Prompted by a worldwide chip shortage already impacting automobile production, President Joe Biden in February signed an executive order directing a 100-day broad review of supply chains for critical materials, including for semiconductors, large-capacity batteries, and rare-earth elements.
The stark truth that this review should highlight is that the United States and its Western allies have been left behind at the starting gate in a race only China seems to have realized was on.
Technology metals consultant Jack Lipton has described five steps in a total rare-earth supply chain – Mining comes first, followed by extraction of the rare-earths from mining concentrates and preparation of clean, pre-PLS (pregnant leach solution) mixed rare-earths products. [In truth, there is another step that precedes mining — gaining permission to mine — and that is often the most difficult and most time-consuming step of all.]
Mining companies typically perform these two steps, and sometimes the third — separation of mixed rare earths into individual oxides and blends. Specialized smaller companies typically handle step 4, the manufacturing of chemical products (such as phosphors and catalysts) and of individual metals and alloys forms, as well as step 5, the manufacturing of rare-earth permanent magnets from rare-earth alloys.
China today controls roughly 80% of the world’s rare-earth production capacity, 43% of exports, and nearly 90% of refining. No other nation today has a functional complete rare-earth supply chain. This means the U.S. and its Western allies have a lot of catching up to do; Western nations have also failed to develop and carry out strategic minerals strategies.
One reason for these strategic shortcomings has been strong opposition to mining, and especially to the very word “radioactive” (for rare-earth deposits linked to thorium and uranium found in monazite ores) from constituencies opposed to environmentally challenging mining practices.
Energy consultant David Blackmon recently asserted that, “There will be no successful ‘energy transition’ or ‘Green New Deal’ implementation in the United States” unless companies are allowed to access this country’s own plentiful supplies of copper, nickel, cobalt, and rare-earth minerals. Yet, he laments, the most strident proponents of decarbonization and renewable energy are often the most strident opponents of domestic mining of these critical minerals.
Anti-mining sentiments remain strong, especially among professional staff at regulatory agencies. For example, a recent article pointed out that offshore wind turbines that are essential to President Biden’s call for 30,000 megawatts of electricity from offshore wind by 2030 require 63,000 pounds of copper per turbine — eight tons of copper per megawatt of energy output.
World copper prices jumped in May to an all-time high of $10,440 per metric ton, a number perhaps buoyed by Biden administration decisions to pause the permitting of two major U.S. copper mines — the Rio Tinto/BHP Group Resolution Copper joint venture in Arizona and the PolyMet TwinMet copper-nickel-precious metals mine in Minnesota.
This approach to energy and materials policy cannot stand if the U.S. is to build reliable, affordable supply chains for critical materials. TechMet Chairman and CEO Brian Menell recently stated that, “To remain a leader in the energy and automotive areas, the U.S. must secure adequate supplies of the metals necessary to power the 21st century’s industrial revolution.”
Menell, whose company “builds projects that produce, process, and recycle ‘technology metals’ critical for electric vehicles, renewable energy systems, and energy storage,” urged the federal government to work with the private sector to enhance supply chains among partners and allies. He called for “massive funding” to transform the U.S. critical metals industry and ramp up global production to help meet geometrically growing demand.
There is a sense of urgency in Menell’s comments, one affirmed by Andrew Miller, product director at Benchmark Mineral Intelligence. Miller told NPR’s Marketplace that, sure, “You can build a new electric vehicle factory in a couple of years,” but “…to fund, to start, and to refine the processing from a new raw material facility, you’re looking at five to seven years.” And that’s with fast-track permitting that steamrolls citizen opposition.
In a four-part series addressing Chinese dominance in the rare-earths industry, Jamil Hijazi and James Kennedy explained that China built its rare-earth industry as part of a carefully designed nationalistic strategy for world domination, one not motivated by the quest for private profits.
Now, with their market share dominance, “…China uses opaque subsidies to eliminate any profit potential for competitors. No profit potential, no competitors, China’s metallurgical monopoly remains secure and uncontested.” Even more daunting, the lack of non-Chinese processing, refining, and metallurgical capacity means that the world sells China its low value ore-concentrate and China sells back higher value-end products.
Menell points out that China’s rare-earths dominance is “…the result of decades of successful central planning to secure the minerals required to develop technologies across strategic sectors such as energy, auto, and defense.”
While President Biden’s executive order supporting the concept of resilient, diverse, and secure supply chains is admirable, Menell says the U.S. must make the supply of critical minerals a central part of both domestic and foreign policy.
Menell notes that the Biden administration also needs to educate the American public that the mining and processing of critical materials can be done with much lower environmental impacts by American companies than by the Chinese, and that their economic well-being might depend on an integrated rare-earths value chain.
“The United States cannot afford,” said Menell, “to be a bystander in the most significant transformation of the global industrial and technological landscape since the invention of the steam engine.”
I agree. Failure to take bold, ongoing action will doom the U.S. — and other Western nations — to submit to China’s iron grip on 21st century technology.
Unchallenged, China could choose to expand its empire southward as Western voices are muted by their utter dependence on Chinese “generosity” in supplying materials for smartphones, wind turbines, electric vehicles and more. China could also continue forcing U.S. companies to “share” their corporate secrets, even their profits, with their Chinese “benefactors.”
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The Need to Build a Free-World Rare-Earths Supply Chain originally appeared on usnews.com