Rare Earth Elements and the WTO

Yesterday the World Trade Organization (WTO) ruled that China breached international trade law by limiting the export of 17 rare earth elements and two metals used in steel alloys (molybdenum and tungsten). The case was originally brought before the WTO by the United States in March 2012; the European Union and Japan later joined in on the U.S. side. The WTO’s ruling could result in trade sanctions against China from these countries.

David Jolly of the New York Times notes that:

Members of a W.T.O. panel considering the case in Geneva found that the export taxes, quotas and bureaucratic delays Beijing imposes on overseas sales of the minerals artificially raise prices and create shortages for foreign buyers. The panel concluded that “China’s export quotas were designed to achieve industrial policy goals” rather than to protect its environment, as Beijing had argued.

Why are rare earth elements, molybdenum and tungsten so important as to prompt a WTO ruling? A large amount of rare earth elements (REE) are necessary for building a robust renewable energy industry. In the wind industry alone, REE are used in light-weight permanent magnets for wind turbines and for capacitors, sensors and scintillators used in electricity transmission, Other REE are critical to the manufacturing of photovoltaic panels, fuel cells and high-capacity batteries for hybrid and electric vehicles. For the metals in contention – molybdenum is used for light bulb filaments. Many technologies in the lighting, aerospace, automotive, and medical areas employ tungsten for various uses.

Unfortunately, the U.S. has become heavily reliant on imports of REE, particularly from China. The U.S. Geological Survey gives import sources for 2009-12 for rare earth metals, compounds, etc. as: China, 79%; France, 6%; Japan, 5%; Austria, 3%; and other, 7%. China also leads globally with 91% of the tungsten production and produces 36% of the world’s molybdenum.

Prior to this week’s ruling on China’s REE export policy, the U.S. has looked for alternatives to importing REE from China. There are potential substantial deposits of REE within North America, but rare earths are currently mined domestically in 2013 only by Molycorp at Mountain Pass, California. There are, however, other companies currently pursuing domestic exploration/production. Properties in Colorado, Idaho, Montana, and Arizona are among the areas of interest.

In October 2013, several U.S. senators introduced the Critical Minerals Policy Act, S. 1600, specifically to address future supply shocks of critical minerals. The act specifically would “facilitate the reestablishment of domestic, critical mineral designation, assessment, production, manufacturing, recycling, analysis, forecasting, workforce, education, research, and international capabilities in the United States, and for other purposes”. The bill is still in the Senate Energy and Natural Resources Committee – the govtrack.us website lists a 3% chance for the bill to be enacted.

There are other known REE deposits in Australia, Vietnam, Brazil, and even Afghanistan, but the development of these resources for US markets will add geopolitcal consequences to the mix. Motley Fool commented on some international REE ventures:

Australia-based Lynas is another company which is slowly but surely turning into one of the major rare earths producers. Lynas said in a statement on Thursday that it will register a record output for the quarter ending March 2014.

Many other rare earth projects are also in the pipeline around the world. Russia, in order to reduce its reliance on imports, announced last year that it will invest $1 billion in rare earth mining projects through a joint venture. Also last year, Greenland announced its decision to remove a ban on rare earth and uranium mining. With all these developments during the last two years, China’s share in global rare earth production has gone down to 80%, according to The Wall Street Journal.

Lastly, in the quest to find usable REE, there is the possibility of “urban Mining” of recycled electronics. While the recycling effort for REE is still in its infancy, some believe that recycled rare earths could play a significant part in global demand.

Kathryn Free, in Scienceline’s The Future of Rare Earth Recycling, remarks that:

For now, the most promising recycling process may be obtaining rare earths from fluorescent light bulbs. In Europe, consumers are required to recycle bulbs because they contain mercury, so recycling companies have immediate access to the materials. Solvay, a chemical and plastics company based in Belgium, has already begun to extract six separate rare earth elements from fluorescent bulbs and has recycled more than 1,000 tons of product, according to Frederic Carencotte, who heads the rare earth division at Solvay. To recycle the bulbs, workers at Solvay separate the rare earths from everything else. Next, they isolate each one and recombine them to make a fluorescent precursor that they sell back to lamp manufacturers.

Other companies are looking beyond bulbs in their quest for recycled material. Around 20–30 percent of rare earths used in magnet production end up as scrap waste, so companies are beginning to collect the scrap to reuse it. In addition, a Chinese research team recently used nanoparticles to capture more than 85 percent of the rare earths from wastewater. But Colorado School of Mines’ Anderson suggests the Chinese results aren’t a breakthrough: the hard part is to separate rare earths from each other, not merely to capture them.

Since hybrid cars require rare earths in their batteries, companies such as Honda and Toyota are working hard to recycle them and cut battery prices. Recycling “could be the winning weapon to excel in the global car market,” says Marcello Ruberti, a rare earths economist at the University of Salento in Italy. Separating rare earths from cell phones, on the other hand, is more difficult and costly because the parts are so small that it requires a lot of labor to take the phones apart.

In the long run, recycling may not only prove to be an economic boon, but also a plus for public health and the environment. Rare earth ores almost always include a small amount of radioactive material, such as uranium and thorium. In 2004, researchers published the results of a 20-year study on workers from the Baiyun Obo Mine in China. They found that thorium exposure over a long period of time caused a higher incidence of lung cancer. With recycling, however, the radioactive materials would already be removed when workers handle the metals.