What are Rare Earth Elements (REEs) and why are they in the news?

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    Rare Earth Elements

    There’s been a lot of mentions of rare earth elements, often also called rare earth metals or rare earth minerals, in the news recently. But what are they, and why are they getting so many headlines?

    What are Rare Earth Elements

    The science bit
    A rare earth element is one which belongs to a group of seventeen chemically similar metallic elements, comprising the fifteen members of the lanthanide series (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium) and also scandium and yttrium. Scandium and yttrium are included because they are often found in the same ores as the REEs and behave in a similar way.

    You may not have been that familiar with REEs if you studied the periodic table at school as they exist in their own little block hanging off the bottom and to be honest most teachers skipped over them.

    Uses of rare earth elements

    Although they don’t often crop up in everyday conversation, the reality is that much of our modern lives relies upon REEs to some extent. Though typically not used in high volumes (they are sometimes referred to as ‘vitamins of chemistry), rare earth elements are critical in many modern products.
    For example. Catalysts in car exhaust systems, magnets used in the motors used of electric vehicles, generators used in wind turbines, computer and TV screens. Mobile phones are one of the most high-profile uses of rare earths. Modern phones typically use over 60 different metals across their circuitry, display, processor and speaker elements, and that’s before we consider the battery and how the electricity is generated to charge it.
    If it’s an electronic device, odds on it has a liberal sprinkling of rare earth’s inside its nice shiny case

    How rare are rare earth elements?

    The name might be a bit of a misnomer. Most REEs aren’t actually THAT rare. Luteium and thulium for example, each have an average crustal abundance that is nearly 200 times greater than gold. The rarity really comes from the fact that these elements are often difficult to mine because they are rarely found in concentrations that make them economically viable to mine. That rarity, coupled with understanding how they are formed geologically, presents a challenge for economic extraction.

    Where are they found?

    Graph by Geology.com using data from the United States Geological Survey.

    At the moment, at least 70% of the mined output of rare earths occurs in China according to the United States Geological Survey, with a higher ratio of processed rare earth compounds. Why? Geology goes a long way, but also refining rare earths tends to be expensive, time-consuming, toxic, challenging and often dangerous. China is more willing to take this on than many other countries. 

    This reliance on China is seen by many as a potential critical weakness. In 2018, the United States Geological Survey identified a list of 35 minerals they defined as critical to the future security and economy of the US – so the USGS, amongst others, is currently on the hunt for more reserves closer to home.

    Reserves are also found in Canada, Brazil, India and Australia – but the critical issue here is how long it would take to initiate or ramp up production in these locations.

    Why are rare earths in the news?

    There’s a couple of reasons. Firstly, the move to electric vehicles and clean energy production has increased for REEs around the world – we need more of them.

    Secondly, Donald Trump has kicked off a trade war with China. It’s beyond our remit here to talk about whether this is a good idea or not (!), but the recent scaling up of a trade tiff that kicked off in 2018 (the US has recently more than doubled tariffs on $200bn worth of Chinese imports) has heightened awareness around the value of REEs to the US. China has retaliated by increasing tariffs on $60bn worth of US products, including rare earth products from the US company MP Materials whose products are exported to China where downstream processors refine them.

    Only last week, President Xi Jinping made a stopover at a rare earth processing plant whilst on a visit to Ganzhou. In the light of the US banning Huawei and raising tariffs this should be considered a warning shot that China could retaliate by stopping or limiting exports of rare earth elements to the US. 

    Opinion is divided on exactly how effective a rare earth ban from China would be. Certainly it would have a critical short term impact, but beyond that? Just the recent threat of a ban has seen stockpiles increase with a corresponding increase in related stock prices. American firm Blue Line Corp  and Australian mining company Lynas have discussed creating new production facilities in the US. Meanwhile the Mountain Pass rare earth mine in California owned by MP Materials, which until recently has been mothballed, re-started production in January 2018, and could be brought up to speed in a relatively short time.

    But the mining itself is only one element. The US requires processing to be performed at much higher environmental standards than in China, with a corresponding increase in costs. So whilst a long-term move to US friendly mining and processing could see the US on a much more independent footing, in the short term, there is no easy solution.

    Disclaimer
    MiningIR host a variety of articles from a range of sources, our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.

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