U.S. Startups Seek to Claw Back China’s Share of ‘Technology Minerals’ Market (Updated)
Stew Magnuson photo
This is part 1 of a 3-part special report on the rare earth market.
MOUNTAIN PASS, Calif. — Atop an arid mountain about an hour’s drive from Las Vegas, an excavator scooped up giant boulders mined from a nearby open pit and dumped them into a machine designed to reduce them to pebbles about the size of a marble.
Down in the pit, some 500 feet below, miners were preparing explosive charges that would blast basalt out of the mountain later that afternoon. Inside that rock were rare earth minerals, 17 different elements valued as building blocks for some of today’s most ubiquitous technologies — everything from electric cars to smartphones.
Despite all the activity and the dozens of workers moving tons of material at the site, Michael Rosenthal, chief operating officer of MP Materials, said mining is only about 10 percent of what the company did there.
“The rest is chemistry,” he said.
The Mountain Pass mine has existed for some 60 years and is the only one of its kind currently in operation. It’s renowned for its high concentration of rare earth elements, sometimes called the “technology minerals.”
The elements that occupy 17 spots on the periodic table are categorized as “strategic minerals” by the U.S. government and therefore considered vital for national defense. Along with smartphones, they are used in fiber-optic cables, medical devices and high-performance magnets, which are needed in a host of machines, including jet fighters, wind turbines — and most importantly on the commercial side — electric vehicle engines.
“From an economic security perspective and defense perspective, magnets are very, very important to national security,” Rosenthal said.
The problem is that China has a near monopoly on the complex process of separating 16 of the 17 elements currently used in these technologies from the source material and refining them to a point where they can be made into useful metals and materials.
The Biden administration’s 100-day review, “Building Resilient Supply Chains, Revitalizing American Manufacturing and Fostering Broad-Based Growth,” released in June, devoted an entire section on strategic and critical materials and minerals, including its thoughts on rare earths.
“The United States imports substantially greater quantities of rare earth elements in value-added products. … Implicit in this trade phenomenon is the gradual decline in value-creation, innovation, research and human capital development,” it stated. That imbalance with China will only increase with the expected growth of green energy technology such as electric vehicles and wind turbines, the review added.
“Rare earths” are a misnomer and are not that rare. China does have an abundance of them, but they are also found in concentrations high enough to mine in several U.S. states and other nations throughout the world. They are further divided into two categories, light and heavy, with the heavier ones considered more difficult to refine and thus, more valuable.
MP Materials — along with three other companies interviewed — are seeking to exploit the abundance of rare earths found in the United States and to end China’s monopoly on their refinement and return some of the market share back to the United States.
Separating the elements from the host rock and further refining them to the point where they are separate from each other is a complex process requiring several steps.
Rosenthal explained that the boulders being fed into the grinder may look the same, but they’re not being selected by happenstance. Every day, geologists drill holes in the mine, mark them with GPS coordinates, and use X-ray fluorescence on the samples to determine the rare earth element content — specifically which and how much of the 17 elements are in that part of the mine. The result is a daily “recipe” to determine a blend.
Extracting the most valuable rare earth elements as efficiently and cheaply as possible is the road to profitability, Rosenthal said.
For example, the Mountain Pass mine’s rare earth content is almost 50 percent composed of cerium (Ce), which is used in glass making and polishing. While abundant, it is not where the company sees future profits. Neodymium (Nd), dysprosium (Dy) and samarium (Sm) — three of the four elements that can make high-performance magnets — are now viewed as the biggest money makers. The company that previously ran the mine focused its business on cerium, which Rosenthal considers one of the main reasons it ceased operations after three years.
Rosenthal moved on to a building where the pebbles that emerged from the giant grinder are further crushed into sub-100-micron particles.
Those are fed into towering vats of water and further separated from each other. A chemical process removes the waste while the rare earths float to the top.
Yet, at this point, the rare earths are still not refined enough for them to be used to serve as technology “building blocks.” The final step involves heat — described as a slow-roasting process — that delivers the purity required. That is all done in China.
The raw material resulting from the second step is packed into giant white bags and moved to the foot of the mountain.
MP Materials has aspirations to not only refine these crucial elements at Mountain Pass, but to make high-intensity magnets as well.
Contractors near the mine were at work building the new facility where light rare earth elements will be refined to the point where they can be used in manufacturing.
In December, MP Materials earned a $10 million Defense Department grant to help it build a $200 million refinement facility for light rare earths. The company broke ground on the building in 2021 and expects it to be operational by 2022.
As is the case for many technologies, the U.S. military market for rare earths is crucial, but would not be large enough to sustain a domestic industry. Magnets are used in every electric system that moves. But the ones needed to spin a radar, for example, are not the everyday magnets found on refrigerators. Neodymium magnets, for example, are prized by the consumer market for their strength and low costs.
The military and its contractors will eventually benefit from the commercial demand for magnets and the other elements needed for other systems by no longer having to depend on China, Rosenthal said.
Meanwhile, flatbed trucks hauled the giant white bags of raw material to the western edge of the facility where they were lined up waiting for shipment. Next stop, the port of Long Beach, California, then China.
Rosenthal acknowledged the irony. But until there is some domestic refinement capability, MP Materials has no choice but to send the raw material to China, he said. The publicly traded company would not be profitable and currently employing 200 workers if it had to wait for the refinement facility to come online. The bags would be sitting ready to go nowhere.
MP Materials spokesman Matt Sloustcher said critics have pointed out that the company has a Chinese investor with an 8 percent stake in the operation. However, this investor doesn’t have a seat on the board of directors and the deal has been reviewed and approved by the Committee on Foreign Investment in the United States, he said.
There will be space in the facility to process the heavy elements later and studies on how to accomplish that are ongoing, Rosenthal said.
Meanwhile, other companies are entering the rare earth mining business in the United States, with their sights set on the burgeoning high-performance magnet market.
One of them is the Round Top Mine near El Paso, Texas, operated by USA Rare Earth, which also has aspirations to mine, process and then convert the rare earths to magnets, said its CEO and director, Pini Althaus.
A preliminary economic assessment report showed that of the mine’s important elements, one-third was composed of rare earths — including all four that can produce magnets — one-third lithium — needed to make lithium-ion batteries — and one-third gallium, a vital element used to make semiconductor chips used in 5G technology.
“It’s a very strange geological anomaly to have rare earths and lithium sitting side by side,” he said.
Deeper inside the mountain are deposits of beryllium, another strategic mineral used by Defense Department contractors to make alloys.
There are no plans to mine the beryllium now, but the mine could produce 36 tons of the mineral per year, he said.
Despite all these bonus minerals, it’s the magnet-making materials that interests the company the most, he said.
The company has also opened a rare earth critical minerals processing facility at Wheat Ridge, Colorado, which is a mining technology hub in the United States. It is a pilot plant that will eventually be scaled up and moved to Texas. The company hopes to be able to demonstrate refinement by the end of the year or early 2022, with full commercial production taking place in Texas by 2023, Althaus said.
Both Round Top and Mountain Pass executives said they want to be able to take feedstock from other sources and do the refinement there so they don’t have to send it to China.
“Then hopefully that material stays in the U.S. supply chain,” Althaus said.
“One of the processes we’re working on is optimizing the feedstock we are starting to receive from other mines around the world,” he added, including one in Australia.
USA Rare Earth has also purchased a mothballed magnet manufacturing facility in North Carolina from Hitachi Metals America Ltd. and is reconditioning that plant with a goal of producing 2,400 tons of magnets per year. It should be operational by the second half of 2022, he said.
Another possible source of rare earths is the nation’s coal seams. A Department of Energy National Energy Technology Laboratory study found rare earth element concentrations exceeding 300 parts per million in several U.S. coal regions, including Illinois, Northern Appalachia, Central Appalachia, the Rocky Mountain coal basins and the Pennsylvania Anthracite region.
“We found that in certain seams in Kentucky, there is a very high mineral content in the coal itself that may date back to volcanic activity so many years ago,” said David McCarthy, CEO of McCarthy Merchant Capital, which is raising funds for a company, Digital Commodities LLC.
Previous concepts were to separate the rare earths and other minerals from coal ash after it was burned.
“The problem with that is you have to burn the coal to get the ashes,” he said. “That’s not a green alternative.”
McCarthy is raising funds to establish a refinery in Harlan, Kentucky.
Researchers from the University of Kentucky have discovered a patent-pending way to pulverize the coal into a fine dust, then spin the powder and separate the elements in a process McCarthy described as a “tornado in a can.”
This solves two “American problems” — reliance on China for rare earths and the decline of the coal industry, he said.
The coal seams not only contain all the rare earth elements, but other strategic minerals such as lithium — also used in electric vehicles for lithium-ion batteries — and precious metals such as gold and silver, he said.
“We’re finding a new green use for coal in an area of economic hardship,” he said. His fund is selling securities for a rare earth company and a separate offering for the precious metals.
The company is building a processing facility in Harlan that it hopes to have running by the end of the year. It is about 50 percent complete, but not all of the financing is in place.
“The quicker we get funding, the quicker we finish,” McCarthy said.
It also has a laboratory in Charlottesville, Virginia, where it is running experiments that McCarthy said will help them to mine and separate 2,400 tons of raw material per day at the beginning of the operation.
Caldera Holdings, which owns the Pea Ridge iron ore mine in Washington County, Missouri, is seeking funding and Department of Energy grants to create America’s first 100 percent green steel manufacturing plant. It would forgo using hydrocarbons and use nearby nuclear power plants’ energy to manufacture the steel.
The company’s president, James Kennedy, also wants to exploit the rare earths found in the mine’s leavings as byproducts. The problem is that they contain a high concentration of thorium, an element used to make nuclear fuel.
To Kennedy, a watershed moment that helped usher in China’s dominance in the rare earths market was a 1980 U.S. government rule that regulated the handling of thorium. Until then, rare earths were extracted as byproducts at several U.S. mines, especially copper. The regulation forced the mines to put the leavings aside and seal them up, or risk liability, thus cutting off the most economical way of extraction at the dawn of a new technological age.
Kennedy — a public and strident critic of current efforts to revive the U.S rare earths industry — said the only way to compete with the Chinese monopoly is by setting up a cooperative that exploits the inexpensive leavings already extracted, and then putting the thorium in a national stockpile.
“The U.S. could meet 85 percent of the global demand for rare earths if they would just solve the problem they created for themselves in 1980 when they defined rare earths byproducts of nuclear fuel,” he said.
All four executives interviewed made claims of having the most of one element, or the richest veins, and some accused the other mines of lacking one element or another to make magnets. MP’s Rosenthal, USA Rare Earth’s Althaus and McCarthy all said their companies — or proposed companies — could withstand a price war brought on by China. (See related story here.)
There are other companies seeking investors and applying for mining permits in Texas, Nebraska and Wyoming — to name a few locations — as well as plans to recycle rare earths from used electric engines or other devices.
“The truth is,” Althaus said, “nobody has everything that is required.” The Round Top Mine at its peak would only account for a small percentage of the rare earths needed for the magnet market. The 2,400 tons of magnets the mothballed plant could produce would be a drop in the bucket with early estimates calling for as much as 20 times that figure as the electric vehicle market ramps up, he said.
The Biden administration’s 100-day review said: “Independent of permitting activities, a reasonable industry benchmark for the development of a mineral-based strategic and critical materials project is not less than 10 years.”
Althaus said: “We need a number of mines in the next five to 10 years, otherwise, we will still be 80 to 90 percent dependent on China.” That includes processing plants, he said.
McCarthy added: “When we put our heads together, we can solve these problems.”
Rare Earth Elements 101
Rare earth elements occupy 17 spots on the periodic table. The U.S. government has designated them as “strategic minerals” and therefore vital for national defense.
“Rare” is somewhat of a misnomer because they are found throughout the world in high enough concentrations for mining. For the most part, the 17 rare earths are found together, but some deposits have higher concentrations of some elements than others. Separating them from their host rock and each other is a complex, multi-step process.
They are divided into two further categories depending on their atomic numbers — “light rare earths” and “heavy rare earths” — with the heavy elements considered the most valuable. There is some debate within scientific circles as to which elements belong in which category.
Their importance as building blocks for modern technology is evolving as researchers continue to find uses for them in such everyday items as smartphones, fiber-optics and medical equipment such as MRIs.
However, the application driving the current rush to mine and refine rare earths are high-performance magnets manufactured with neodymium (Nd), dysprosium (Dy), samarium (Sm) and sometimes (Ho) holmium. These magnets are needed to supply the growing market in electric engines along with computer hard disk drives, precision-guided munitions and wind turbines.
The following is a list of the 17 elements and some of their uses in modern technology.
Found in abundance but low global production levels have limited the development of applications.
Uses: dental lasers; solid oxide fuel cells; aluminum alloys used in baseball bats; bicycle frames; gun cylinders.
Created red color in 1960s TV sets. Also found in lunar rocks collected by Apollo astronauts.
Uses: superconducting material; cancer treatment; lithium-ion batteries; spark plugs; camera lenses.
Applications often overlap with cerium.
Uses: nickel metal hydride (NiMH) batteries; petroleum refinement; automobile catalytic converters.
The most abundant rare earth.
Uses: decolorizing and polishing glass; arc-lights; making aluminum alloys.
Properties used to give ceramics and glasses yellow/green color.
Uses: combined with nickel to make alloys for aircraft engines; nickel metal hydride batteries; fiber-optic amplifier; magnets.
Neodymium magnets are preferred by industry for their strength and low
Other Uses: welders goggles; tanning booths; color glass for violet, wine-red and gray.
The one “non-commercial” rare earth element. Rare in nature; mostly produced in laboratories.
Uses: atomic batteries found in pacemakers; guided missiles; radios.
One of the elements in demand for high-density magnets.
Uses: samarium-cobalt batteries that can withstand extremely high temperatures.
Named after the continent of Europe.
Uses: color red in TV sets; possible use in quantum computing chips.
An element with few large-scale applications but many niche applications.
Uses: nuclear marine propulsion; nuclear shielding; X-ray machines; fuel cells; to enhance MRI images to detect small tumors.
A malleable yet ductile element.
Uses: fuel cells; alloys; flat-panel speakers; naval sonars.
A silvery luster element also in demand to make high-performance magnets.
Other Uses: neutron-absorbing control rods in nuclear reactors; hard disk drives; lasers.
Has the highest magnetic strength of any element.
Uses: artificially generated magnetic fields; neutron absorption to regulate nuclear reactors (burnable poison); possible use in
A fluorescent, pink-colored element also found in human bones.
Uses: medical lasers; malleable alloys; neutron-absorbing control rods; to boost speed of high-capacity fiber-optic lines.
One of the least abundant rare earths.
Uses: portable X-ray machines; solid-state military and medical lasers.
Found in small quantities and difficult to refine.
Uses: atomic clocks; lasers used in quantum computing; strengthening steel.
Known as the rarest and most expensive rare earth to refine.
Uses: catalyst in petroleum refineries that make jet and diesel fuel; cancer treatments for stomach, pancreas and intestines.
Topics: Defense Department