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Vol. 15, No. 17 Week of April 25, 2010
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Bill urges ‘restart’ of U.S. REEs mining

Colorado lawmaker advocates stimulating domestic rare earth elements industry, calls for stockpiling minerals deemed critical

Shane Lasley

Mining News

Rare earth elements have become a hot topic among United States policymakers. The growing demand for the unique properties of these metals in “green energy” technology and military applications, coupled with China’s monopoly on the rare earth market has lawmakers and the Pentagon investigating the need to stimulate domestic production, manufacture and stockpiling of these elements.

A bill introduced by U.S. Rep. Mike Coffman, R-Colo., in March has moved the rare earth conversation from focus groups to Capitol Hill.

Coffman has introduced legislation in the U.S. House of Representatives that would require government agencies – including the departments of State, Defense, Commerce and Interior – to support the re-establishment of rare earth element mining, refining, alloying and manufacturing operations in the United States.  H.R. 4866, the “Rare Earths Supply-Chain Technology and Resources Transformation Act of 2010” or the Restart Act – also calls for a national stockpile of “critical” REEs. China is not only the sole source of nearly all of the REEs mined in the world, it also controls the refining and alloy processing of these strategic metals.

“The United States has no active heavy group rare earth production capabilities or refining capabilities for heavy rare earth elements. Thus, should the United States begin to mine its heavy rare earth oxides, it would still be dependent on overseas refineries for further elemental and alloy processing,” according to the Restart Act.

The proposed legislation also calls for the re-establishment of a domestic rare earth supply chain.  Among proposals in the bill are assessments and implementations of “obtaining loan guarantees to support the re-establishment of mining, refining, alloying and manufacturing operations for (rare earth elements) in the United States.”

Growing focus on REEs

The bill’s introduction follows a December roundtable on rare earth materials hosted by the U.S. Department of Commerce. A 25-member panel, including representatives of key end users of rare earth materials such as General Electric and the American Wind Energy Association, as well as interested government agencies such as the Department of Defense and the White House, discussed the issue.

The roundtable’s findings and the Restart Act both reflect concerns about China’s near complete control of the REE market, and the United States’ lack of mines and infrastructure needed to obtain these elements that are playing an increasingly important role in emerging technologies critical to the nation’s defense and clean energy needs.

In Canada, numerous Asian investors flocked to the Prospectors and Developers Association annual conference in March seeking junior mining companies with REE prospects in their portfolios.

“Lots of investors from Asia came to the trade show. They all were looking for REEs listed on the companies’ displays, and it was the only the thing that they were looking for,” one observer told Mining News recently.

Coffman’s legislation received overwhelming support from the Alaska State House April 15, as the legislators unanimously voted in favor of House Resolution 16, which urges the U.S. Congress to pass the Restart Act. The State House Resources Committee sponsored the resolution.

“The rare earths are no longer mined in the United States, but they are exceptionally valuable due to their unique chemical, electrical and physical properties,“ House Resources Committee Co-Chairman Craig Johnson, R-Anchorage, said. “Rare Earth elements are critical to high-technology industries and many weapons systems used by our armed forces. They’re also in high demand for ‘green’ energy projects and there’s a backlog of buyers looking for them. The bottom line is you can’t go green without good, old-fashioned mining, and America’s ability to meet the new business and consumer demand is compromised until we get rare earth minerals back in production.”

“We have known and available rare earths right here in Alaska at Bokan Mountain,” Johnson added. “Passing Restart is another way we can provide for domestic energy security and provide for Alaska families, businesses, diversifying our economy and strengthening our mining industry.”

China’s control of market

China, which accounts for nearly all of the production of REEs worldwide, has increasingly restricted its exports of the critical metals to non-China-based production facilities.

The Chinese Ministry of Industry and Information Technology has proposed banning all exports of heavy rare earth elements (dysprosium, terbium, thulium, lutetium and yttrium) and further restricting the export of the light rare earth metals to a level well below that of Japan’s 2008 demand alone.

“China currently accounts for 97 percent of global production of these incredibly important metals and last month set off a wave of anxiety among clean energy developers by announcing its intention to decrease export quotas for the eighth time in as many years,” U.S. Sen. Lisa Murkowski, R-Alaska, wrote in a Roll Call report last October.

“By cutting rare earth exports, China is seeking to ensure the manufacture of clean technologies within its own borders,” she added.

China is not only the sole source of nearly all of the REEs mined in the world, the Far East country also controls the refining and alloy processing of these strategic metals.

A report released by the Rare Earth Material Roundtable said China’s near total monopoly over global REE production and its 80 percent control over dense rare earth magnet production coupled with the country’s restrictive trade policies create supply concerns for rare earth product end users in the United States.

Roundtable participants expressed the concern that a surge in demand for these products could put domestic manufacturers at a disadvantage if timely and cost competitive access to these materials is not ensured. Some participants indicated that a crisis point could be reached as early as 2012.

Growing appetite for green metals

From the curly-fry shaped compact fluorescent lamps to enormous wind turbines, “green technology” is expected to drive much of the near-term demand for REEs.

Increasing quantities of rare earths are being needed to build fuel-efficient hybrid cars.

For example, every Toyota Prius has between 25 and 35 pounds of the special elements. The hybrid electric motors and generators of the world’s top-selling hybrid need praseodymium, dysprosium, terbium plus about 4 pounds of neodymium. Lanthanum, which is found in the batteries and catalytic convertors, is the most used REE in these fuel-efficient vehicles. The special qualities of yttrium, cerium and Europium also are utilized in the manufacture of the gas-electric cars.

Between 1997 — when Prius first hit the markets in Japan — and May 2008, Toyota sold 1 million of the popular hybrids. By the end of 2009 that number jumped to 1.6 million. Today, nearly every major automobile manufacturer has added hybrid vehicles to its lineup.

The same properties REEs attribute to the efficiency of hybrid cars also apply to generators in wind turbines. It is estimated that a utility-scale wind generator contains more than 1 ton of rare earth magnets.

Concerned about United States’ reliance on foreign sources of metals, Sen. Murkowski wrote, “The large quantities of minerals required for clean energy technologies only add to the scale of our needs. A large wind turbine can contain more than 1 ton of rare earth elements — in addition to more than 300 tons of steel, nearly 5 tons of copper and 3 tons of aluminum.”

Stockpiling REEs

The U.S. Department of Defense is worried that growing demand coupled with foreign reliance could create shortages in the REEs needed for military applications. Guided missiles, lasers, radar systems and night vision equipment are part of a long list of defense equipment that utilizes the special properties of these elements.

H.R. 4866, as it was introduced by Coffman, would require the secretaries of Commerce, Defense, Energy, Interior and State — as well as the United States Trade Representative and the Office of Science and Technology Policy — to create an interagency working group to evaluate which rare earth elements are critical to the defense and economy of the nation.

Once a list of critical REEs is established, the elements would be added to the national stockpile list, according to the legislation.

Funding loan guarantees

Given the broad economic and national security implications, combined with the substantial funds that will be required to develop a viable REE industry in the United States, roundtable participants suggested that government-industry partnerships will be required.

Coffman’s bill addresses this public-private sector partnership by directing various government agencies to investigate mechanisms for funding loan guarantees to establish a domestic rare earth supply chain.

Defense stockpile funds and the American Recovery and Reinvestment Act of 2009 are suggested mechanisms for funding the development of REE mining and manufacturing in the United States.

The legislation calls for the funding of governmental and private research and development projects.

“It is the sense of Congress that, in order to re-establish the United States as the preeminent supplier of rare earth materials, components and associated technologies, there is a pressing need to support innovation, training and workforce development of the rare earth supply chain. Therefore, base budget funding should be provided by the Secretaries of Commerce, Defense, Energy, and Interior to fund academic institutions, Government laboratories, corporate research and development, not-for-profit research and development, and industry associations,” H.R. 4866 reads.

Targeting U.S. REEs deposits

According to the U.S. Geological Survey, global demand for rare earths is expected to exceed 200,000 tons per year by 2014.

“The good news is that the United States has, within its borders, abundant reserves of many critical minerals. These reserves represent an opportunity to create many new American jobs, and their production would undoubtedly facilitate a robust clean technology manufacturing sector,” Sen. Murkowski wrote.

According to the findings of H.R. 4866, at least 15 percent of the world’s REE reserves are in the United States.

The Mountain Pass Mine, located in California’s Mojave Desert, is considered to be the largest concentration of rare earths outside of China.

After supplying rare earths for about 50 years, mining operations at Mountain Pass were closed in 2002.

Molycorp Minerals LLC, the Chevron Mining subsidiary that operated Mountain Pass, was bought by a group of investors in 2008. The privately-owned Molycorp is in the process of resuming operations at the southern California mine and plans to produce about 20,000 metric tons of finished rare earth products per year from the mine by the end of 2012.

Historically, Mountain Pass has not been known for producing large quantities of heavy rare earth elements. Though small quantities of heavy rare earths such as dysprosium and terbium are recovered from the ore, the developed deposit contains primarily light rare earth elements.

Molycorp is setting out to explore other deposits on the property known to contain the ores that commonly contain higher concentrations of the valuable HREEs.

The Bokan Mountain prospect on the southern end of Prince of Wales Island in Southeast Alaska is a project that could provide the United States with HREEs that are feared to soon be in short supply.

Ucore Uranium Inc. is currently gearing up for its 2010 exploration program at the REE prospect. Though a NI 43-101-compliant resource has yet to be calculated for Bokan Mountain, drill results indicate that HREEs make up about half of the total rare earth elements in the deposit.

The company is planning to drill about 5,000 meters focused on two areas which yielded significant HREE intercepts in 2009, with the goal of calculating a resource in 2010.

In addition to drilling, the Nova Scotia-based explorer is planning geological mapping, airborne and ground-based geophysical surveying, detailed mineralogical studies, environmental baseline data collection, and bench-scale metallurgical testing. The company said it also plans to have an early-stage scoping study of prospective mining logistics and methodologies completed for the prospect.

“Our objective is to advance the Bokan-Dotson Ridge project as quickly as possible,” said Ucore President and CEO Jim McKenzie. “A number of near-term events have the potential for material impact on the U.S. rare earth sector, and HREEs in particular. They include the pending finalization of China’s five-year plan, which promises a staged export withdrawal of HREEs such as terbium and dysprosium, metals particular to Bokan and in short supply worldwide. In April, the U.S. Committee on Armed Services is due to issue a report on rare earths in the supply chain of the Department of Defense to the U.S. Senate. The United States is the world’s largest consumer of HREEs for strategic military and high technology applications. In turn, Bokan’s unique positioning as the nation’s largest historically estimated HREE deposit, albeit non-43-101-compliant, should serve us well in focusing attention on an increasingly compelling story. As well, our drive toward a 43-101-compliant resource estimate in 2010 becomes all the more salient, in light of near-term domestic and international events.”

Other REE deposits have been identified by the USGS in Colorado, Idaho and Montana, Missouri, Utah and Wyoming. The agency estimates that the United States has 13 million tons of REE reserves within its borders.

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