Huge increases in the capacity of renewable energy facilities around the world are sending demand for key rare earth elements skyrocketing. While these materials are not as geologically rare as their name suggests, their production is limited as a finite number of already developed supply chains struggle to keep up with demand. As a result, prices are skyrocketing. So not only is there enormous economic opportunity in establishing new supply chains for rare earths, there are also major risks associated with allowing current market entities to continue to consolidate their influence over these essential building blocks for clean energy.
Currently, China dominates the rare earth supply chains. According to the Oxford Institute of Energy Studies, Beijing alone is responsible for 70% of the world’s rare earth ore mining and 90% of rare earth ore processing. Moreover, China remains the only large-scale producer of heavy rare earth ores in the world. This is not only due to China’s own rich natural reserves of these ores. “This dominance has been achieved through decades of state investment, export controls, cheap labor and low environmental standards,” Oxford reports. The country has spent decades building supply chains around the world, expanding its energy and industrial influence into emerging markets across Asia, Africa and Latin America.
Now the United States is making concerted efforts to build its own rare earth supply chains for its own renewable energy needs, as well as the military’s significant demand. The Department of Defense has allocated more than $439 million since 2020 to build domestic supply chains for rare earths, and the Department of Energy has also poured billions of dollars into kick-starting the country’s lithium industry.
The United States has been examining supply chains for key rare earths around the world and in recent years has intensified efforts to secure its own supplies by turning to countries such as Mongolia, South Africa and Mexico for potential trade deals. However, it has proven difficult to broker trade deals that China has not previously agreed to. For example, China has been busy expanding a 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 metals; it is enough that an entire extraction and processing industry must be built from scratch. Given the enormous and rapidly growing demand for these elements, as well as the geopolitical risk associated with a one-nation monopoly over their supply chains, such a timeline is less than ideal.
But researchers at 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 for faster and more cost-efficient ore extraction. The research team has found “elevated concentrations” of rare earth elements in currently operating mines in the Uinta coal belt of Colorado and Utah. In theory, this could allow already active mines to extract rare earths along with the ore they are already extracting, with little additional overhead.
“The model is that if you’re already moving rock, can you move some more rock for raw materials towards the energy transition?” said co-author Lauren Birgenheier, associate professor of geology and geophysics. “In those areas, we find that the rare earth elements are concentrated in fine-grained shale units, the muddy shale that lies above and below the coal seams.”
Although the United States has an important place to become competitive in the rare earth market, it still lags many years and billions of dollars behind China in industrial development and diplomacy in making deals with ore-rich countries. Moreover, the country’s low labor costs, unilateral decision-making power and lax environmental monitoring give Beijing an edge in the market. But innovative approaches like those being tested by the University of Utah could open a potential path to regaining some of that ground.
By Haley Zaremba for Oilprice.com
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