The economic war between US and China has but boosted and strengthened their respective local industries in some way especially companies which have been in the shadows of major global powerhouses due to readily available resources and markets. China is the world’s largest producer and processor of Rare Earth Metals (REM) accounting for about 80% supply to the U.S supply of the 17 specific minerals used to build weapons, consumer electronics and a range of other goods and there are no known substitutes.
In June, China more than doubled tariffs on U.S. rare earths imports for refining to 25 percent and recently added it would add an additional 10 percent on top of that tariff rate starting next month. Just the prospect of China starving needy factories of essential materials has sent rare-earth prices soaring over the past month, with dysprosium oxide, used in lasers and nuclear-reactor control rods, shooting up by a third.
The sole US based producer, MP Materials has responded by embarking on an aggressive strategy to building an American refining capability. Having taken over Mountain Pass Mine site in 2017, the Michael Rosenthal led MP Material is targeting early next year to start refining the metals.
MP Materials owns and operates Mountain Pass, the only Rare Earth mining and processing site in North America. Rare Earths power the modern economy and are essential components in a wide range of industrial, clean energy and information technology applications. MP Materials’ primary outputs will include Rare Earths concentrate, Neodymium and Praseodymium (NdPr) oxide and Lanthanum oxide.
They are essential components in a wide range of industrial, clean energy and information technology applications. Mountain Pass’ bastnaesite ore is one of the world’s highest quality Rare Earth deposits. The mine started production in 1952, and, from the 1960s through the mid-1980s, it was the dominant source of Rare Earth minerals in the world. More recently, Chinese Rare Earth production has grown to account for 85% of the global supply, and Rare Earths mining and processing stopped in the United States. Affiliates of two U.S. investment fund advisors, JHL Capital Group LLC and QVT Financial LP, acquired Mountain Pass in July of 2017 with the goal of reviving America’s Rare Earth industry. Leshan Shenghe Rare Earth Co. Ltd., a Rare Earth company in China, holds a non-voting minority interest in the company.
Although rare earths are critical for a cleaner and more sustainable future, extracting and processing them has historically been detrimental to the environment. Most of the rare earth industry today exists in China or Southeast Asia where environmental standards are more lenient than in the United States although recently some of them have been raising environmental concerns a typical example being the Lynas Corporation on its Malaysian facilities.
Since 2010, more than $1.5 billion was invested in new mining and processing facilities at Mountain Pass. These state-of-the-art, environmentally friendly facilities were completed with the oversight of state, local, and federal agencies to ensure compliance with the most stringent environmental standards in the world. One of the key innovations at Mountain Pass is the elimination of wet tailings ponds found in most mining operations. MP Materials has a tailings processing plant that generates a dry cake, which is stored at a lined impound to protect groundwater. The water reclaimed from the tailings is recycled back into the production process, greatly reducing the need to draw fresh water supplies from the surrounding aquifers.
Soon, MP Materials plans to operate an onsite combined heat and power (CHP) facility that utilizes clean natural gas to satisfy most of Mountain Pass’ energy needs. We will benefit from CHP’s higher energy efficiency and greater reliability when compared to other power sources. To resume refining in California, MP Materials is spending $200 million to restart mothballed equipment at the mine and build a large roasting oven.
“MP Materials also plans to re-open the Mountain Pass chlor-alkali facility, which was built by Molycorp”, James Litinsky, the Chairman for MP Materials
At the facility, production of hydrochloric acid and caustic soda will be done using recycled and will be used in the rare earths separation process, saving the facility the added cost of buying the chemicals on the open market. Once the refining equipment does switch online, the goal is to use that material on site to make more than 5,000 tonnes per year of neodymium and praseodymium (NdPr), two of the 17 types of rare earths that are used to make magnets.
The recent tarrif pronouncement means that MP Materials will need to find more customers outside of China, pitting it against Australia’s Lynas Corp (LYC.AX), the largest rare earths miner and processor outside of China. The world of rare earth metals watches with enthusiasm and the events unfold, but thing is certain, the field of rare earth metals will never be the same again.