The future for rare earths - is the ocean the limit?
Published by MAC on 2013-01-14
What's the future for the mining and use of rare earth elements (REEs)?
These are those materials, neither rare nor strictly speaking earthen, considered vital by many electronics manufacturers and purveyors of purportedly "green" power.
However, their extraction is accompanied by significant environmental pollution and health risks posed to mine workers, notably in China, the world's biggest single source of REEs. See: Rare-earth mining in China comes at a heavy cost for local villages
As foretold on MAC last year, the market price for REEs has been falling, and has caused a drop in share value for the largest US producer, Molycorp, which earlier pledged to become an alternative source to China. See: They're not rare and they're not earths - and the scenario is set to change
Now, a new taskforce, sponsored by the US Department of Energy, says it will try to find alternatives to REEs and also spur their recycling.
Not that this has deterred Japan, one of the world's most significant exporters of electronic goods. Some of its scientists have announced that - in just a week's time - they will start exploring for REE's on the ocean floor.
Perhaps they should reflect on the experience of a Japanese scientific experiment, undertaken around three decades ago.
Then, the Japanese government conducted a project to extract uranium from seawater itself.
Technically. the venture was successful, but economically it proved unfeasible, especially when the market price of uranium began to collapse.
Japan to scour the bottom of the Pacific for rare earth deposits
10 January 2013
Scientists from Japan plan to search the floor of the Pacific Ocean for rare earth deposits in bid to reduce the nation's dependence on China for the key industrial materials.
ABC News reports that researchers from the Japan Agency for Marine-Earth Science and Technology will launch a probe on January 21 which will explore the seabed of waters adjacent to Minamitorishima Island, around 2,000 kilometers southeast of Tokyo.
The new study continues the work of an earlier survey conducted by Professor Yashuiro Kato of Tokyo University, who took samples of mud from the area which indicate that there could be around 6.8 million tonnes of rare earth minerals on the seabed.
Japan is eager to obtain an ample and reliable source of rare earth minerals at present, due to the monopoly on supply enjoyed by China and the flaring of tensions between the two nations in the wake of territorial disputes over the Diaoyu/Senkaku Islands in the East China Sea.
While your shares were tanking, Molycorp was funding research to eliminate need for rare earths
10 January 2013
Shares of Molycorp (NYSE:MCP) plunged more than 22% to $8.33 in heavy volumes on Thursday after the rare earth miner served up more bad news to already shell-shocked investors.
The Colorado-based company said 2013 revenue will be lower than previously forecast as rare earth oxide prices continue to spiral downwards.
That would not have surprised anyone following the rare earth industry.
More damaging is the announcement by Molycorp that it is "evaluating its capital needs" and that phase two of production ramp-up at its California mine is on hold until "market demand, product pricing, capital availability, and financial returns justify" it.
Translation: Don't hold your breath for the long-promised output of 40,000 tonnes rare earth equivalent per year.
And don't be surprised if Molycorp comes back to the market looking for more funds to complete the $1.25 billion phase I - a 20,000 tonne run rate - which is already six months behind schedule.
What could not have helped sentiment in the industry either is the announcement just yesterday by the US Dept of Energy and private partners of $120 million to set up the Critical Materials Institute.
A primary mission for the new research institute will be to find alternatives and increase the recycling of rare earths used in green technologies such as wind turbines.
The irony? Molycorp is a sponsor of the program.
Perhaps the miner - and hopefully, eventually shareholders - could still benefit from the research: The institute will also look at ways to make "extraction more commercially viable".
Still, that's cold comfort for punters who picked up MCP for $35.79 in April.