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Rare Earth Elements (REE's): The Devil is in the Details
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O.K. the world is starting to wake up to the fact that it really, really, really needs Rare Earth Elements (REEs). The recent increase in the share value of the new publicly traded Molycorp mine in California is finally helping to bring more eyeballs to the story.
Many of the 15 known REEs (metals) are essential components of the green technologies that many say will make the difference in our survival in the future. Heck, REEs are so essential in our world now that they have been incorporated into many important products and core technologies that are essential to the quality of our life, yet, the vast majority of people don’t yet know what they are or why they are so important to our future.
Without REEs the LCD computer screen you might be looking at to read this couldn’t be built, your computer hard drive, all hybrid cars, wind turbines or even the x-ray machine that might save your life one day are all dependent upon REEs. If you find this interesting, try sending this as a message over your BlackBerry to someone to tell them about it. But . . . without REEs, you wouldn’t be able to, because your BlackBerry wouldn’t work.
Are there enough REEs available?
Yup, there are a whole bunch of REEs available around the world. But there are very few locations where they are found in commercially viable deposits. When we say commercially viable we mean where a company can go in, pull enough of the stuff out of the ground, send it to be processed, separate it and make enough money at the end of this cycle to make the whole effort worthwhile. Sounds simple – but the devil is in the details.
China now controls 95 – 97% of the world’s supply of the stuff and they have recently decided that they need much of that limited supply to support their own internal needs. So this has created a modern day gold rush for new sources of supply.
But just like the Klondike gold rush over 110 years ago, some prospectors are deep in the hinterland far removed from civilization and any source of infrastructure looking for their deposits. Many Klondike prospectors found gold, but the long trek to get the stuff back to civilization did them in. But more on that later.
Back to the question of whether there are enough REEs available to meet the world demand. Remember, there are 15 metals classified as REEs. Some are classified as Light REEs and others as Heavy REEs. Of these 15 metals, some are way more valuable than others. The world demand for some of these metals will outstrip the current supply in a time frame that can be measured in months not decades. More specifically, the world is fast running out of some of the heavy rare earths (HREE). Already, we are starting to see the impact of select REE shortages.
No wonder there is a gold rush feel to the REE market. But, to best understand the prospects and viability of a mining company, it would be prudent to study the supply/demand curve of each of the respective metals that each REE mine is planning to produce. This is because – despite the scarcity of some of specific REEs – there may very well be a glut of some of the light rare earths (LREE) in the coming years. This is because; many REE companies are currently focused on mining for the more readily available light REEs. When these mines eventually get on line, they will begin to pump these minerals into a flooded market for select REEs. Knowing which REEs will be in short supply and which ones will be in extremely high demand and then comparing that to what each company is going after might be a prudent exercise.
Actually, in the REE space it is not wise to use the term “pumping out minerals” as the process of separating the REEs from the rock is a lot more complex than that. REEs are not processed like gold! Relative to REEs, gold is easy to harvest. Put the crushed ore into a furnace, turn up the heat, pour off the gold and get rich – simple!
Here is the rub . . . some REE scientists have spent decades trying to break the metallurgical equivalent of the ancient Gordian Knot mystery. Many have failed, and many still don’t know how to separate the metals from the rare ore, and the ones who do are few and far between.
Some REE miners have to be frustrated!
Knowing that there are REEs in that chunk of rock in your hand is one thing, but knowing how to separate all the minerals safely, economically and with some semblance of success is altogether another thing. Poorly done, the extraction process can effectively destroy much of the valuable metal in the process. It’s an extremely tough nut to crack. Especially when you consider that each REE deposit has a unique geological identity – its own DNA if you will. The science of extraction in one area is different than it is in other deposits throughout the world.
Yes, mining for this stuff isn’t easy. Mining companies are faced with the difficult task of finding viable deposits, then proving that each of the REE metals are there in viable quantitates, getting a mining and environmental license to start a mine, starting it and getting their rock to a processing facility via roads, rail, pipeline and/or boat. Now, if the roads, pipelines and docks aren’t available, these companies have to build them which takes time and a lot of money.
Once the raw material is brought to where you want it, in the case of a gold mine, when you start to heat up the furnace you are almost home free. But with a REE mine, when they finally have the rocks at the processing facility they then have to make sure to have the scientific expertise to help carry out the metallurgy – which is to separate each of the possible 15 REEs and other metals from the rocks.
The Chinese know how to do it, but aside from the Chinese, there are VERY few facilities around the world with the expertise to know how to do this effectively.
What’s Your Take?
We would love to hear from you, the reader. For more information on rare earth elements, China’s current control of the industry and REE mining issues, send us an email at info AT kidela.com… or visit us online at http://www.kidela.com. You can also follow us on Twitter @Kidela.com. We’d love to hear from you!
Kidela Capital Group
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