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Rare earth metals: it's the value chain that is at stake, not just the supply chain

Among critical mineral resources, rare earth metals occupy a special place because they are part of the core of many future technologies: electric cars, smartphones, wind turbines. Resources are now concentrated in the hands of a few players. Can this situation be reversed? What are the risks entailed for industrial sectors downstream of production?

February 2013
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lire en français
Executive Resume

Paris Innovation Review - For some manufacturers, rare earths are a cause for concern. But are they actually rare?

Patrice Christmann - Rare earth elements are part of rare metals, that is to say that their global production is less than 100 000 tons per year, and much less than that for some of them. Rare earths are a group of elements, their number varying between 15, 16 or 17 according to the different classifications. All these elements are located in the last two lines at the very bottom of Mendeleev’s periodic table: 15 lanthanides (the official rare earth elements) to which some people would like to add two elements, yttrium and scandium.

Paradoxically, despite their name, there are actually many rare earth deposits. Even in France, there is known evidence of their presence in the Breton department of Ille-et-Vilaine and elsewhere in the Britanny region, in the westernmost part of the country. In November 2012, there were 442 exploration projects in 37 countries around the world, carried out by 260 companies, mostly junior mining ones.

So what's the problem?

The main characteristic of rare earths is that they are a niche market. Its size is about eight billion dollars, a fairly small sum compared to the iron, aluminum or zinc industries. In addition, it is a rather complicated industry. Once a deposit discovered, an operator is far from being out of the woods. It is not enough to produce monazite concentrate, that is to say, a rare earth-containing mineral. That is in fact pretty easy to do. What has value, and what the industry is in demand for concerning rare earths, are the phosphor powders thanks to which it is possible to make video screens, energy-saving light bulbs, or neodymium-iron-boron permanent magnets, to which dysprosium is sometimes being added.

Manufacturing these products requires cutting-edge technology in order to separate and purify the rare earth elements mixed together in the ore and to produce magnetic alloy or phosphor powders according to the specifications of industrial users. It is a high-tech world, fueled by leading edge research in metallurgy and materials science, areas in which research is particularly strong in Asia… whereas Europe and the US, which had been the source of many discoveries, have become very complacent. Luckily, the just completed negotiation of the EU budget (2014-2020) does not reduce the European effort towards research and innovation proposed within the future Framework Programme for research “Horizon 2020”. The ability to respond with an all-European dimension is essential to meet challenges that are global. This will simply not happen without appropriate funding, especially if we expect to attract young people towards research and innovation.

Green technologies, especially the batteries of hybrid or electric cars, consume a lot of rare earth metals, whose extraction, incidentally, is very pollutant.

Our modern cars house catalytic converters that reduce CO2, nitrogen oxide and particulate matter emissions. They contain cerium, a rare earth. In 2013, an entry-level thermal combustion automobile requires eight elements belonging to the group of rare earths to be produced. For a high-tech electric vehicle, the quantity of certain rare earth elements necessary to build it could increase substantially because of the alloys used for the anode of the rechargeable nickel-metal hydride (NiMH): the battery of a hybrid car like the Toyota Prius contains over 10 kg of Lanthanum, yet another rare earth metal. Fortunately, it is fairly abundant in the earth's crust.

Could “green technology” be the first area to be impacted by shortages?

Yes indeed, because the quantities consumed are incommensurate with those that the industry needed only a few years ago. The hungriest sector is that of sintered permanent magnets based on neodymium /iron/boron alloy, whose specifications are very precise, for wind turbines. This alloy makes it possible to manufacture magnets of any shape, butiIt has a relatively low Curie point (the temperature beyond which it loses its magnetic properties). To improve the operational temperature range of magnets, the alloy must be boosted with, in this specific case, % dysprosium. However, no matter where the deposits are, rare earths are mixed together in proportions that are very different. On average, you will find 42% of cerium and 24% of lanthanum. But only 1% of dysprosium!

This is worrying for wind turbines!

The United States Department of Energy estimated in late 2011 that there was a real risk for the production of wind turbines whose synchronous drive is based on dysprosium-boosted rare earth permanent magnets. These engines are very popular because they are much more efficient than copper-based induction motors. They make it possible to build wind turbines that perform really well, even with light winds. And maintenance costs are lower: the mean time between failures (MTBF) for a permanent magnet wind turbine is given to be 8000 hours, against 1500 hours for an induction motor with a gearbox. Hence the success of rare earth-based engines for large wind turbines up to 6 MW capacity installed offshore, where maintenance is very expensive. It takes 600 kilograms of permanent magnets per megawatt of capacity, of which approximately 25% is neodymium and 4% dysprosium. So there is a real tension around dysprosium: its demand increases by 10% per year and the deficit in dysprosium will remain a serious problem until 2020 at least. This is an area where innovation is needed to overcome this addiction to dysprosium.

If we add the other issue at stake, heavy rare earth elements (europium, terbium and yttrium) which are necessary for the phosphor powders for video screens and energy-saving light bulbs, we live in a world where access to these resources is very unbalanced.

Let us consider the two markets under stress, that is to say, those of permanent magnets and phosphor powders. In 2010 China produced 81% of magnetic alloys for permanent magnets, 13% were manufactured in Japan and North-East Asia, 2% in the United States on foreign license and 4% in the rest of the world including Europe. For phosphor powders, 65% of world production was made in China, 23% in Japan and North-East Asia, 6% in the U.S. and 6% in the rest of the world, including the EU and France. The verdict is unequivocal: the rare earth processing industry, which is the one that counts, is located in Asia, especially in China and Japan. In the case of China, what we are witnessing is a particularly wise industrial strategy, as one of its challenges is to take advantage of local production to develop other segments of the value chain. The Chinese have not hesitated to restrict their exports to develop industrial sectors that rely on rare earth metals.

European countries and the United States, by contrast, have displayed a disturbing lack of vision. Hard-earned knowledge and know-how that had been largely Western for a long time, having been developed in France and the United States, have been squandered. The separation chemistry of rare earth metals has been developed in France in the late nineteenth century through the works of Lecoq de Boisbaudran (1838-1912, discoverer of samarium and dysprosium) and Urbain (1872 - 1938, discoverer of lutetium and inventor of the separation of rare earths by fractional crystallization), and later on in the United States as a spin-off of the Manhattan Project whose objective was to develop the atomic bomb (the work of Spedding in 1947 had led to the development of hydrometallurgical process through ion exchange, followed by the development of a method through solvent exchange launched in 1953). American physicists of the Manhattan Project tried their hands at separating lanthanides before embarking in the separation of radioactive actinides.

Fortunately, in Europe we managed to maintain industrial know-how in rare-earth separation, purification and the production of some semi-products, thanks to Solvay and its La Rochelle plant.

You often describe the situation in Europe and France concerning rare earths as “worrying”. Is the extraordinary dominance of China durable in this field, or is it reversible? It also seems that this country will soon become an importer, which will worsen the situation still.

For many sensitive raw materials, in the chain that runs from geological expertise, upstream, to mining operations, metallurgy and materials science, downstream, the step of criticality lies in the phases of metal extraction and purification and in the production of semi- products. In 2013, much of the cutting edge expertise in metallurgy is Asian. Let us not kid ourselves. The crux here is technology and it is increasingly controlled by China. This is unfortunate because if a company wants to become a heavyweight in recycling or in high-tech, sooner or later metallurgy, whether it’s hydrometallurgy or pyrometallurgy, is a fundamental and unavoidable prerequisite. If you are lacking the expertise, no matter how many tons of ore you stack, you will not be the one who reaps the added value.

Who owns the patents on the separation and processing of rare earth metals?

That is a vast subject and I would be hard pressed to give comprehensive information. Regarding permanent neodymium-iron-boron magnets, their discovery was announced independently in 1982 by General Motors (USA) and Sumitomo (Japan). The master patents are now owned by two companies.

First, there is Magnequench, originally a subsidiary of General Motors, which was created in 1986 for the production of permanent Nd-Fe-B magnets in their Anderson factory (Indiana). It was sold in 1995 to Sextant Group, an American company controlled by two Chinese companies, San Huan New Material and China National Non-Ferrous Metals Import and Export Corporation. The production line of the plant was moved to China in 1998, and the U.S. factory was closed down. Since then, Magnequench has become a division of Neo Material Technologies, a Canadian corporation acquired in 2012 by Molycorp, a U.S. producer of rare earths from the Mountain Pass mine (California), whose ore concentrates, which are absolute requisites for the production of permanent magnets, are still being exported to China. The reopening of that mine, which had been closed in 2002, has not made a difference for the United States which are still dependent on China for their needs in neodymium-iron-boron.

Then we have the Japanese firm Hitachi. Originally, patents were held by Sumitomo, discoverer of various processes involved in the production of Nd-Fe-B magnets, notably the most efficient ones: sintered magnets. These patents have become the property of Hitachi (Japan), which has been actively exploiting them since the merger, in 2007, between Sumitomo Special Metals Co. and Hitachi Metals. That same year, Hitachi held 615 patents relating to sintered Nd-Fe-B magnets. The company has granted licenses to various producers, several of which are European: Vacuumschmelze GmbH and Magnetfabrik Schramberg GmbH in Germany,Neorem Magnets Oy in Finland.

To further complicate the picture, there are also cross-licensing agreements between Hitachi and Magnequench.

Since the shortage seems to be a real threat, what is the current state of research to find substitutes for mineral raw materials and rare earths for which we might face a shortage?

There is no simple answer because each element has specific physical and chemical properties that constitute a unique challenge if we expect to replace it. Developing a substitute at an industrial scale, to the extent that it is feasible, may take from ten to twenty years. In the case of rare earths, we are looking for magnetic materials which are as effective, or possibly more, as rare earth-based permanent magnets.

Hitachi announced in 2008 that they had achieved mastery of amorphous iron, a magnetic material with excellent magnetic properties. Amorphous iron production requires the implementation of a complex process that allows the molten iron to cool quickly enough so that the atoms don’t have time to organize according to the crystal structure specific to iron. A few additional large atoms are added which cause anisotropy and considerable magnetic effect. Permanent magnets based on amorphous iron are the core of a prototype electric motor submitted by Hitachi in 2008 with a power of 250 W, and then in 2012 with a power of 11 KW, but we are still a long way from the power necessary to propel a car, even a small one, and a fortiori a wind turbine.

In 2013, we still do not know if we will ever be able to manufacture large permanent magnets based on amorphous iron. The whole problem is to step up a gear. Various research labs, including Hitachi, are also actively studying how to synthesize iron nitride, whose magnetic properties are even more interesting than Nd-Fe-B.

Patrice Christmann
Deputy director of BRGM's corporate strategy directorate, in charge of BRGM's mineral resources strategy