Strategically important metals - Science and Technology Committee Contents


Written evidence submitted by Gareth P Hatch (SIM 18)

DISCLAIMER

The views expressed in this paper are solely those of the author and do not necessarily represent or reflect the views of Technology Metals Research, LLC or those of any other individual or entity.

ABOUT THE AUTHOR

Gareth Hatch is a Founding Principal of Technology Metals Research, LLC. He is interested in helping people to understand the challenges associated with the growing demand for rare-earth elements [REEs] and other critical and strategic materials, and how those challenges affect market sectors throughout the entire technology supply chain. He is currently based in the suburbs of Chicago, Illinois, USA.

For several years Gareth was Director of Technology at Dexter Magnetic Technologies, where he focused on the design & application of innovative magnetic materials, devices and systems, in order to solve real engineering problems. He led a stellar team of engineers who helped customers and clients in the aerospace, defence, medical, data storage, oil & gas, renewables and industrial sectors. He holds five US patents on a variety of magnetic devices.

A two-time graduate of the UK's University of Birmingham, Gareth has a B.Eng. (Hons) in Materials Science & Technology and a Ph.D. in Metallurgy & Materials, focused on rare-earth permanent-magnet materials. He is a Fellow of the UK's Institute of Materials, Minerals & Mining, a Fellow of the UK's Institution of Engineering & Technology, a Chartered Engineer and a Senior Member of the IEEE. Gareth is also a Chartered Scientist and a Chartered Physicist through the UK's Institute of Physics.

Gareth is the Founding Editor of Terra Magnetica, an Editor at RareMetalBlog and is Newsletter Editor and Chicago Chapter Chair of the IEEE Magnetics Society. He is Founder of the Magnetism & Electromagnetics Interest Group and the Strategic Materials Network, both at Linkedin.com. Gareth is also an Advisor to Energy Scienomic, a non-profit organization focused on best practices and standardization of global energy production data and information.

RARE-EARTH ELEMENTS: SUPPLY AND DEMAND CHALLENGES FOR UK INDUSTRY

INTRODUCTION AND BACKGROUND

1.  As recently noted by the House of Commons Science and Technology Select Committee [1], there is growing speculation on the availability of a variety of metals of strategic importance to UK industry. Unfortunately much of this speculation has been driven by frequently inaccurate media coverage of the sector. Nonetheless, there are some distinct challenges that the UK faces when it comes to the procurement of these metals.

2.  Rare earths are almost universally viewed as being of strategic importance. Rare-earth elements (REEs) exhibit special electronic, magnetic and optical properties. In common with a number of other strategic metals, REEs are enablers; although generally used in small quantities, components based on REE alloys and compounds can have a profound effect on the ultimate performance of complex engineering systems.

3.  The supply and demand challenges associated with REEs have much in common with other strategically important metals. Given the author's experience with the rare-earth supply chain, the present work focuses primarily on REEs, as it seeks to address the five groups of questions raised by the committee. The answers in many cases are likely to be applicable to other strategic metals too.

RARE-EARTH ELEMENTS: TERMS AND DEFINITIONS

4.  The International Union of Pure and Applied Chemistry (IUPAC) defines the rare earths as a collection of 17 elements of the periodic table [2]. The list includes the 15 lanthanoid elements (atomic numbers 57 through to 71), in addition to scandium (Sc) and yttrium (Y). In practice, Sc does not usually occur in the same minerals as the lanthanoids + Y, and thus the rare-earths industry generally omits reference to it. Also, promethium (Pm) does not occur freely in Nature, and thus we are left with the 15 elements shown in Figure 1.

5.  The rare-earths industry further differentiates REEs as being either light or heavy rare earths. In general, the first five lanthanoids are referred to as light REEs (LREEs). This leave the remaining lanthanoids + Y as heavy REEs (HREEs) as shown in Figure 1. Note that this subdivision does not quite match the terminology used by many scientists; there is little reason to delve into this discrepancy any further; suffice it to say that it is important to note exactly which elements are being referred to, whenever the terms "light" REEs or "heavy" REEs are being used in any discussion on the subject. HREEs are generally rarer than LREEs, and are thus generally more valuable. Note that within the industry, it is customary to discuss REEs in terms of their oxide equivalents (REOs).

6.  REEs are always found together within any given rare-earth deposit, albeit in different proportions from one deposit to another. The minerals containing the REEs have to be extracted and the individual REEs separated from one another. Because they are chemically very similar, this separation process requires intensive chemical processes. Specific processes have to be fine-tuned for each deposit, because of the unique mineral "signature" of each deposit.

RARE-EARTH DEMAND DRIVERS

7.  Before addressing specific concerns relating to the supply of REEs, it is important to review the key drivers for the growing demand for REE alloys and compounds.

8.  Certain REEs might be used directly in compound form, while others may be incorporated into engineered components via alloying with other elements. Such components are then used within sub-assemblies, which are in turn used to create engineered devices and systems. In simplistic terms, any engineered system can be seem as the sum total of a set of sub-assemblies, consisting of a set of components. The materials used in those components are the foundational basis for the entire engineered system.

9.  Table 1 shows the estimated 2010 global demand for REEs. These usages correspond to the production of components or component-level goods. 60% of demand comes from China, with 20% coming from Japan and Korea. Usage in the UK and all other countries with the exception of the USA totals 8%, a relatively small proportion of the global demand.

10.  The key applications are for use in permanent magnets (primarily Nd, dysprosium (Dy), praseodymium (Pr) and samarium (Sm)), catalysts (primarily lanthanum (La) and cerium (Ce)), metal alloys (primarily La for battery packs) and polishing (primarily Ce for glass and silicon wafer polishing).

11.  The steady increase in demand for REEs is directly correlated to overall GDP growth globally. There has also been increased demand, particularly in developed countries, for energy-efficient appliances and devices that use rare-earth-based components.

12.  Going forward, the demand for next-generation wind turbines and hybrid and plugin electric vehicles are the key growth drivers for the specific REEs required for those applications. Table 2 shows forecasted demand for 2015, with significant predicted increases in demand for REEs for use in permanent magnets and metal alloys in particular. Market share by region is very similar, though the overall tonnage is significantly increased to 185,000 t.

13.  In terms of specific demand by UK industry, very little REE raw material is presently used to produce components in the UK. It is in the use of semi-finished and finished goods such as permanent magnets and other components, and the devices and systems created from them, that companies in the UK generally interact with the rare-earths supply chain.

Q1:  Is there a global shortfall in the supply and availability of rare-earth metals?

14.  Until relatively recently, there have been few supply issues for REEs. In the longer term (2-3 years and beyond for LREEs and 4-5 years and beyond for HREE) there should be few problems in sourcing REEs. The issue comes in dealing with certain supply challenges in the interim periods—the next 0-3 years for LREEs and 0-5 years for HREEs.

15.  It is widely accepted that at present, over 97% of global rare-earth production originates in China. However, there are numerous rare-earth deposits located outside of China, many of which have active development projects underway. Over a dozen of these projects are at an advanced stage of development (see Table 3). There is thus no shortage of potential projects that will eventually diversify the global supply of REEs. The time to develop such projects can be considerable, however, and there is growing concern about the availability of materials in the short term, and certain specific REEs in particular.

16.  In recent years, China has imposed export quotas on rare-earth shipments out of China. Ostensibly these were put in place by the authorities to allow for the shut down of inefficient, polluting mines and to allow for environmental remediation.

17.  Up until the second half of 2010, there have been few real challenges associated with the physical supply of rare earths to the rest of the world from China. Figure 2 shows the export quota levels in recent years, along with official demand numbers from the rest of the world (ROW), as well projected actual demand (an estimated 15-30,000 tonnes per annum of REOs are said to be illegally smuggled out of China to the rest of the world in recent years, and so the actual ROW demand metrics in Figure 2 attempt to account for this). It can be seen that up until 2010, the export quotas from China were broadly in line with ROW demand. The dip in 2009 of demand reflects the global recession and its effects on demand for REEs.

18.  It should be noted that export quotas are allocated by the Chinese authorities to individual trading companies in China, some of which are foreign-owned. It should also be noted that the quotas to date have been monolithic—there has been no differentiation between specific REEs or REOs within those quotas. Furthermore, the export quotas do NOT apply to semi-finished or finished goods, such as permanent magnets or magnet alloys, produced in China. As present they apply only to the raw material forms of REEs and simple REE-based compounds.

19.  In July 2010, the authorities announced a significant reduction in export quotas for the latter half of the year—a maximum of approximately 8,000 t of REOs for export, bringing the total for 2010 to just over 30,000 t. This was a 40% reduction over the prior year and caused considerable consternation in the rare-earth industry.

20.  The result of this action were very significant price increases for the export of LREEs (in some cases by 1,000-1,500%). LREEs are historically lower-value materials than HREEs, and because of the quota limits, Chinese traders prefer to sell HREEs if they can, in order to maximise profits. The underlying base price for the LREEs actually remained largely unchanged; the traders imposed significant surcharges on top of those prices, resulting in the overall price increases. If the quota for 2011 is further reduced, then further price increases are likely.

21.  One other ongoing challenge of increasing importance is the fact that the ratios of individual REEs required to fulfill global demand for the various applications listed in Tables 1 & 2, generally do not occur in the same ratios naturally in the various rare-earth deposits available for extraction - either in China or elsewhere. This leads to an imbalance in the production of certain REEs compared to others.

22.  There is additional pressure on specific REEs, given the demand for them, and in particular for oxides of Nd, and Dy (for permanent magnets), as well as Eu and Tb (for phosphors). Some projections indicate that there demand for these REEs will outstrip supply, by 2015, even if some of the new projects come on-stream soon.

Q2:  How vulnerable is the UK to a potential decline or restriction in the supply of rare earths? What should the government be doing to safeguard against this and to ensure supplies are produced ethically?

23.  There is relatively little industry in the UK that is directly connected to the rare-earth supply chain at the raw-materials level. Most companies are connected further up the chain, so any vulnerabilities are indirect, though they certainly exist, and are of potential concern.

24.  One exception is a company called Less Common Metals (LCM), based in Birkenhead. LCM produces rare-earth-based alloys and compounds. Historically, LCM has taken raw materials produced in China and processed them into semi-finished goods. The company is owned by Great Western Minerals Group, a Canada-based company in the process of developing a formerly producing rare-earth mine in South Africa. The plan is for materials mined and extracted from South Africa, to be refined into metals elsewhere, before being processed into alloys at LCM.

25.  Despite the indirect nature of UK industry's interaction with the rare-earth supply chain, it is still potentially vulnerable to disruption on a couple of fronts.

26.  The first is on the geopolitical front. There was much coverage in the media recently about an alleged embargo that China placed on REE shipments to Japan, supposedly in retaliation for the arrest of a Chinese fishing vessel captain. Despite these assertions in the media, there was actually little evidence to suggest that the supply disruption to Japan was as a result of retaliatory actions on the part of the Chinese authorities. One only has to revisit Figure 2 to see that individual trading companies in China likely started running out of their allocated quotas months ago. Given the demand, and potential profits to be made, illegal smuggling also increased, and only a few such shipments needed to be intercepted for the authorities to decide to clamp down and to do more rigorous inspections of all such goods (leading to delays, and certain shipments being prohibited).

27.  Regardless of the reality of what happened between Japan and China, there is obviously concern that China could, for whatever reason, decide to unilaterally restrict rare-earth shipments to the UK and elsewhere. Note again, however, that it is likely that the cast majority of goods containing REEs, arrive into the UK in the form of components and sub-assemblies produced in China—not the raw materials themselves. Still, relying on the magnanimity of a single country for such exports is certainly a key potential issue.

28.  The second vulnerability results from the geographic "bottleneck" caused by the fact that the vast majority of LREEs produced in China, are done so in the Bayun Obo region, up in Inner Mongolia. It would require just one moderate earthquake in this region to potentially devastate the entire global supply chain for these materials. A similar catastrophe in the SE of the country would have similar effects on the supply of HREEs.

29.  Diversification of global supply therefore, makes sense, business-wise. Given the relatively small amount of raw material REE goods used by UK industry, however, it is difficult to see how the UK Government might mitigate against either of the above circumstances. The maintenance of a modest stockpile of raw materials, either unilaterally or in conjunction with European partners, might be one way to solve the issue, particularly to help safeguard the capabilities of companies such as LCM and others.

30.  In the long term, the UK government might try to encourage the return of companies and manufacturing entities to the UK, who can produce the components and sub-assemblies that contain REE alloys, in order to safeguard supplies of those parts of the supply chain. it might also consider, either unilaterally or together with European partners, following in the footsteps of Japan and JOGMEC, its government-industry partnership-based resource company that goes out around the world to find and to develop natural resources of strategic importance to Japan and its industrial base. Granted, Japan has a much larger user base when it comes to REEs than the UK and Europe, but such an approach is still worth considering.

Q3:  How desirable, easy and cost-effective is it to recover and recycle rare-earth metals from discarded products? How can this be encouraged? Where recycling currently takes place, what arrangements need to be in place to ensure it is done cost-effectively, safely and ethically?

31.  Given the significant resources required to extract and to produce REEs, it is absolutely desirable to try to recover these valuable materials from the waste streams of our society. Historically the over-dispersion of many of these metals into low concentrations made it questionable as to whether such recycling could be done cost-effectively, assuming there was a process available to do it.

32.  In the case of REEs, it is likely that the recovery of these materials could be made cost-effective, given the right approach. To date, however, there has been little work done to study the economic feasibility of candidate processes that have been studied academically.

33.  Once such process, developed at the University of Birmingham, involves the processing of previously used rare-earth permanent magnets, into a powder form of the underlying magnet alloy, which can then be re-used to make new magnets. The concept does not require the processing of the alloy back into the constituent elements, unlike related processes recently developed in Japan.

34.  The perennial challenge for such research teams is the ongoing funding of their research. In the interests of full disclosure the author recently co-founded a private US-based company which has as its sole mission, the funding of feasibility studies for promising recovery technologies for REEs and other rare metals, such as the Birmingham project. The UK Government might consider setting up special initiatives to help fund such feasibility studies, and work towards the goal of developing the logistics infrastructure required to get access to the rare metals in question, perhaps part of other ?nd-of-life· initiatives for consumer and other products.

Q4:  Are there substitutes for rare earths in technological products manufactured in the UK? How can these substitutes be more widely applied?

35.  As described above, REEs are present at the foundational materials level in the "structural hierarchy" of engineering products and systems. It is generally far easier to consider substitutions at the system, sub-assembly or component level, than at this materials level, because of the time that it takes to research new materials systems and microstructures. Because REEs are exploited for their unique optical, electronic and magnetic properties, substitutions are even more difficult in their case.

36.  That said, there have been significant efforts made, especially in Japan, to reduce the amount of scarce REEs and other strategic metals in components, while maintaining the original performance characteristics [3]. A good example of this is work being done to reduce the amount of the increasingly scarce HREE Dy in permanent magnets, by manipulating the structure of the magnet alloy at the microscopic level during processing, and "putting" the Dy only in certain places within the alloy where it is actually needed.

37.  It is important to note the potential unintended consequences of well-meant substitution efforts, such as reduced systemic efficiencies, or costs of production and so on. It is important not to "throw the baby out with the bath water" in the search for overcoming short-term supply difficulties.

Q5:  What opportunities are there to work internationally on the challenge of recovering, recycling and substituting rare-earth metals?

38.  At present there is relatively little work underway in this area internationally, outside of Japan. The US Department of Energy issued a report in December 2010 calling for the US to get actively involved in such activities [4]; there has been legislation considered in the US Congress designed to encourage such activities, including international cooperation with the European Union and entities within it.

39.  It is the author's experience that there is tremendous enthusiasm in both the private and public sectors in numerous countries, particularly in Europe, but also in North America, Japan and Korea, to see such initiatives succeed. Perhaps by combining such activities under a common framework with related activities, momentum could be achieved. There are certainly European Union initiatives underway to encourage collaboration internationally, on the activities suggested by this question.

40.  There are precedents for such frameworks, such as the Concerted European Action on Magnetics, initiated in the mid 1980s to incubate fundamental research into rare-earth-based permanent magnets [5]. Perhaps the UK could take the lead in establishing a similar type of framework, involving not just European but also North American, Australian and Asian partners (including institutions in China as well as Japan and South Korea).

DECLARATION OF INTERESTS

41.  Except for the recycling-related company mentioned above, the author owns no shares or stock options in any of the companies noted above, Nor in any junior mining or exploration company operating in the rare-earths sector.

Gareth P Hatch
BEng (Hons) PhD CEng FIMMM FIET SMIEEE CSci CPhys MinstP
Founding principal
Technology Metals Research, LLC

21 December 2010

REFERENCES

1.  House of Commons Science and Technology Select Committee, Committee announce new inquiry into strategically important metals, UK Parliament, Nov 11, 2010, last accessed Dec 17, 2010.

2.  N G Connelly, T Damhus, R M Hartshorn & A T Hutton, "Nomenclature of Inorganic Chemistry", IUPAC - RSC Publishing, Cambridge, 2005.

3.  G P Hatch, Tackling The Rare Metals Shortage: Can We Learn From The Japanese?, Technology Metals Research, Nov 5, 2009, last accessed Dec 17, 2010.

4.  D Bauer, D Diamond, J Li, D Sandalow, P Telleen & B Wanner, U.S. Department of Energy Critical Materials Strategy, U.S . Department of Energy, December 2010, last accessed 17 Dec, 2010.

5.  G P Hatch, The Concerted European Action On Magnets: A Model For Facing The Rare Earths Challenge?, Technology Metals Research, Feb 10, 2010, last accessed 30 Oct, 2010.

Table 1

ESTIMATED GLOBAL RARE-EARTH DEMAND IN 2010 (TONNES OF REO ± 15%)
Application ChinaJapan &
NE Asia
USAOthers TotalMarket
Share
Permanent Magnets21,000 3,5005001,000 26,00021%
Catalysts9,0003,000 9,0003,50024,500 20%
Metal Alloys15,5004,500 1,0001,00022,000 18%
Polishing10,5006,000 1,0001,50019,000 15%
Glass7,0001,500 1,0001,50011,000 9%
Phosphors5,5002,000 5005008,500 7%
Ceramics2,5002,500 1,5005007,000 6%
Other4,0002,000 5005007,000 6%
Total75,000 25,00015,000 10,000125,000 100%
Market Share60% 20%12% 8%100%

(numbers may not add to 100% due to rounding) Source: Dudley Kingsnorth / IMCOA

Table 2

ESTIMATED GLOBAL RARE-EARTH DEMAND IN 2015 (TONNES OF REO ± 15%)
ApplicationChina Japan &
NE Asia
USA OthersTotal Market
Share
Permanent Magnets37,000 6,0003,0002,000 48,00026%
Catalysts25,0007,000 2,0001,00035,000 19%
Metal Alloys12,50010,000 4,0004,00030,500 16%
Polishing12,5003,000 10,0003,00028,500 15%
Glass8,0003,000 1,0001,00013,000 7%
Phosphors7,0002,000 1,0001,00011,000 6%
Ceramics3,0003,000 2,0001,5009,500 5%
Other6,0002,500 5005009,500 5%
Total111,000 36,50023,500 14,000185,000 100%
Market Share60% 20%13% 8%100%

(numbers may not add to 100% due to rounding) Source: Dudley Kingsnorth / IMCOA

Table 3

CONSTITUENT PROJECTS OF THE TMR ADVANCED RARE-EARTH PROJECTS INDEX (DEC 2010)
Rare-Earth Deposit
Location
Owner
Bear Lodge
Wyoming, USA
Rare Eelement Resources
Dubbo
New South Wales, Australia
Alkane Resources
Hoidas Lake
Saskatchewan, Canada
Great Western Minerals Group
Kutessay II
Chui, Kyrgyzstan
Stans Energy
Kvanefjeld
Kujalleq, Greenland
Greenland Minerals & Energy
Mount Weld
Western Australia, Australia
Lynas Corporation
Mountain Pass
California, USA
Molycorp
Nechalacho / Thor Lake
Northwest Territories, Canada
Avalon Rare Metals
Nolan's Bore
Northern Territory, Australia
Arafura Resources
Norra Karr
Småland, Sweden
Tasman Metals
Steenkampskraal
Western Cape, South Africa
Great Western Minerals Group
Strange Lake
Quebec, Canada
Quest Rare Minerals
Zandkopsdrift
Northern Cape, South Africa
Frontier Rare Earths
Zeus
Quebec, Canada
Matamec Explorations





 
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© Parliamentary copyright 2011
Prepared 17 May 2011