U.S. rare earth metals mine reopens to combat Chinese monopoly

chinese rare earth monopoly

A rare earth metals mine in California is reopening as a Chinese monopoly controls 97 percent of the world's supply. Image: CC Michael Diggles/Wikimedia Commons

A major rare earth metals mine in the U.S. will resume operations in 2011. Molycorp closed the California rare earth metals mine in 2004 because it couldn’t compete with Chinese suppliers. But now China is restricting exports and the cost of strategic metals are soaring.

The Molycorp Mountain Pass mine

A dormant mine in Mountain Pass, Calif., owned by Molycorp used to be the richest source of rare earth elements in the world. Molycorp’s Mountain Pass mine closed over environmental concerns and overwhelming competition from China. However, since the Mountain Pass mine closed China has built a monopoly in rare earth metals that threatens the economy and national security of the U.S. Now Molycorp has secured permits and financing to restart production. In 2011, the company will produce about 3,000 tons of rare earth metals processed from ore stockpiled before the mine was closed. In 2012, it projects production at 20,000 tons.

China’s rare earths monopoly

Global demand for rare earth metals was 125,000 tons in 2010. China controls 97 percent of the world’s rare earth metals production. Rare earth metals are used in wind turbines, electric car batteries, electronic gadgets and military technology. In 2010, China appeared to be using its rare earths monopoly for geopolitical leverage. High tech manufacturing in the U.S., Japan and Europe was disrupted when it cut exports of rare earth metals by more than 70 percent. China also reduced taxes on rare earth metals for domestic manufacturers. Prices for rare earth metals rose 40 percent. Clean-energy technology companies are moving operations to China to save costs.

Jump-starting a clean energy economy

Sumitomo Corp of Japan invested $130 million in Molycorp to guarantee a supply of rare earth metals for seven years. Molycorp has plans to increase production to 40,000 tons within 18 months. There are currently no companies in the U.S. with the expertise to produce emerging technologies — such as the neodymium magnets used in wind turbines — based on rare earth metals in a clean energy economy. But Molycorp has entered a partnership with Hitachi to use bastnasite ore from the Mountain Pass mine to produce neodymium magnets in the U.S. Currently only 10 companies located in Germany, Japan and China are licensed to make neodymium magnets.


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