The huge increase in capacity of renewable energy installations around the world is causing a skyrocketing demand for the key elements of rare earths. While these materials are not as geologically rare as their name suggests, their production is limited as the finite number of already developed supply chains struggle to keep up with demand. As a result, prices are skyrocketing. Not only is there enormous economic opportunity in establishing new supply chains for rare earths, there are also great risks to allowing current market players to continue to consolidate influence over these basic building blocks of clean energy.
China currently dominates the supply chains of rare earth elements. According to the Oxford Institute for Energy Studies, Beijing alone is responsible for 70% of the world’s rare earth ore mining and 90% of rare earth ore processing. In addition, China is still the only major producer of heavy rare earth ores on the planet. It is not only because of the rich natural deposits of these ores in China. “This dominance has been achieved through decades of state investment, export controls, cheap labor and low environmental standards,” according to Oxford. The country has spent decades building supply chains around the world, extending its energy and industrial influence to emerging markets spread across Asia, Africa and Latin America.
The United States is now making a concerted effort to build its own domestic rare earth supply chains for its own renewable energy needs, as well as significant demand from the military. The Department of Defense has awarded more than $439 million since 2020 to establish domestic supply chains for rare earth elements, and the Department of Energy has also invested billions of dollars to jumpstart the country’s lithium industry.
The United States is scouring supply chains for key elements of rare earths around the world, and in recent years has stepped up efforts to secure its own supplies by approaching countries including Mongolia, South Africa and Mexico for potential trade deals. However, establishing trade agreements that China has yet to reach has proven difficult. China, for example, is aggressively expanding its green energy empire in lithium-rich Latin America, but the United States has had a relatively difficult time entering the same market.
Fortunately, the United States is also geologically rich in many rare earth elements – it will just require building an entire mining and processing industry from the ground up. Considering the huge and rapidly growing demand for these elements, as well as the geopolitical risk associated with one country’s monopoly on their supply chains, this kind of timeline is not ideal.
But researchers from the University of Utah may have found a shortcut. Ironically, the key to powering the U.S. renewable energy industry may require partnering with the U.S. coal industry to extract the ore faster and more cost-effectively. The research team found “elevated concentrations” of rare earth elements in currently operating mines in the Uinta Coal Belt in Colorado and Utah. In theory, this could allow already active mines to mine rare earths alongside the ore they are already mining, with little additional overhead.
“The model is, if you’re already moving rock, could you move a little more resource rock toward the energy transition?” said study co-author Lauren Birgenheier, associate professor of geology and geophysics. “In these areas, we find that the rare earth elements are concentrated in the fine-grained shale units, the mud shales that are above and below the coal seams.”
While the United States is making major strides to become competitive in the rare earth element market, it is still years and billions of dollars behind China in terms of industrial development as well as the diplomacy of making deals with ore-rich countries. Moreover, it cannot compete with the low labor costs, unilateral decision-making authority and lax environmental oversight that give Beijing a market edge. But innovative approaches like those being tested by the University of Utah could open a potential path to reclaiming some of that land.
Haley Zaremba for Oilprice.com
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