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Rare Earths Industry
Technological, Economic, and
Environmental Implications
Edited by
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ISBN: 978-0-12-802328-0
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xix
xx LIST OF CONTRIBUTORS
Jeriffa De Clercq
Department of Industrial Technology and Construction, Industrial Catalysis and Adsorption
Technology (INCAT), Ghent University, Ghent, Belgium
Jeroen De Decker
Department of Inorganic and Physical Chemistry, Center for Ordered Materials, Organometallics
and Catalysis (COMOC), Ghent University, Ghent, Belgium
Bayarmagnai Enkhzul
Central Geological Laboratory, Ulaanbaatar, Mongolia
Andrea Ferrari
D’Appolonia S.p.A., Genoa, Italy
I. Giannopoulou
School of Mining and Metallurgical Engineering, National Technical University of Athens,
Athens, Greece
Bertil Grundfelt
Kemakta Konsult AB, Stockholm, Sweden
X. Guo
Department of Materials Science and Engineering, Delft University of Technology, Delft,
The Netherlands
Jens Gutzmer
Institute of Mineralogy, TU Bergakademie Freiberg, Freiberg, Germany
Sabrina Herrmann
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany; University of Potsdam, Potsdam-Golm, Telegrafenberg,
Germany
Lars Olof Höglund
Kemakta Konsult AB, Stockholm, Sweden
Sotiris N. Kamenopoulos
School of Mineral Resources Engineering, Technical University of Crete, Chania, Greece
A. Karantonis
School of Chemical Engineering, National Technical University of Athens, Athens, Greece
S. Kaya
Department of Metallurgical and Materials Engineering, Middle East Technical University
(METU), Ankara, Turkey
Miranda Keith-Roach
Kemakta Konsult AB, Stockholm, Sweden
James C. Kennedy
ThREE Consulting, St. Louis, MO, USA
Kostas Komnitsas
School of Mineral Resources Engineering, Technical University of Crete, Chania, Greece
LIST OF CONTRIBUTORS xxi
Friederike Körting
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany; University of Potsdam, Potsdam-Golm, Telegrafenberg, Germany
Anne Kousa
Geological Survey of Finland, Kuopio, Finland
Jukka Laukkanen
Geological Survey of Finland, GTK Mineral processing, Outokumpu, Finland
Walter Leal Filho
Hamburg University of Applied Sciences, Research and Transfer Centre “Applications of Life
Sciences”, Hamburg, Germany
Ling Zhi Li
China Western Mining Co., Ltd, Xining, Qinghai, P.R. China
Batzorig Lkhagvasuren
Central Geological Laboratory, Ulaanbaatar, Mongolia
Christin Lubitz
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany
Stefan Luidold
Chair of Nonferrous Metallurgy, Montanuniversitaet Leoben, Leoben, Austria
Paloma Magistrati
Fen Minerals A/S, Norway
Nabeel A. Mancheri
Institute of Social Science, University of Tokyo, Tokyo, Japan
Delgermaa Margai
Mongol Gazar LLC, Ulaanbaatar, Mongolia
Christian Mielke
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany; University of Potsdam, Potsdam-Golm, Telegrafenberg, Germany
Helmut Mischo
Institute for Mining and Special Civil Engineering, TU Bergakademie Freiberg, Freiberg,
Germany
Nicolò Olivieri
D’Appolonia S.p.A., Genoa, Italy
Dimitrios Panias
School of Mining and Metallurgical Engineering, National Technical University of Athens,
Athens, Greece
Anne Papenfuß
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany; University of Potsdam, Potsdam-Golm, Telegrafenberg, Germany
xxii LIST OF CONTRIBUTORS
Ioannis Paspaliaris
School of Mining and Metallurgical Engineering, National Technical University of Athens,
Athens, Greece
Sebastiaan Peelman
Department of Materials Science and Engineering, Delft University of Technology, Delft,
The Netherlands
Esa Pohjolainen
Geological Survey of Finland, Espoo, Finland
Alexander Poscher
Chair of Nonferrous Metallurgy, Montanuniversitaet Leoben, Leoben, Austria
V. Prakash
Department of Materials Science and Engineering, Delft University of Technology, Delft,
The Netherlands
Christian Rogass
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany
Roberto V. Santos
Serviço Geológico do Brasil – CPRM – SGAN 603 Conj. “J” Parte A – 1 andar –
CEP 70.830-100 – Brası́lia – DF, Brazil
Holger Schnideritsch
Chair of Nonferrous Metallurgy, Montanuniversitaet Leoben, Leoben, Austria
Hans K. Schønwandt
G.B. Barnes & Associates, South Perth, WA, Australia
Seshadri Seetharaman
Department of Materials Science and Engineering, Royal Institute of Technology, Stockholm,
Sweden
Deborah Shields
Department of Economics, Colorado State University, Fort Collins, CO, USA
Jilt Sietsma
Department of Materials Science and Engineering, Delft University of Technology, Delft,
The Netherlands
Francisco V. Silveira
Serviço Geológico do Brasil – CPRM – SGAN 603 Conj. “J” Parte A – 1 andar –
CEP 70.830-100 – Brası́lia – DF, Brazil
Zhi H.I. Sun
Department of Materials Science and Engineering, Delft University of Technology, Delft,
The Netherlands
Lucy Takehara
Serviço Geológico do Brasil – CPRM – Rua Banco da Provı́ncia, Porto Alegre - RS, Brazil
LIST OF CONTRIBUTORS xxiii
Lidong Teng
Department of Materials Science and Engineering, Royal Institute of Technology, Stockholm,
Sweden
Sabine Tonn
Helmholtz Centre Potsdam–GFZ German Research Centre for Geosciences, Potsdam,
Telegrafenberg, Germany
Y.A. Topkaya
Department of Metallurgical and Materials Engineering, Middle East Technical University
(METU), Ankara, Turkey
Akseli Torppa
Geological Survey of Finland, Kuopio, Finland
Thomas Ulrich
Department of Geoscience, Aarhus University, Aarhus, Denmark
Pascal Van Der Voort
Department of Inorganic and Physical Chemistry, Center for Ordered Materials, Organometallics
and Catalysis (COMOC), Ghent University, Ghent, Belgium
Xiaosheng Yang
Geological Survey of Finland, GTK Mineral Processing, Outokumpu, Finland
Yongxiang Yang
Department of Materials Science and Engineering, Delft University of Technology, Delft,
The Netherlands
Volker Zepf
Scientist at the Chair of Resource Strategy, University of Augsburg, Germany
Preface
Rare earths are elements that comprise critical components of many of our modern technological
devices and everyday electronics. Their demand worldwide is projected to increase, given their
many applications. The European Union (EU) imports more than 90% of its rare earth metal
(REMs) needs from countries such as China because there is not enough internal supply. Experts
predict that the demand for these metals will grow as consumer preferences shift toward high-tech
and “green” products. To ensure supply security, the EU is trying to improve access to rare earths,
reduce their consumption, and enhance extraction conditions across the continent. Yet, despite the
relevance of and need for rare earths, their technological and economic elements and the environ-
mental implications of their exploration and trade are not fully understood. This innovative book
will provide such a contribution and will address this gap in the book market.
A main motivation for proposing a book on rare earths has been the global increasing demand for
critical, updated, and extensive analysis and information on the theme. The book has an interdisci-
plinary orientation with a focus on technical, scientific, academic, economic, and environmental
and market issues; thus, it widely covers multiple interests of the audience. The chapters provide
updated information and a priceless analysis of the theme. They present the latest techniques,
approaches, processes, and technologies that can reduce the costs of compliance with environmental
concerns in a way that makes it possible to anticipate and mitigate emerging problems. At the end of
each main part of the book, a critical summary outlines the technological, economic, and environ-
mental implications of the rare earth reserves, explorations, and market.
At the beginning, a chapter offers a concise but meaningful geopolitical analysis of the current
worldwide scenario and the importance of rare earth exploration for governments, corporate groups,
and local stakeholders. Rare earth elements (REEs) are composed of 15 chemical elements in the
periodic table. Scandium and yttrium have similar properties, with mineral assemblages, and are
therefore referred to alike in the literature. Although they are abundant on the planet surface, rare earths
are not found in concentrated form, which makes them economically valuable because of the challenges
and difficulties in obtaining them. Their importance in the industry lies in the fact that almost all newer
technologies require these rare minerals, such as solar and wind energy systems, smartphones, the aero-
space industry, high-efficiency lighting and electric motors, and hybrid and electric vehicles.
In view of the high demand for rare earths, their exploration should occur on a sustainable basis
using processes with “green” technologies; in this sense, recycling has a pivotal role and has its
own space and discussion in the book. The book provides a description of the many facets and
complexities related to rare earth exploration, development, and disposal, which have revealed them-
selves to be of utmost importance to the economies of developed and developing countries, among
which are China, the United States, Australia, India, Brazil, and Germany, to mention just a few.
Rare earths have suddenly become a national technological and economic priority because countries
have aimed to become even more competitive in the world market, and these minerals are unquestion-
ably essential.
As observed in the market fact sheets and institutional reports, worldwide demand is expected to
grow by 8–11% each year and mining and production may not happen at the same stride. The projected
global demand for REEs in 2016 is at least 160,000 tons annually, suggesting a Hobbes and Calvin
principle that theoretically explains the dynamics of a gulf between ‘supply’ and ‘demand’, in which
raw resource demands surpass supplies for specific minerals.
xxv
xxvi PREFACE
Simply put, in the near future the REE sector risks facing short-term shortages. The increase in
demand is intertwined with environmental implications of production and existing supply risks owing
to an intricate and complex market. These issues have strikingly led to the identification of REEs as
critical raw materials.
The recycling and reuse of REMs is a promising field because it also saves energy used in mining
and processing, conserves resources, and reduces pollution and greenhouse gas emissions. Consistent
with this goal, it is important to undertake an analysis of socioenvironmental and socioeconomic
elements and to produce guidelines that should be considered in the sustainable recycling of REMs,
in line with the principles of sustainable development and corporate social responsibility.
In terms of socioeconomic sustainability, a possible course of action is to develop analytical guides
for the socioeconomic evaluation of the exploitation of REMs and their recycling. Such guides may
then be used as policy tools to allow informed decisions to ensure socioeconomic elements are consid-
ered in the exploitation and recycling of REMs, ensuring sustainability aspects are fully considered.
Companies in the information technology and energy sector (e.g., wind energy) urgently need to
address problems related to their short supply of REEs. One way to address the problem is to maximize
the use of already existing REEs (i.e., their recovery from existing electronic equipment); this leads a
discussion of the sustainability of the rare earths industry not only in mining but also in overall REE
production, consumption, and recycling. In this context, recycling methods may have an important role
and will be useful to companies. Yet, there is a paucity of research in this field.
The purpose of this book is to compile current information and report on research and projects that
may ultimately catalyze efforts to develop a strategy for managing REE resources as a whole and
reducing their potential environmental impacts in particular. It consists of a set of chapters in which
each element (technological, environmental, or market) is emphasized. To present the topics system-
atically, the book was divided into three main parts. Part I deals with rare earth reserves and mining;
Part II focuses on rare earth processes and high-tech product development and industry market issues;
and Part III deals with rare earth environmental issues: opportunities and challenges.
Each chapter presents highlights of the methods and findings of updated, unique, particular studies
provided by experts on rare earths, who are either researchers of acknowledged higher education
institutions or belong to renowned research institutes worldwide. The book gathers a collection of
high-quality scientific, academic, and technological work that is of utmost value to those interested
in or engaged with the rare earths sector. Chapter 1 offers an overview of the current situation and
trends of rare earths related to pertinent issues of the industry, either economic facts or innovative sci-
entific solutions and new approaches to a problem issue: for instance, an environmental one. Thus be-
gins a valuable outline for a startup reading into the theme. Chapter 2 provides a critical review on
Chinese rare earth export restrictions and implications with regard to its current monopoly over the
industry, and provides insights into the market in terms of volume, value, and availability. Chapter 3
examines how United States/International Atomic Energy Agency regulatory constraints have
been unfavorable for Western rare earth producers and have therefore contributed to some extent
to China’s rare earth production leadership. The chapter discusses the economic viability of rare
earths in the interfaces of geochemistry and value chain integration. Chapter 4 reports on the poten-
tiality of REEs in Brazil by comprehensively analyzing rare earth sites in Brazilian lands, including the
capacity of mines with estimated reserves. It discusses details about REEs in a country with
promising production in the following decades. The current state of active operational mines in
different regions of the country is fully discussed regarding geological and economic value aspects.
Chapter 5 describes the rare earth deposit Tanbreez in south Greenland and its potentiality and
concentrates in the soil with conservative estimates of more than four billion tons of specific REEs.
PREFACE xxvii
The chapter largely contributes to the literature by advancing high-intense magnetic separation, and
therefore can substantially minimize the impact of waste products. Chapter 6 contributes to the
rare earth theme by developing a mix of qualitative and quantitative sustainable development criteria
and indicators, which can in turn be used for assessing REE mining projects. The proposed criteria and
indicators can be used by overall stakeholders, as well as to assist decision and policy makers
regarding the bottom line concerning social, economic, environmental, geopolitical, and technological
aspects for REE development. Chapter 7 extends the analysis of sustainability in REE mining by elab-
orating a framework that includes fundamental elements contributing to a holistic sustainable platform
for REEs including tangible and intangible variables, limiting and controlling factors, and outputs for
improving a global scenario on REEs given the absence of an existing international interorganizational
regulatory agency for the sector. The framework can be widely applied to a set of situations helping to
balance governing positions and decisions about certain multidimensional problem issues in the rare
earth industry. Chapter 8 deals with an analysis of rare earth underground mining and radioactivity in
terms of control and monitoring strategies. It attempts to determine radon dispersion sources and the
risks related to radiation exposure. It focuses on key issues of rare earth exploration and processes,
such as occupational exposition, tailings, mine water, dust suppression, and ventilation. The chapter
discusses environmental and health issues of rare earth production. Chapter 9 examines China’s
rare earth resources, production, mines, and ore mineralogy, as well as beneficiation techniques
including flow sheets, flotation, and leaching reagents. The chapter discusses ion adsorption and fo-
cuses on the largest active reserves of the world in China, among which is the Bayan Obo
REE-Nb-Fe ore in Inner Mongolia. Chapter 10 deals with the role of rare earth supply risks in
low-carbon technologies innovation. It analyzes offshore wind turbines and electrically powered vehi-
cles to determine actual quantities of rare earths used within their generators, electric motors, and bat-
teries. The chapter contests prevalent views and allegations that a paucity of potential supply would
disrupt the further development of the automotive industry, for instance. Chapter 11 studies the effects
of high-pressure acid leaching behavior of scandium together with nickel and cobalt from a refractory
nickel laterite ore. It seeks to determine the process parameters and optimum process conditions over
finer particle sizes and longer leaching duration. Chapter 12 investigates leaching REEs from bauxite
residue using Bronsted acidic ionic liquids. It applies innovative solvents called ionic liquids in rare
earth exploitation by leaving lower-value metals such as iron undissolved. Chapter 13 briefly reviews
the recent literature on ionic liquids in REM electrodeposition and systematically presents the main
electrochemical properties of ionic liquids and applications. As an outcome, the chapter presents
the results of a preliminary investigation for the suitability of a pyrrolidinium-based ionic liquid for
the electrodeposition of lanthanum, thus adding significantly to the literature on REEs. Chapter 14
describes different options of processing for polishing glass substrates or wafers and the use of
fine-grained particles based on the oxides of the lanthanides cerium and lanthanum. It examines
different hydrometallurgical methods including mineral acids for extraction. It also investigates pre-
cipitation methods, by carbonate or oxalate carriers, as the means to produce a rare earth concentrate
required for reuse in fabricating new polishing powders. Chapter 15 offers a critical evaluation of the
solubility of rare earth oxides (REOs) in molten fluorides. It presents a comprehensive analysis of
available data from previous publications with a focus on the limited solubility of REOs as an obstacle
to preparing REMs. Chapter 16 provides a hyperspectral REE mapping of three outcrops at the Fen
Complex, Norway: calcitic, dolomitic, and ankeritic carbonatites. The new approach allows a charac-
terization of the outcrop mineralogy in a rapid and robust manner because of new spatiotemporal
hyperspectral methods. Chapter 17 provides a general description of some environmental impacts
of the exploitation of REMs and outlines areas where attention is needed, such as ecosystem alteration
xxviii PREFACE
and environmental risks of ground and surface water contamination, for example. A particular review
is done of waste, radioactive waste, the generation of tailingda hazardous waste materialdand its
particulates, and fugitive dust from tailings impoundment transported by wind that may accumulate
in downwind areas. The chapter discusses the topic by outlining treatment and disposal solutions.
Chapter 18 appraises environmental legislation and best practice in the emerging European REE
industry with regard to quantities of waste and to nontarget toxic metals, fluorine, and radionuclides.
Past REE mining and processing resulted in significant environmental impacts in several countries, and
the chapter assesses the EU’s existing environmental legislation, comparing it with regulations with
other REE-producing countries. Chapter 19 reviews the main recycling aspects of REE elements
by offering an overview of ongoing possibilities and advances worldwide. Current REE recycling pro-
jects and prospective fields are identified in the literature and news reports. Recycling is taken as one
solution to the likely scarcity of rare earth supplies, besides being ecologically desirable to alleviate the
pressure to open new mines or increase current production. Notwithstanding, economic and cost as-
pects and feasibilities are examined in the review. Chapter 20 investigates the systemic need for
and approaches to neodymium use and recycling potential. Consequently, the study aims to determine
and evaluate the quantitative recycling potential with a focus on neodymium used in NdFeB magnets
in wind turbines, electric cars, and computer hard drives at a local level in the domains of time and
space. Chapter 21 examines the leaching of REEs by reviewing past and present technologies in pri-
mary REE production and in current REE recycling as critical to hydrometallurgical REE processing.
The chapter provides a comprehensive understanding of these processes as fundamental to REE recy-
cling from secondary resources. Chapter 22 provides a theoretical analysis of simultaneous electro-
chemical recovery of REEs and iron from magnet scrap. It reviews the role of the microstructure of the
alloy and different elements in the dissolution mechanism of the REE magnet. The focus is on under-
standing the electrochemical behavior of different components in the NdFeB magnet alloy as well as a
selective extract of REEs into aqueous solutions. Chapter 23 contributes to the literature with scien-
tific advances by providing metal-organic frameworks in the field of liquid adsorption for recovering
rare earths. Selectivity tests demonstrated very high selectivity for europium over the transition metal
zinc and good selectivity between the rare earths europium and yttrium. Chapter 24 examines rare
earth extraction from NdFeB magnets and REOs using aluminum chloride–fluoride molten salt pro-
cesses. The chapter points out that the method is well suited for recovering REMs from magnetic scrap
containing these metals. The major field knowledge advances lie in the molten salt and electrodepo-
sition with regard to the recovery of neodymium and dysprosium from used magnets. Chapter 25
deals with the mineralogy and beneficiation of REE in the Mushgia Khudag ore, South Gobi, in
Mongolia, as investigated during a joint research and development project of GTK Finland and
CGL in Mongolia in 2012–2014. Samples were examined by MLA, XRD, EMPA, XRF, and ICP–MS.
In addition to apatite veins, the deposit also contains carbonatite; both rock types are associated with
Mesozoic, c. 140 Ma, syenite magmatism. This chapter contributes to knowledge of processing an
extremely REE-enriched igneous-hydrothermal ore type. Chapter 26 summarizes the major key find-
ings, outcomes, innovative approaches, and pertinent methods presented in the chapters as the means
to promote theoretical-conceptual advances in the literature and the applicability of innovative pro-
cesses with regard to rare earths. The chapter is a synthesis of the previous chapters with a compilation
of the key contributions of the authors in academic, scientific, and technological terms.
We hope this book will serve as a reference source for those working with REMs or for those who
are interested in their various applications.
Enjoy your reading!
The Editors.
CHAPTER
AN OVERVIEW OF THE
USEFULNESS AND STRATEGIC
VALUE OF RARE EARTH METALS
1
Volker Zepf
Scientist at the Chair of Resource Strategy, University of Augsburg, Germany
1
Note: Commas have been used as 1000 dividers; points indicate decimals.
Rare Earths Industry. http://dx.doi.org/10.1016/B978-0-12-802328-0.00001-2
Copyright © 2016 Elsevier Inc. All rights reserved.
3
4 CHAPTER 1 AN OVERVIEW OF THE USEFULNESS AND STRATEGIC VALUE
(Sc, atomic number 21), yttrium (Y, 39), and the lanthanides, which are lanthanum (La, 57), cerium
(Ce, 58), praseodymium (Pr, 59), neodymium (Nd, 60), promethium (Pm, 61), samarium (Sm, 62),
europium (Eu, 63), gadolinium (Gd, 64), terbium (Tb, 65), dysprosium (Dy, 66), holmium (Ho, 67),
erbium (Er, 68), thulium (Tm, 69), ytterbium (Yb, 70), and lutetium (Lu, 71). Promethium is not
usually included in the discussion because it is the only radioactive REE and principally it does not
occur in nature. Next to the umbrella term “REE,” the elements are further grouped into light REEs
(LREEs) and heavy REEs (HREEs), and some authors such as Kingsnorth (2010) add a medium class
of REEs (MREEs). The attributions to these groups are not distinct: the United States (US) Geological
Survey (USGS) calls La to Gd the LREEs and Tb to Lu and Y the HREEs (USGS, 2014). Kingsnorth,
however, uses La to Nd as LREEs, Pm to Gd as MREEs, and Tb to Lu plus Y as HREEs (Kingsnorth,
2010). Introduction of the three groups may become common because the new Chinese tax rates
differentiate among LRE, MRE, and HRE, i.e., light, medium, and high rare earth–rich concentrates
(Argus, 2015).
The term “rare earth” traces back to the time of discovery of the elements, at around 1800. The
origin and reason for calling the materials “rare” are not explicit, but the etymological explanation
given by Reiners (2001) is helpful. She argues that the adjective “rare” was used from the fifteenth
century onward for something strange, extraordinary, and astonishing (Reiners, 2001). Thus, “rare”
does not refer to a rare occurrence but to a strange habitus of the materials. Today, the low concen-
trations of REEs in ore bodies may be considered as being rare. “Earth,” however, is clearly a common
word for oxidic materials in the nineteenth century.
matrix introducing as main indicators “supply risk” and the “impact to supply restriction”; the
latter indicator is about equivalent to the term economic importance. The group of the REEs was
identified as highly critical in supply risk and nearly high concerning the impact of supply re-
striction (NRC, 2008).
In 2009, Angerer et al. conducted a profound study on raw materials for emerging technologies in
which neodymium was ranked the second most critical element (Angerer et al., 2009). In 2010, the
European Commission issued the Critical Raw Materials for the EU, a report of the ad hoc working
group that pinpointed the group of the REEs as critical with the highest supply risk and medium
economic importance (European Commission, 2010).
A sequel to the NRC work was the Critical Materials Strategy published in 2010 by the US
Department of Energy in which in the matrix as developed by the NRC individual REEs were iden-
tified as being the most critical elements under investigation (US DOE, 2010). The update 1 year later
confirmed the status (US DOE, 2011). Consultants and press media joined the publication circle, e.g.,
Reuters’ analysis of the “Fight for Rare Earths” (Reuters, 2010). Hurst (2010) reported on the Chinese
REE industry and explained lessons to be learned.
In 2011, Ernst and Young (2011) reported on REEs as technology minerals for which deficits in
supply were identified. The focus was more on mining ventures rather than on general criticality. In the
same year, the European Joint Research Center dealt with “Critical Metals in Strategic Energy
Technologies” and attributed to dysprosium and neodymium an overall high risk based on market and
political factors (JRC, 2011). In 2014, the United Nations Conference on Trade and Development
produced a special report on REs that discussed global high dependency on Chinese REE production
and the importance of REEs for defense applications (UNCTAD, 2014). Since about 2010, many more
such studies and sequels with more or less the same assessment showed up, so that from this
perspective the extraordinary importance and criticality of REEs were underlined.
2
Assuming an average ore concentration of 23% La and 18% Nd; calculated with an annual production of 110,000 t.
6 CHAPTER 1 AN OVERVIEW OF THE USEFULNESS AND STRATEGIC VALUE
neodymium1 19,800 t; and cerium1 55,000 t and zinc 13.3 million t (USGS, 2015b). Thus, the message
of the table describing abundance is of no real help when talking about actual extraction potential.
The major ores from which REEs are being produced are bastnaesite, monazite, xenotime, and ion-
adsorption clays. Bastnaesite is a fluorocarbonate mineral with the basic formula3 [(Ln) (CO3) F]
composed of various additions of LREE and a few HREEs (Zepf, 2013). This ore is the primary
feedstock of the Chinese Bayan Obo and the California Mountain Pass Mine. Monazite, a phosphate
mineral with the typical formula [(Ce, La, Y, Th)PO4], can contain additions of other LREEs and a few
HREEs. A major problem when processing monazites is radioactive residues, which have to be treated
accordingly. Monazite is the main ore of the Australian Mount Weld mine. Xenotimes and ion-adsorption
clays contain relatively high percentages of HREE, but these minerals themselves are rare or have an
overall low REE concentration. Main extraction areas of these minerals are in southeastern Chinese
provinces.
3
Ln stands for lanthanides.
3. OCCURRENCES, MINING, AND PRODUCTION 7
FIGURE 1
Rare earth element production, 1950–2014. Notes: The production data refer to the lanthanides,
i.e., excluding yttrium and scandium production. Data given in metric tons (1 t = 1000 kg).
Sources: USGS Minerals Yearbooks 1994–2012; USGS Mineral Commodity Summarises 2015.
magnetic RE supply? It is likely that considerable illegal mining and trade are present, but actual data
remain obscure.
Annual global production numbers are known; quantitative shares of the individual REEs are not
available, however. The numbers can and have to be interpolated from known concentrations of single
elements in the mined ores. Of the REEs contained in the bastnaesite of the Bayan Obo ore body, 50%
is cerium (CeO2), lanthanum comprises about 25% (La2O3), and the neodymium content is about 17%
(Nd2O3) (Zhi Li and Yang, 2014). Using a simplified assumption that the entire global production is
derived from such ores, the individual share can be deduced with reasonable reliability for LREEs: In
2014, with an annual production of 110,000 t REOs, cerium contained is 55,000 t, lanthanum is
27,500 t, and neodymium 18,700 t.
Various separation and refining techniques are explained, e.g., by Gupta and Krishnamurthy
(2005), so just one major aspect needs recognition: that during separation and refining in a first step,
cerium and lanthanum always have to be separated before other REEs can be extracted. This means
that the separation of the cheapest REEs, cerium and lanthanum, requires a lot of beneficiation cost.
The supply of these two elements is likely higher than demand. For lanthanum, the systemic substitute
of lithium ion battery technology also reduces demand.
3.2.3 Reserves
Global REE reserves in 2014 are given as 130 million t REO. Until 2008, global reserves were
88 million t (USGS, 2009), so that today’s reserves are the result of recent exploration successes. From
these reserves, 55 million t belong to China (42%), 22 million t are Brazilian (17%), and Australia and
the US together own 5 million t, which is less than 5% of global reserves (USGS, 2015b). It is possible
22 CHAPTER 2 CHINESE REE EXPORT RESTRICTIONS AND IMPLICATIONS
terms of trade; (2) export taxes can reduce the domestic price of the taxed commodity and thus benefit
final consumers of this commodity; this element is especially important when food security is at stake;
(3) export taxes can reduce the domestic price of the taxed commodity and benefit consumers of this
commodity as inputs; and (4) export taxes increase public revenue, which is beneficial in a country
where fiscal receipts on domestic base are limited (Bouet and Debucquet, 2010). The study finds that
all of these reasons except the fourth one may have prompted China to impose restrictions on the
export of rare earth minerals, although China claims environmental degradation as the main reason.
A number of scientific articles and policy reports both from governmental and private organizations
have been published on these minerals, particularly after the 2010 incident of Chinese export
restrictions to Japan over a territorial dispute. These articles and reports have dealt with a wide range of
aspects concerning rare earths from assessing criticality of individual minerals to the possible effects
of future scarcity (Hedrick, 2010; Hurst, 2010; Hoenderdaal et al., 2013; Wübbeke, 2013). Most of
these reports introduce a framework for measuring the criticality of raw materials. Key factors
considered are their economic importance, their substitutability, the diversity of supply, the size of
known resources and reserves, and the potential for recycling (Kleijn, 2012). Assuming these minerals
are critical based on the previous studies, the current study evaluates China’s monopoly over the
industry and provides insights into how widely traded these minerals are and China’s positions in the
international trade in terms of both volume and value. The study investigates the various trade
restrictions imposed by China and its implications including the availability of materials to Western
companies. Some individual rare earths minerals are more critical from the demand and supply side.
Although China has been restricting the export of high rare earths more, the study does not attempt to
evaluate the criticality of individual elements and does not differentiate among them; rather, it has
taken them as a total, largely because of the nonavailability of data on individual rare earths.
Metals and minerals account for a relatively small share of the world industrial output, but their
supply is essential for large value-adding activities in any economy. The demand for raw materials has
been increasing as greater numbers of countries move up in the developmental stage. The greater
demand from outside usually prompts resource-endowed countries to impose restrictions on minerals
that are considered critical. There have been several such restrictions imposed by various countries.
Researchers have already conducted studies with different backgrounds using different techniques on
these trade restrictions. Restrictions to trade include quotas, taxes, and other legislation such as tariff
and nontariff trade barriers. For example, Peeling et al. (2010) provided an economic context of export
restrictions with particular focus on the metal and mineral sector. There could be various policy
objectives in imposing these restrictions, and many argue that Chinese export taxes on these minerals
are imposed to maintain mineral security in the domestic industries. Kim (2010) examined the use of
export restrictions on raw materials and analyzed the policy objectives of export restrictions and their
effectiveness in achieving their stated goals. This study found that by affecting the price and quantity
of trade, export restrictions produce trade-distorting effects in the same way as import restrictions and
may result in efficiency losses.
Export restrictions of one country may induce other exporting countries to take similar measures.
Once an export restriction is applied, it is likely that importing countries will shift their source of
imports to other countries. The other exporting countries may then be forced to apply similar measures
to meet domestic demand by limiting their exports (Dollive, 2008). Rising global food prices during
2006–2008 contributed to high food price inflation that created serious concern in several countries. In
response, several governments applied export taxes to limit exports and thus increase domestic
2. CASE AGAINST CHINA IN WTO ON REE EXPORT RESTRICTIONS 23
supplies at low prices. However, in the case of rare earths, the export restrictions of China actually
resulted in increased prices that eventually prompted other countries to enter the market to supply these
minerals. Some studies such as that by Fabiosa et al. (2003) and Fabiosa and Beghin (2002) examined
the effect of removing all border taxes, including export taxes, domestic subsidies, and other distor-
tions to world commodity markets. Bouet and Debucquet (2010) provided a theoretical background to
using export taxes to maintaining food security. Their analysis emphasized the negative impact of such
measures on the welfare of trade partners and the effects of noncooperative trade policies. Tarr (2010)
analyzed export restraints by Russia on natural gas and timber, which shared the dual effect of
decreasing domestic prices while increasing export prices. The analysis focused on a development
perspective of export restrictions, in that the restrictions are applied to improve the exporter’s terms of
trade. Our study does not find that China had the intention of improving its terms of trade by applying
export taxes and duties on rare earths. This may be true in the case of trade in hydrocarbons, because
both exporters and importers impose several taxes and duties to increase government revenue or
improve the terms of trade.
China claims that its export restrictions are imposed to protect the environment and conserve its
rapidly depleting resource base. However, a study by Korinek and Kim (2010) found that the export
restrictions put in place did not fulfill their objective of environmental protection and the presence of
export restrictions in one country put pressure on other exporters to apply restrictions, which sug-
gests the potential for competitive policy practices in restricting exports. Another important question
raised in the literature is whether weak environmental laws attract foreign firms into mining. This
may be true for domestic firms, because weak environmental regulation may prompt private com-
panies to enter the mining business, which has happened in the Chinese rare earth mining business
for a long time. However, Tole and Koop (2010) found that stringent environmental regulations have
no effect on forming investment location decisions by mining firms. Regardless of any short-term
cost savings from lower environmental standards, most multinational mining firms now view their
presence in environmentally “dirty” parts of the world as potentially damaging to their corporate
reputation, even though they may adopt international best practice standards. In China’s case,
although environmental regulations were weak, except for international firms, the regulatory
framework for the minerals sector was complex. The framework manifests itself in terms of both a
complex approval process and inconsistent regulations and policy among central, provincial, and
local levels of government (Penney et al., 2007).
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