Why There Is a Need for More Rare Earth Elements

By
Henry Mann
·
October 30, 2020

The last time you probably heard a reference to rare earth elements (REEs) was in an earth science class. In fact, these elements were once only familiar to those working in geology and specialized engineering fields. Many people don't realize that these elements are crucial components in high-tech devices, including smartphones, computers, televisions, and other electronic displays. They also are necessary for the functioning of military jet engines and even satellites. 

REEs form in the Earth's crust but are very dispersed and are not easily mined. In fact, it is somewhat rare to locate them in extractable groups. 

The group of metals comprising REE include yttrium and the 15 lanthanide elements of lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. Scandium is included as well since it is found in most deposits. Since they share many of the same properties, they are located in the same geologic deposits. 

Several of the above REEs are used in the manufacturing process of many popular technology items. Let’s take a look:

Rare Earth Elements and Their Uses 

Neodymium 

This metal was discovered in 1983 and made the miniaturization of popular electronic devices possible. Neodymium is found in mobile phones, microphones, loudspeakers, and electronic musical instruments.

Neodymium is extracted from minerals through ion exchange and solvents.

Lanthanum

While lanthanum has no known commercial uses, lanthanum alloys are used in carbon lighting, such as studio lighting and cinema projection. The oxide form is used in the manufacturing of special optics. Lanthanum salts are catalysts in oil refining. 

As with neodymium, this metal is also obtained through ion exchange and solvent extraction. 

Cerium

Catalytic converters manufactured for today's automobiles use cerium. It also can be found in flat-screen televisions and in low-energy light bulbs.

This element is abundantly found in many minerals. It is extracted through heating bastnaesite ore and then treating with hydrochloric acid. 

Praseodymium

This soft, silvery metal is used in many alloy forms. The magnesium alloy is used in the manufacturing of aircraft engines. Other uses include permanent magnets, welder goggles, and cigarette lighter flint.

Praseodymium is extracted from monazite and bastnaesite ores by ion exchange and solvent extraction. 

Gadolinium

Gadolinium is most widely used in X-ray and MRI equipment.  Since it is an excellent element for absorbing neutrons, it is used in nuclear reactor cores.

Gadolinium is obtained through ion exchange and solvent extraction. 

Yttrium, Terbium, Europium

These elements are all used for television and computer monitor manufacturing.  Terbium improves medical X-ray technology by shortening exposure times. Europium is used in euro banknote printing since forgeries are easily detected with ultraviolet light.

All 3 elements occur in monazite and bastnaesite. 

Mining Origin

The United States (US) was once a primary REE producer until the 1980s when China began production. According to a report by the US Geological Survey (USGS), 90% of the global supply of REEs comes from China. This is due to the difficulty in mining and refining the materials. Additionally, China holds a monopoly on the REE market since other countries cannot compete with them.

However, in an attempt to reduce dependency on REEs from China, the US Department of Energy recently announced $122M in funding to develop technology that will extract REEs from coal and coal byproducts.

At one time, the US started mining operations at Mountain Pass in San Bernadino County, California. However, due to weak prices for rare earth elements, the operation was suspended in 2002. Following a series of company acquisitions, MP Materials purchased the property in June 2017 and began producing rare earth concentrates a year later. 

Other potential sites in the US for mining found in Utah, Colorado, Wyoming, Alaska, Nevada, and Nebraska continue to be explored for additional REE resources. However, as of this writing, Mountain Pass mine is the sole producing rare earth mine.

open pit mine near the coastline in Australia

How REEs Are Mined and Processed

REE mines can come in the form of open pit, underground, or leached in-situ. In-situ leach mining recovers minerals by drilling boreholes into ore locations and injecting leaching solution to extract them to the surface. 

Methods to separate and refine the mined REEs are fractional crystallization, ion-exchange, liquid-liquid extraction, or solvent extraction. 

In fractional crystallization, the mixture of substances in the solution crystallizes, and the resulting materials are separated. Ion-exchange processes work by exchanging unwanted dissolved ions for ones with a similar charge to remove contaminants. Liquid and solvent extraction methods isolate the element from other joined materials. 

The Future of REEs

Because REEs are used in the production of magnets for inclusion in hybrid and electric cars, the demand for these elements continues to increase. The sale of electric and hybrid cars continue to skyrocket as consumers wish to save energy costs and contribute to conservation efforts by abandoning gas-dependent transportation.

Since REEs are used widely in the production of magnets for electronics, automobiles, medical equipment, and power generation, this demand will continue to rise in the years to come. A report by Global Market Insights states that the market for REEs was estimated to be $13.2Bn in 2019 and will hit nearly $19.8Bn in 2026. 

To further revive the US rare earth industry, legislation was recently introduced allowing mining companies to deduct the costs of rare earth mine construction as well as purchases of processing facilities and equipment. Included in the bill is an allowance for electronics manufacturers to deduct up to 200% of the cost of US rare earth products in an effort to sway companies from buying these elements from China. 

How to Invest in Rare Earth Elements 

Investors wishing to take advantage of the demand for REEs can do so through financial entities to enhance and diversify their portfolios. 

The most straightforward way is by investing in the VanEck Vectors Rare Earth/Strategic Metals (REMX) Exchange Traded Fund (ETF). This ETF represents a group of companies that are involved in the production, mining, and refining of rare earth metals and minerals. 

Another investment possibility is purchasing stock with Lynas Corporation (LYC), an Australian-based mining company that has recently contracted with the U.S. Department of Defense to design a new heavy rare earth separation plant in Texas.

Mining Company Milestones for REEs

The following mining companies have recently achieved milestones in mining REEs. 

Pensana Rare Earths and Pensana Metals (PM8)

Founded in 2006 and headquartered in London, UK, Pensana mines non-ferrous metal ores. They have recently successfully produced a neodymium-praseodymium (NdPr)-rich mixed rare earth carbonate. Its current market capitalization is valued at 314.799M. Company shares are up 12.8% and are trading for $1.15.

Pensana Metals' Longongjo NdPr Project is potentially one of the world's best rare earth mines located in Africa. The company's goal is to provide industries with a low-cost, reliable solution for greener energy and electric transport worldwide.  

Krakatoa Resources (ASX: KTA)

Based in Perth, Australia, Krakatoa Resources’ mission is to acquire and develop projects containing gold, copper, and rare earth elements crucial to technology and defense applications. The company's current projects include Belgravia Project, Turon Project, and Rand Project. Krakatoa's current market cap is 24.836M.

Hexagon Energy Materials (ASX: HXG)

Focused on resources, energy materials, and clean energy, Hexagon holds a 100% interest in the McIntosh Graphite Project in Western Australia and an 80% interest in the Ceylon Graphite Project in Alabama, U.S. Hexagon also has an interest in the Halls Creek Project, an early-stage gold and base metal exploration project in Western Australia. Hexagon is also working on an earth processing technology called RapidSX which may disrupt China's monopoly over rare earth elements processing into rare earth oxides. Hexagon has a market cap of 15.791M. 

Search Minerals (TSXV: SMY)

Based in SE Labrador, Canada, Search Minerals owns The FOXTROT Deposit, Deep Fox, and Fox Meadow. Search has just reported that they completed their 2020 exploration program for Critical Rare Earth Elements (CREE), Zirconium, and Hafnium in the Port Hope Simpson-St. Lewis CREE district. A total of 986 samples were collected with 606M of trenched channel. Search has also recently identified a proprietary, scalable, hydro-metallurgical process. Search Minerals has a market cap of 10,445,040. 

Mkango Resources (TSXV/SIM: MKA)

Mkango Resources is based in Malawi, Africa. Their current projects include the Thambani U-Ta-Nb project, Chimimbe Hill Ni-Co project, and the Mchiniji Project. The Songwe Hill Rare Earths Deposit is the main exploration area featuring carbonatite-hosted rare earth mineralization. Mkango Resources has a market capitalization of 11.719M. 

Energy Fuels (NYSE American UUUU) (TSX: EFR)

Energy Fuels is a US-based uranium mining company, supplying uranium oxide to major nuclear utilities. Energy Fuels was recently awarded a contract to work with a team from Penn State to develop a conceptual design that allows the commercial production of mixed rare earth oxides from coal-based resources. 

Energy Fuels holds three key uranium production centers. Energy Fuels’ market capitalization is 203.424M. The company became debt-free just this month. 

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