Written evidence submitted by Gareth P
Hatch (SIM 18)|
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.
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
RARE-EARTH ELEMENTS: SUPPLY AND DEMAND CHALLENGES
FOR UK INDUSTRY
1. As recently noted by the House of Commons
Science and Technology Select Committee , 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.
4. The International Union of Pure and Applied
Chemistry (IUPAC) defines the rare earths as a collection of 17
elements of the periodic table . 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.
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
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
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 periodsthe 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
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 monolithicthere 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 yeara 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 Chinanot 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
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
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 . 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
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 ; 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 . 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).
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
Technology Metals Research, LLC
21 December 2010
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Feb 10, 2010, last accessed 30 Oct, 2010.
ESTIMATED GLOBAL RARE-EARTH DEMAND IN 2010
(TONNES OF REO ± 15%)
(numbers may not add to 100% due to rounding) Source: Dudley
Kingsnorth / IMCOA
ESTIMATED GLOBAL RARE-EARTH DEMAND IN 2015 (TONNES OF
REO ± 15%)
(numbers may not add to 100% due to rounding) Source: Dudley
Kingsnorth / IMCOA
CONSTITUENT PROJECTS OF THE TMR ADVANCED RARE-EARTH PROJECTS
INDEX (DEC 2010)
|Bear Lodge||Wyoming, USA
||Rare Eelement Resources
|Dubbo||New South Wales, Australia
|Hoidas Lake||Saskatchewan, Canada
||Great Western Minerals Group
|Kutessay II||Chui, Kyrgyzstan
||Greenland Minerals & Energy
|Mount Weld||Western Australia, Australia
|Mountain Pass||California, USA
|Nechalacho / Thor Lake
||Northwest Territories, Canada
||Avalon Rare Metals|
|Nolan's Bore||Northern Territory, Australia
|Norra Karr||Småland, Sweden
|Steenkampskraal||Western Cape, South Africa
||Great Western Minerals Group
|Strange Lake||Quebec, Canada
||Quest Rare Minerals|
|Zandkopsdrift||Northern Cape, South Africa
||Frontier Rare Earths