The first curious thing about rare earth elements (REEs) is that they’re actually neither. The name was given to the ianthanide group of elements, some of which are more abundant than lead. The challenge is not in finding these elements, said Gary Billingsley, chairman and CFO of Great Western Minerals Group, but in finding a deposit that is concentrated enough to be economical.
The second curious thing, Billingsley added, is how little-known these elements are, especially considering the extensive impact they have on our everyday lives.
“There are new applications for REEs being developed almost every day,” said Billingsley. Existing applications already include catalytic converters (cerium), any electronic device that needs small, high-powered magnets (neodymium), and LCD monitors (yttrium, europium, and terbium), to name but a few. Billingsley, citing a report by BCC Consulting, predicted that the worldwide demand will grow from around 100,000 tonnes today to more than 150,000 tonnes by 2010. Most of that increase is expected to come from the hybrid and electric vehicle industry, primarily in the form of batteries and regenerative breaking systems.
But while demand is set to grow and prices for REEs and REOs (rare earth oxides, the industry standard form for trading in rare earths) are unlikely to fall, there is growing concern over the supply.
“Right now, China is supplying over 90 per cent of the world’s REEs,” said Billingsley, “but as its economy develops it’s going to need more and more for its own use, so there’s a concern about how much it can increase its exports.”
Already, China has placed restrictions on the amounts of REEs being sold to external markets. The prediction is that Chinese supply will at best remain flat through 2010. Part of the reason for this, said Billingsley, is that there simply aren’t any new places for China to mine.
“The Chinese are extracting the REEs from tailings,” he explained. “The REEs are a side benefit of an iron mine at Bayan Obo.”
The original design did not incorporate the extraction of REEs from the ore, so for the time being, the Chinese operation has a massive stockpile on the surface from which to extract the precious elements. However, the only other deposit is in the form of ionic clays in the south of China which, Billingsley said, have become “an environmental disaster” due to illegal mining operations. Understandably, the Chinese government is hesitant to open that area up for development, having just finished shutting down the illegal mines.
With politics suddenly playing a larger role in their supply chain, manufacturers are becoming concerned about where their rare earths are coming from, said Billingsley. Some are even going as far as investing in the mining operations, something they would normally be hesitant to do, due to the riskier nature of the mining and exploration business.
“Japan, for example, is very concerned and is aggressively seeking additional sources for its REEs,” said Billingsley. But supply sources outside of China may fall far short of meeting the overall demand.
Great Western’s goal for Hoidas Lake was to be able to meet ten per cent of North America’s demand for Rare Earth Elements come 2010.