Domestic Supply Chains for Rare Earth Elements
While countries across the globe commit to cutting carbon emissions in the near future, a frequently asked question is how these targets will be achieved. A crucial part of many of these pledges is the replacement of carbon-intensive energy sources with cleaner technologies such as wind and solar power. Additionally, massive developments of battery technology will also play an important role in meeting these pledges. An increase in the production of these technologies will require substantial amounts of natural resources and minerals.
The United States Geological Survey identifies 35 mineral commodities critical to the green energy transition, a list that includes a group called rare earth elements (REE). REEs consist of 17 minerals such as Dysprosium and Ytterbium which are critical to a wide range of technological uses. Most technology, from electric vehicles to missile guidance systems, heavily rely on these materials to function. Since 2010, the average amount of minerals needed for a new unit of power generation has increased by 50 percent as the share of renewables in new investment has risen.
Although the name suggests scarcity, REEs are abundant in the earth’s crust. However, the production and sourcing of rare earth element ores are expensive, technically challenging, and face large environmental costs. In June 2021, the Biden Administration published a review of the independence of United States supply chains, including an analysis of REE sources. The report found that the global supply chains are “at serious risk of disruption and are rife with political intervention and distortionary trade practices.”
The threats in question in the report stem from Chinese dominance over REE global markets. Recent estimates place Chinese exports of REEs at 80 percent of total US imports. In late 2021, three of China’s largest rare earth mining firms merged to form the China Rare Earth Group, further consolidating Chinese control over market prices and global supply. Lynas, an Australian mining company, is currently the only western firm capable of exporting REEs.
China’s hegemony over rare earth elements is the result of a multi-decade push to control the global market for these materials. Up until the 1980s, the largest rare earth mining site was in Mountain Pass, California, and the United States occupied a position like the one China currently finds itself in. A decline in American production of rare earths combined with a strategic push from Beijing has resulted in the dramatic shift in the rare earth markets.
Creating a domestic supply chain of rare earth elements is crucial to national security and the ability of the United States to reach CO2 emission reduction targets. Doing so is a complex task that would involve a significant amount of upfront investment. In 2021, the Department of Energy committed $30 million to “researching and securing the U.S. domestic supply chain for rare earths and other important minerals in battery-making such as cobalt and lithium.”
However, recent developments have shown optimism towards the possibility of independent supply chains. New REE deposits have been discovered in 19 different states, with the Mountain Pass mine in California still contributing most of the domestic supply. The operation reopened in 2017 after decades of dormancy and received a $9.6 million grant from the Department of Defense in November of 2020. DoD also granted $1.8 million to various firms to assist in the development of more efficient extraction and refinement processes. A REE deposit in Bear Lodge, Wyoming is estimated to contain 550,000 tons of REEs, while a former uranium mine in Bokan Mountain, Alaska could provide 375 tons of REEs per day over a projected 11-year lifespan. Internationally, a partnership between US based Energy Fuels Inc and Canadian firm Neo plans to mine mineral rich ore in Utah and process the material into high quality REE products.
Challenges remain in the way of a truly independent supply chain. Mining incurs high upfront capital investment, and current REE market prices are low enough to make most mining projects uneconomical. Most mining sites produce environmentally hazardous waste, which attracts opposition from locals. These challenges can be met through increased government investment into mining technologies, recycling practices, and support for research into AI and automation to increase mining efficiency.
