Starting in early 2010, a small Canadian company called Elissa Resources spent more than $1.66 million exploring a hilly scrap of desert dotted with cacti, creosote bushes, and Joshua trees, at the southern tip of Nevada. The company was looking for rare earths: obscure metals with magnetic and luminescent properties which are used in such products as high-efficiency light bulbs, smartphones, and TV screens. The metals are also of enormous value to the defense and renewable-energy industries. To find them, Elissa Resources employees mapped the landscape and used special devices to figure out where radiation was unusually high. The firm contracted an aircraft to measure the land’s magnetism, surveyed the area from a helicopter, and drilled twenty-one holes to figure out what was down below. But, in 2013, Elissa Resources halted major work at the site. A slump in the rare-earths market has made it hard to attract the investment needed to continue the investigations.
Most of the world’s rare earths are mined in China. In recent years, amid fears that China’s control of the market could jeopardize Western strategic interests, firms such as Elissa pursued deposits elsewhere—in the United States, Kyrgyzstan, Namibia, Vietnam, Greenland, Australia, and other countries. A boom was on. “A geologist would pick up a rock, lick it, and say, ‘Oh, I’ve got rare earths,’ and suddenly you’ve got a rare-earths company,” Gareth Hatch, a co-founder of the market-intelligence firm Technology Metals Research, said. The industry acquired an air of glamour, thanks to the futuristic uses of the metals, and a moniker suggestive of preciousness.
In fact, the rare earths—there are seventeen, and they have baroque names like dysprosium and gadolinium—are not all that rare. Most are more common in the earth’s crust than gold or silver, and they look like ordinary metals. But unlike gold and silver, they are not readily found in minable concentrations; their name derives from the difficulty of separating them out from one another. Nearly all the rare earths had been discovered by the end of the nineteenth century, but their uses were few. A shift began in 1949, when uranium prospectors carrying a Geiger counter hit upon an unusually radioactive zone in the desert, about sixty miles from Las Vegas. They found thorium, a radioactive metal often contained in rare-earth deposits. In 1950 and 1951, a firm called the Molybdenum Corporation of America (later renamed Molycorp) bought the rights in the area and soon opened a mine called Mountain Pass. In the coming decades, Mountain Pass would provide a significant portion of the rare earths utilized around the world.
With advances in technology, applications for rare earths proliferated. In the sixties, electronics manufacturers discovered that europium and yttrium could produce the red hue in TV sets. The oil industry realized that rare earths could help refine petroleum. Today, magnets that combine neodymium with iron and boron, making them exceptionally strong, are found in wind turbines, electric motors, and headphones. Dysprosium is used in military guidance-and-control systems, and lanthanum in Toyota Prius battery packs.
At Mountain Pass, however, environmental concerns eventually came to the fore. Uranium and thorium are present in nearly all rare-earth deposits, and any high concentrations of these that result from extraction and processing need to be carefully managed. (Nate Lavey, in a recent New Yorker video and infographic project called “The Most Radioactive Place in New York City,” explores the negative consequences of thorium waste.) Other substances that may be found in the deposits or used to process them—heavy metals, acids, sulphides, fluorides, and more—can leach into groundwater or be blown into the atmosphere as dust. Mountain Pass repeatedly leaked wastewater, which led to investigations from state and local regulators and scrutiny from environmentalists (including a group calling itself PARD, or People Against Radioactive Dumping); in 1998, the local water board fined Molycorp more than four hundred thousand dollars. That year, the company stopped its rare-earth separating operations at Mountain Pass to avoid more leaks. Molycorp ceased all mining in 2002, when it took the company longer than anticipated to obtain a new permit to store mining waste on site. By the time the permit was renewed, in 2004, prices for rare earths were too low to justify more digging. Private-equity investors bought Mountain Pass in 2008, with plans to reopen the mine and incorporate technology to recycle effluent; they kept the company name of Molycorp, since it was well known.
The rare-earths industry had changed a great deal while Molycorp was grappling with the problems at Mountain Pass. As the market for the metals grew, it had attracted miners abroad, especially in China. In 1990, China controlled nearly thirty per cent of the world market; by 2008, that figure had grown to more than ninety per cent. (Its mining and processing activities had profound ecological impacts, including the creation of thorium dust that was linked to a spike in lung-cancer mortality rates.)
But, for several years, the Chinese had gradually reduced the quantity of rare earths allocated for export, according to a report by the U.S. Geological Survey. Then, in July of 2010, China announced that it would cut its export quota dramatically, by thirty-seven per cent from the previous year. The U.S.G.S. said that the reduction was meant to help China meet its growing domestic demand. Critics said that the goal may also have been to force foreign companies to bring their manufacturing facilities to China, according to a Congressional Research Service paper. Two months later, the Times and others said that China had cut off rare-earth supplies to Japan over a maritime dispute. (The Chinese government disputed this.) Washington began to feel vulnerable: a Department of Energy report said that the supply of particular rare earths needed for clean-energy technology, such as electric vehicles, was at severe risk of disruption.
Firms tried to insure themselves against a possible shortage by stockpiling the metals; this, along with the reduction in the Chinese export quota, led to dizzying price increases. The value of one type of lanthanum oxide, for instance, jumped from around fifty-five hundred dollars per metric ton, in early 2010, to around a hundred and seventy thousand dollars some eighteen months later, according to Metal-Pages, a Web site that tracks the industry. Nearly two hundred new mining projects were developed between early 2010 and mid-2011, as companies made announcements about deposits around the world. A graduate student at the Arkansas Center for Space and Planetary Sciences speculated online about whether it was worth mining the moon for rare earths. (His conclusion: not really.) In the United States, the new owners of Mountain Pass began raising money to build a new processing plant.
It soon became clear, however, that China was not halting shipments summarily, and that metals were still available. Demand fell as companies became unable to afford them, found substitutes, or lived off their stockpiles. Prices for lanthanum and other rare earths dropped back toward their pre-boom levels. In many cases, it no longer made commercial sense to pursue mining projects. Gareth Hatch, of Technology Metals Research, estimates that, of the four hundred and forty prospective sites on a list he has kept of companies that were investigating and developing deposits over the years, fewer than a hundred are still active.
Christopher Ecclestone, an analyst at the research firm Hallgarten & Company, wrote in a report that the bust was an “apocalyptic event.” It turns out that although rare earths are crucial, they are used in comparatively minuscule amounts. If the supply isn’t being artificially restricted, there should be enough to go around. According to the U.S. Geological Survey, the global production of copper was about eighteen million metric tons in 2013. The global production of rare earths, in contrast—or, technically, of rare-earth oxides, the most common finished form—was around a hundred thousand metric tons.
“Even if China were to stop producing every ton of rare earth tomorrow, to meet world demand for the next ten or twenty years you wouldn’t need more than, say, ten projects,” Hatch said. “And China isn’t going to stop any time soon, so my perspective is that maybe five or six of these projects will be necessary.”
Meanwhile, other developments may make rare-earth mines an uncertain investment. In March, the World Trade Organization found that China had violated trade rules by limiting its exports; China is appealing the ruling. In order to cut U.S. reliance on the metals—and on China—a new Department of Energy initiative, the Critical Materials Institute, is studying ways to replace and recycle them.
Molycorp is struggling to ramp up production at Mountain Pass; the mine produced just over a thousand metric tons of rare earths in the first quarter of 2014, a yield that coincided with disappointing financial results and a plummeting stock price. Also, in April, the Environmental Protection Agency fined the company more than twenty-seven thousand dollars, because inspections in 2012 discovered what the agency described as a leak or spill of a substance that contained lead. (Molycorp said that it has ceased the chemical process that led to the problem.)
For now, China remains the biggest rare-earths miner by far. But with prices for the metals having stabilized, a smaller cadre of mining companies are working to exploit rare-earth deposits in places such as Alaska and Wyoming. While the need for rare earths is predicted to grow, the question is whether it will justify much of an increase in mines. At Elissa Resources, the firm that has stopped its exploration in southern Nevada, Paul McKenzie, the C.E.O., said, “It would be easier to raise money and attract money for gold and other commodities right now than for rare earths.” Luckily for him, his company also owns the rights to mine gold deposits in Nevada and South Dakota.
Photograph by Jacob Kepler/Bloomberg/Getty.
Alastair Gee
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