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Rush On for ‘Rare Earths’ as U.S. Firms Seek to Counter Chinese Monopoly

Alternative Energy

MOUNTAIN PASS, Calif. — About an hour’s drive southwest of Las Vegas, on a private 2,200-acre desert patch flanked by Clark Mountain and the Mojave National Preserve, lies an idled mine many consider to be a linchpin in the U.S. push for energy independence and national security.

The Mountain Pass mine, once the world’s leading producer of “rare earth” minerals used to manufacture cutting-edge weapons and clean energy technologies, shuttered operations here in 2002 after Chinese producers undercut its prices and a series of environmental spills stalled the renewal of state mining permits.

Today, the mine musters a limited production of rare earth oxides from ore mined years ago from a massive open pit hewn from the arid terrain.

But even that material must be shipped to Asian manufacturing plants equipped with the technology and know-how to process the oxides into metals and alloys to create new high-performance products, many of which are shipped back to the United States in the form of permanent magnets used in products such as wind turbines, hybrid electric vehicle motors, military radar equipment or precision-guided munitions.

That is, as long as supplies last.

As the United States and other countries pursue ambitious paths to energy efficiency and renewable energy, the very technologies needed to achieve those goals are expected to consume an increasing amount of rare earth minerals, and some analysts have projected global shortages as soon as 2012.

This is all good news for China, which last year produced more than 97 percent of the world’s rare earth oxides and controls about half of the globe’s known reserves.

With the opportunity to tighten its grip on a burgeoning market, China earlier this month cut its rare earths export quota by 72 percent for the second half of 2010, a move aimed at forcing international firms to manufacture rare earth products on Chinese soil, bringing with them a steady tide of high-paying jobs and taxes.

While raising the specter of a trade dispute with the United States, the cuts were not the first from China, and they may not be the last.

“I’m not sure we’re going to have much choice over the next short while,” said Jon Hykawy, a clean technology and materials analyst at Byron Capital Markets Inc. “We’re going to be in a situation where a lot of the downstream processing is done by Chinese companies. The only difference will be even the Western companies in Japan and South Korea will have to move their plants to China.”

But it does not have to be that way, according to U.S. mining firms searching for new domestic rare earth deposits to develop into mines.

China’s latest cut in exports exposed what some believe to be a significant shortcoming in U.S. energy policy and has refocused attention on the need to revive the domestic rare earths industry needed to power a low-carbon economy.

Denver-based Molycorp Minerals LLC, which owns the Mountain Pass mine, has ambitious plans to retool the facility and resume mining and processing of 20,000 tons of rare earths by 2012, up from its current 2,000 tons a year.

As the only current producer of rare earths in the United States — and the only company with an existing mining infrastructure and proven reserves — Molycorp could be the first to significantly expand rare earth mining and processing in the United States.

But reviving Mountain Pass will require more than a half-billion dollars to retool the mine’s aging separation plants, build a new gas-fired power generator and water recycling units, and acquire expensive technology licenses to convert the rare earth minerals into usable metals, alloys and magnets.

New York Times

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