The U.S. rare-Earth industry can rebound -- over time

one another. They also tend to occur in deposits with radioactive elements, particularly thorium and uranium. Those elements can become a threat if the “tailings,” the slushy waste product of the first step in separating rare earths from the rocks they are found in, are not dealt with properly.

Mountain Pass went into decline in the 1990s when Chinese producers began to undercut the mine on price at the same time as it had safety issues with tailings. When the Mountain Pass mine was operating at full capacity, it produced 850 gallons of waste saltwater containing these radioactive elements every hour, every day of the year. The tailings were transported down an eleven-mile pipeline to evaporation ponds. In 1998, Mountain Pass, which was then owned by a subsidiary of oil company Unocal, had a problem with tailing leaks when the pipeline burst; four years later, the company’s permit for storing the tailings lapsed.

Meanwhile, throughout the 1990s, Chinese mines exploited their foothold in the rare-earth market. The Chinese began unearthing the elements as a byproduct of an iron-ore mine called Bayan Obo in the northern part of the country; getting both products from the same site helped keep prices low initially. The country invested in R&D around rare-Earth element processing, eventually opening several smaller mines, and then encouraging manufacturers that use these metals to set up facilities in the country.

Meanwhile, worldwide demand for rare-Earth elements has been growing. This year demand was 125,000 tons; by 2015, it is expected to grow to 225,000 tons, and Molycorp spokesman Jim Sims notes that this projection does not include the wind-turbine industry, which is expected to be a major market. State-of-the-art wind turbines like those that will be installed at the world’s largest wind farm, an 845-megawatt facility in Oregon, use high-efficiency rare-earth magnets. They can be ten times lighter and smaller than comparable magnets but equally strong. Each of these magnets requires a ton of rare earths, Sims says.

Molycorp renewed the Mountain Pass mining permit and began R&D of its own in 2004. This year, using rock that was mined before a previous permit expired and new separation technologies it has developed, the company will sell 3,000 tons of rare earths. By 2012, Molycorp expects to produce 20,000 tons a year, and under its current mining permits could double capacity to 40,000 tons. Sims also says the company will produce rare-earth products at half the cost of the Chinese in 2012. According to the company, these savings will be made possible by several changes, such as eliminating the production of waste saltwater. Molycorp will use a closed-loop system, converting the waste back into the acids and bases required for separation and eliminating the need to buy such chemicals. The company will also install a natural-gas power cogeneration facility onsite to cut energy costs.

Ames Lab’s Geschneidner notes, however, that one major source of cost in the separation process cannot be eliminated — the fact that it simply takes a long time. Milled rock is shaken again and again in a mixture of solvents to separate the elements by weight; depending on the ultimate purity that is required, this must be done 10,000 to 100,000 times. The result is then sold as a concentrate or treated to produce rare-earth metal oxides.

Even if Molycorp does succeed in reducing the costs of separation by half, the next step in production may cause a hiccup. Rare-earth oxides and concentrates do have a market, for example as catalysts for the petroleum industry, but they cannot be made into magnets. To make magnets, rare-earth oxides must first be converted into pure metals, a process that produces caustic byproducts, and is done solely in China today. Sims says that Molycorp is investigating pathways that are environmentally friendly and are not covered under intellectual property owned by foreign companies. These metals must next be made into alloys suitable for the magnets, another capability that’s concentrated overseas, mostly in Japan and Germany.

The company’s goal is to control every step along the supply chain, through production of alloys and eventually the magnets, too. Here, too, the United States lacks infrastructure and intellectual property, so Molycorp hopes to license or buy patents on making alloys, and will make magnets through a joint venture with another company.

By going public in July, Molycorp raised $379 million of the $511 million the company believes is required to put in place its projects by 2012. A bill pending in the House and the Senate would offer loan guarantees for Molycorp and other investors in rare-earth mines — and the company has applied for loan guarantees through the U.S. Department of Energy, which will give a final decision next summer.