MOLTEN SALT REACTORS AND RARE EARTH ELEMENTS
When examining the complexities of REE’s (Rare Earth Element) geopolitical ramifications, one can only arrive at these irrefutable conclusions:
REEs are essential to developing and manufacturing high tech electronic and aerospace products. A $4 trillion world-wide consumer electronics industry depends upon $2 billion worth of REEs that are almost exclusively sourced from China.
American industry does not produce any substantial amount of consumer electronic products using REEs because of the environmental regulations that make domestic REE mining, processing, and purification, cost prohibitive.
American industry is essentially totally dependent upon foreign sources of REE’s, as is America’s military and its aerospace industry.
Rare-earth elements are 15 elements with the atomic numbers 57 to 71 on the periodic table, as well as scandium and yttrium. The metals themselves amount to a meager $3 billion global industry, including aerospace and the renewable energy industry, but they are essential in the production of over $5 trillion worth of consumer products, aerospace and military products, and renewable energy products.Due to their scarcity and huge value, rare earths lie at the heart of a complex geopolitical fight. It is a contest pitting China against the United States and just about every other powerful nation on earth, in a new Great Game. A game of diplomacy, business brinksmanship, and a fight to dominate the market for these scarce elements. At the moment, China is winning. Over the past few decades, China has bought up nearly the entire supply chain of rare-earth metals and the products in which they are incorporated, leaving other nations struggling to catch up.
ENVIRONMENTAL REGULATIONS ENDED THE REE RACE
And we in the United States have lost this round. China’s export restrictions and supply-chain acquisition have coerced U.S.-based operations to move their production to China in order to secure a reliable source of rare earths needed for modern manufacturing. It has been a process that has played out over the last 25 years or so. In 1992, the then-leader of the Communist Party of China, Deng Xiaoping, said: “The Middle East has oil and China has rare earth.” The country has since lived up to that promise.
Thirty years ago, U.S. production of rare earths was nearly three times that of China, just under 30,000 tons. However, U.S. production shut down largely due to U.S. regulations mandating the handling and treatment of a by-product of a REE mining: the element thorium.
The most notable single example of China taking on the U.S. was in 1995, when Chinese companies acquired Magnequench of Columbus, Ohio, a GM subsidiary built in conjunction with the Department of Defense that developed high-tech magnets using the rare earth neodymium. By 2002, Magnequench’s facilities had been duplicated in China, and all U.S. operations were shut down.
The National Institute of Advanced Studies released an independent report describing Chinese dominance of the rare-earths industry. The report suggested that China’s upper hand, including the acquisition of Magnequench, was the “result of a well-thought out carefully crafted dynamic long term strategy.”
China’s rare-earth production is almost equal to global rare earth consumption, around 135,000 tons. That gives China power, especially as the world economy moves ever more high tech. If advanced countries such as the U.S. and some European countries want to build an economy which moves towards Renewable Energy systems, then China, being an almost sole supplier of (rare earths), could hold these countries to ransom, much as OPEC has manipulated oil markets to their member countries’ benefit, and to our detriment.
A MONOPOLY CHINA RELISHES
China’s leverage also exists when it comes to military technology based on rare earths, which are used in radar systems, missiles, and satellites, to name a few high tech products. That gives China powerful influence in global diplomacy. In September, 2010, reports emerged alleging that China had suspended exports of rare earths to Japan over an incident surrounding disputed islands in the South China Sea. Chinese officials continue to deny this claim, but rare-earth consumers nonetheless have been scrambling to find an alternative supply ever since.
Does the alternative to Chinese REE production dominance lie in American resources, scattered across the U.S., such as Molycorp’s California Mountain Pass mine, Alaska’s Bokan Mountain, Missouri’s Pea Ridge Mine, or the many phosphate mines that also produce REEs as byproducts?
In 2010 Colorado-based Molycorp reopened the Mountain Pass Mine, which had been the last operating rare-earths mine in the United States until it was shut down in 2002 after an environmental accident. The reopening was hailed by some as a step toward American rare-earth independence, and Molycorp began to plan and build infrastructure to process the rare earths it was pulling from the ground.
Molycorp has since been described as a solution to the United States’ “rare-earth problem,” including in recent reports from both the Congressional Research Service and the Pentagon.
But experts say the reports overlook crucial points of the supply chain, and that the U.S. — including Molycorp — is still dependent on Chinese rare-earth infrastructure in vital areas.
Molycorp is indeed a domestic producer of rare earths. But when it comes to which metals are coming out of the mine, the mineral makeup is 98 percent light rare earths, mostly cerium and lanthanum. Those two elements have a low market value; prices for them fell more than 80 percent from 2011 to 2012 alone, suggesting an oversupply.
What Molycorp’s Mountain Pass doesn’t have is any of the heavy and most sought after REEs. Mountain Pass actually has fewer heavy rare earths than normal. The country’s only operating rare-earth mine cannot provide a viable alternative to China’s monopoly, given what’s coming out of the ground there.
Experts agree with this assessment. But Molycorp says that any step toward production of domestic heavy rare earths, even if small in quantity, could make an impact in the global market and is a step toward rare-earth independence — a quest that mirrors the far better-known desire for energy independence from Middle Eastern oil supplies. “What’s often overlooked in the discussion of heavy rare earths is that the global consumption of those heavy rare earths is very small and it doesn’t take a lot of production of some of these rare earths to meet global market demand,” claims Molycorp.
But it is not just mining the rare earths that matters. What you can — or cannot — do with them once they are aboveground matters also. A domestic supply of raw materials means nothing without the manufacturing capacity to turn them into high-value products. Some in the industry say China still has the upper hand in manufacturing.
Even if American mines like Molycorp’s Mountain Pass, Alaska’s Bokan Mountain and Missouri’s Pea Ridge started pumping out mass quantities of heavy rare earths, there would still be no U.S. infrastructure to manufacture them into the modern technological products that make them so important.
An example is the neodymium magnet, also known as “neo magnet.” When companies like Magnequench moved from Columbus, Ohio to China, they took that piece of the supply chain with them. Neo magnets are used in dozens of U.S. weapon systems, including the Patriot missile, the F-22 Raptor, and the joint air-to-ground missile. Those magnets are still coming from China or are dependent on parts of the supply chain in which that country has a monopoly.
“We don’t really have the ability to not depend on China,” said Ed Richardson of the U.S. Magnet Manufacturers Association. “We don’t have all the technology operational here in the U.S. to be able to go from a mine to a magnet. That’s a fundamental problem.”
Molycorp also sends its heavy rare earths to its Chinese facilities for this processing and value-adding, including to the Magnequench facility it now owns via its acquisition of the company Neo Material Technologies. China held a 62 percent stake in Neo Material Technologies at the time of Molycorp’s acquisition in 2012. Despite the reacquisition of Magnequench facilities by a U.S.-based company, the National Institute of Advanced Studies report called the arrangement “even more advantageous to China.”
“The U.S. is completely dependent on China for rare-earth-magnet materials, and now the export of U.S. rare-earth assets into China will only intensify this dependence, at least for some more years,” the report said.
Not only is our country’s only functioning rare-earth mine dependent on Chinese infrastructure, but so is the only facility manufacturing neo magnets in the U.S. That facility, a plant in North Carolina owned by Hitachi, can only partially make the magnets. It still relies on Chinese facilities for other parts of the process.
Richardson summed up the current struggle for the world’s rare earths as a situation that many believe looks unlikely to change in the immediate future. “The world is really dependent on China for this,” he said.
A NATIONAL SECURITY RISK
China controls the rare earth elements that US defense relies on for its high-tech equipment (59 vital military programs in all), and now the Pentagon is claiming, in direct opposition to industry experts, that the balance is shifting.
There is always a risk that China, which monopolizes extraction of rare earth elements and the manufacture of its products, could disrupt or divert supplies earmarked for use in US military applications, but a new report by the Pentagon says that the market is changing and the risk is lessening.
“Global market forces are leading to positive changes in rare earth supply chains, and a sufficient supply of most of these materials likely will be available to the defense industrial base,” said the Pentagon report. “Prices for most rare earth oxides and metals have declined approximately 60 percent from their peaks in the summer of 2011.”
Rare earth elements are used to manufacture not only a wide array of today’s consumer electronics, but defense equipment as well, from cruise missiles to missile guidance systems, smart bombs, and night-vision technology. There are military applications for seven of the heavy rare earths: dysprosium, erbium, europium, gadolinium, neodymium, praseodymium and yttrium.
China controlled 95% or more of the rare earths market in 2011, and its government was limiting exports and placing restrictive taxes on their sale, causing prices to soar and creating panic that US demand for commercial and military applications would not be met.
The new Pentagon report claims supplies from outside China have now increased, and this trend should continue with US Defense Department efforts to come up with a better domestic production strategy for rare earth metals — one that would be “economic and environmentally superior”. Some say it’s a long shot, though, because there is no planned investment that could make significant domestic production a reality. It is important to note that lack of investment into REEs in the United States is largely due to environmental regulations.
“These conclusions are wishful thinking, not a defense strategy,” says Jeff Green, president of J.A. Green & Co. in Washington, who represents miners and users of the elements.
HOW TO MAKE CLEAN ENERGY CLEAN!
Wind energy seems so clean — gentle breezes quietly spinning sleek blades, generating energy. What could be dirty about that? According to The Data Center Journal the answer is, “Plenty.”
The manufacture of wind turbines requires a rather large quantity of rare earth minerals. Mining and processing these rare earths generates a tremendous amount of “hazardous and radioactive byproducts,” the DCJ reports, which “can cause tremendous harm to both people and the environment.”
In fact, the environmental effects of rare earth mining can be literally sickening. In the Mongolian town of Baotou, the epicenter of Chinese rare earths production, the mining has literally killed off the local farming, The Guardian reports: “The soil and groundwater are saturated with toxic substances. Five years ago (local farmer) Li had to get rid of his sick pigs, the last survivors of a collection of cows, horses, chickens, and goats, killed off by the toxins.”
The environmental damage that China’s rare earth production produces might be one of the major reasons the U.S. seems content to let China do most of it, and then buy the finished product from them. The irony is hard to miss — proponents of wind power demand stringent environmental standards on our domestic coal and nuclear industry, but seem strangely unconcerned at the appalling environmental conditions allowed to exist in China to supply the rare earths their industry requires.
It doesn’t need to be this way. New technology using super critical carbon dioxide as an infinitely moderating solvent can selectively extract and purify REEs. Because the process uses no water, and super critical carbon dioxide (similar to a liquid solvent) turns into a gas at ambient pressure, there are no toxic water-bearing tailings to contend with, and the carbon dioxide can be recycled. Using this clean extraction technology, both the nuclear fuels uranium and thorium, which are always found with REEs, can be separated and used for fuel in MSRs (Molten Salt Reactors).
Extraction of rare earths accounts for a great deal of the overall carbon footprint of green energy, energy storage, and other clean technologies.
An electric car can use nearly 10 times the amount of rare earth metals used in a conventional car, which uses a little more than one pound of rare earth materials. Research conducted at MIT noted, “A single large wind turbine (rated at about 3.5 MW) typically contains 600 kg, or about 1,300 lbs, of rare earth metals.”
The grim trade-off between obtaining power from wind and the methods required to make that happen leave those within the industry uncomfortable. “Executives in the $1.3 Billion rare-earths mining industry say that less environmentally damaging mining is needed, given the importance of their product for green energy technologies,” The New York Times wrote in 2009, adding that Nicholas Curtis, the executive chairman of the Lynas Corporation of Australia, in a speech to an industry gathering in Hong Kong, said, “This industry wants to save the world. We can’t do it and leave a product that is glowing in the dark somewhere else, killing people.”
KILLING THEM SOFTLY
Looking down on the city of Baotou, Inner Mongolia, you can see a large, grey, oval “lake” several miles to the west of the city proper, and about 6 miles to the north of the Yellow River. At 4.25 square miles in size, Baotou Steel Group’s (BSG) tailings pond holds 180 million tonnes of fine waste powder left over from ore processing. It is one of the biggest tailings ponds in the country.
Tailings ponds are dumping sites for waste from the processing of ore, and other industrial refuse. This one also contains more than 9.3 million tonnes of valuable rare earths and metals, mixed in with the waste. Industry valuations of those resources range from 1 trillion yuan (US$160 billion) to as high as 80 trillion yuan (US$12.8 trillion).
But the pond has generated a lot of negative coverage. The media have reported that pollution from the pond has affected at least seven villages and more than 9,000 acres of farmland which is either unusable or less fertile as a result. More than 3,000 villagers have spent the last decade trying to find someone to act on their complaints.
There are fears over radiation poisoning and the possible collapse of the dike holding back the pond. The pond is seen as a major environmental hazard for the city of Baotou and surroundings areas.
Valuing the resources held in the pond is hard: there are different types of rare earth, and the price of each fluctuates.
Agreement is easier when it comes to the pollution problem. It is generally accepted that the tailings pond should not have been located here – that this was a mistake made during a troubled period in China’s history.
When BSG was founded in the 1950s, there was no source of water near its mines. Ore processing and smelting plants were instead built several hundred kilometres away, near the Yellow River and on the outskirts of Baotou. BSG’s factories – and the tailings pond – are still here.
According to official figures, the company’s ore-processing plants dump 7 to 8 million tonnes of waste into the pond annually. The site is also used to store the 2.1 million cubic metres of acidic waste-water which BSG’s subsidiary Huamei Rare Earths and the smelting plants produce each year.
It became apparent in the late 1970s that the pond was a source of pollution. Wang Jianying, a professor at Inner Mongolia University of Science and Technology, explains that the pond’s polluted water was seeping down to aquifers and contaminating nearby groundwater.
Farmland near the pond started to fail, with both crops and livestock affected. Today, large swaths of land have been abandoned, and water from the aquifer cannot be used for irrigation or drinking by either local people or their livestock. According to Wang, the pollution is moving towards the Yellow River at a speed of 20 to 30 meters per year.
And alongside the obvious damage to the soil, the Inner Mongolia and Baotou governments, and environmental scientists, are concerned about the risk of the dike that contains the pond collapsing.
In recent years, tailings dikes have failed in a number of locations around China. With this one lying so close to both Baotou and the Yellow River, a collapse here could be catastrophic. Also, this is an earthquake-prone region.
Experts say a shift of focus from processing iron ore to rare earths could help improve efficiency and lower pollution. But BSG is persisting with outdated ore-processing techniques designed to prioritize iron ore, rather than the more valuable rare earths.
A former BSG researcher, who asked not to be named, said the iron ore from the company’s mines contains a high proportion of heavy rare earths. Assuming an annual production rate of 10 million tonnes of steel and a rare earth content of 5% to 6%, some 500,000 to 600,000 tonnes of rare earths could be recovered annually. Current global demand for rare earths is estimated at only 136,000 tonnes.
Because even current techniques produce more than enough rare earths to meet market demand, BSG and the local government have no incentive to spend more money extracting rare earths from the tailings pond. BSG’s steel-manufacturing operation is huge and requires a constant supply of iron ore. If the company mined less itself, it would have to purchase expensive imported ore, resulting in losses.
WHY GIVE CHINA A SOLUTION TO THEIR REE POLLUTION?
Following calls from the nuclear science community for renewed investigation into thorium’s potential as a source of nuclear energy, a number of states, China foremost among them, have begun funding thorium research in earnest. Thorium’s theoretical prospects for providing relatively low-cost and considerably safer nuclear energy are bright indeed, and significantly, both the United States and China are believed to possess substantial quantities of this element. Although not a rare earth itself, thorium is often refined as a by-product of rare earths extraction following the mining of the mineral monazite. Given the friction between the U.S. and China relating to rare earths (culminating, for now at least, in litigation at the World Trade Organization), one might expect that thorium would be another arena in the ongoing competition between the world’s greatest power and its rising competitor.
In fact, something very different has happened: a remarkable degree of cooperation has arisen between the two nations, with the U.S. actively supporting Chinese research and development.
Beijing recently tasked the Chinese Academy of Sciences, a state entity, with developing a workable design for a thorium-powered nuclear power plant within the next ten years (an acceleration of a previous 25-year schedule), and researchers involved on the project have reported facing “war-like” pressure to meet this goal. The project, dubbed “the world’s largest national effort on thorium,” currently employs 430 scientists and engineers, has plans to expand to 750 by 2016, has a budget of $350 million, and is headed by Jiang Mianheng, the son of former Chinese President Jiang Zemin (perhaps underlining the political implications of the project). Although the Chinese effort is officially said to be aimed at curbing pollution through the use of a new, cleaner energy source, thorium “could be used to power Chinese navy surface warships, including a planned fleet of aircraft carriers,” and provide the reactor reliability and safety necessary to improve China’s nuclear submarine fleet.
A fleet of thorium reactors can potentially solve China’s environmental disaster at Batou by making it economical to process mining tailings that are filled with REEs.
For its part, the U.S. abandoned thorium research in the 1970s in favor of the LMFBR (Liquid Metal Fast Breeder Reactor). This was not because there was anything wrong with thorium based nuclear reactors, but in the 1970’s the American economy could not support both the thorium and the LMFBR programs. American efforts up to that point had actually been successful in creating the first liquid core powered reactor at Oak Ridge National Laboratory. The world’s newfound interest in thorium does not, at first glance, seem to have spurred Washington to dust off its previous research and retake its commanding lead to commercialize this burgeoning field of nuclear science. Attempts to push thorium onto the agenda at the federal level have fallen flat: an effort in 2009 by then Congressional Representative Joe Sestak (D-PA) to push the U.S. Department of Defense towards thorium research went nowhere, as did 2010 a bipartisan Senate bill to direct the U.S. Department of Energy to fund thorium research.
Washington’s reluctance to invest in thorium research and development has been attributed to satisfaction with the uranium-based status quo, but perhaps the federal government’s budgetary problems play a role: the sequester, for instance, reduced the budgets of agencies that fund research and development by anywhere from 5.1% to 7.3%. Whatever the reason for its domestic difficulties, American thorium research has found a surprising new home in China. Specifically, as part of an agreement with the U.S. Department of Energy to share thorium research, the Chinese Academy of Sciences has been given the plans to the reactor at Oak Ridge National Laboratory.
This level of collaboration is particularly surprising given the commodity involved and the nature of the enterprise. Although the protocol governing the agreement has provisions for sharing important breakthroughs with the international scientific community and prohibiting military or weapons-related research, information used for commercial purposes is excluded from any required sharing and is free of any restrictive conditions. And, frankly, it is highly doubtful that any mechanism for enforcing the prohibition on military research is realistic. Thus, China will have the opportunity to achieve a commercially dominant position in thorium development and investigate thorium’s potential to upgrade its military capabilities without the U.S. deriving a benefit from either, leading some commentators to wonder exactly what is in it for Washington.
While this agreement seems like a no-strings-attached gift to Beijing, what are the U.S.’s motives for participating in this venture? What might it expect to gain? There are possible answers, but they require some assumptions. First, we must suppose that American decision-makers have determined that thorium is not, as some have argued, a quick and easy path to American energy independence, and that it would not be cost-effective, at least in the short term, for American nuclear efforts to transition to thorium research. Given federal budget limitations, then, the benefits of using federal dollars to pursue thorium as an energy source appear to be limited at this time. We must also suppose that those same decision-makers may see significant long-term promise in thorium as a source of nuclear energy. A reasonable case could therefore be made that research in this potentially important but non-priority field should be shared with those who are willing to expend the resources to advance the field.
With these suppositions in place, rational (though speculative) motivations and possible benefits become clearer. Although the U.S. might have been expected to share its thorium research with privately-owned American corporations and perhaps allied states rather than with a strategic competitor, the significant scientific and engineering obstacles and the resulting high cost of developing thorium-powered reactors may require the sort of long-term commitment and resources that only another world power, like China, can provide. Since the U.S. is believed to possess one of the world’s largest concentrated deposits of thorium, it may want China to assume the short-term risk and expenditure of resources with the intention of cashing in on its large reserves when (or if) China’s research turns thorium into a commercially viable energy resource.
Concerns about China’s state-owned enterprises holding a significant head start once commercial viability is reached are perhaps assuaged by a belief in the dynamism of the American private sector to quickly catch up. Additionally, as noted above, China’s interest in thorium is, officially speaking, driven by environmental concerns. China’s difficulties with greenhouse gases and other forms of air pollution are well known, and the thorium cooperation agreement could be seen, from an environmentalist perspective, as dovetailing with the U.S.’s own efforts to reduce greenhouse gas emissions.
While successful development of thorium into a practical large-scale energy source remains far off, China has sprinted to the front of the pack, and it has done so with American assistance. Washington policymakers may recognize thorium’s promise and could be waiting for a more politically opportune time for the U.S. itself to seize upon it, but by facilitating China’s thorium research efforts, the U.S. appears to be betting that it can capitalize on Chinese breakthroughs down the road. In so doing, the U.S. risks missing the boat, or worse, seeing Chinese research go in unfavorable directions. Thorium could prove to be an incredible, world-changing upgrade over existing energy sources, or it could prove to be a dead end; either way, the U.S. has handed over its research regarding this poorly-understood radioactive chemical element to a strategic competitor with very little idea about what that competitor may discover. How this plays out may color the global energy marketplace for decades to come.