by Anthony Marchese
60 Minutes did a brilliant job in explaining the rare earth market given the limited amount of time they had. In a nutshell, rare earth minerals are found in virtually every modern device we own, from our smartphones to our refrigerators to the Air Force F-35, the most technologically advanced fighter plane in the world.
Molycorp, the poster-child for the rare earth industry, was featured in the story as a victim of China’s virtual monopoly of the worldwide rare earth market.
What 60 Minutes couldn’t tell you is the fact that Molycorp has struggled for two principal reasons: operational difficulties starting their plant in California and the biggest reason of all, their reliance on the sale of light rare earths. The rare earth market can be divided into light and heavy rare earths, based on their atomic weight
China, which accounts for 80% of the world’s light rare earths, produces vast quantities of light rare earths as a byproduct of iron ore manufacturing in Northern China. Molycorp and Lynas Corp of Australia account for the balance. There is no shortage of light rare earths in the world. Prices are depressed and are expected to remain that way for the forseeable future.
Heavy rare earths, on the other hand, ARE SOLELY PRODUCED IN CHINA. They are the building blocks for many technologically driven products. They are used in virtually every significant defense system of the United States. Unlike the light rare earths, China is now looking outside its borders for heavy rare earth deposits and have been active in Australia and Africa.
We can assume their desire to go outside stems from their assessment of future demand. It is not surprising that heavy rare earth prices have risen within China since the beginning of the year.
James Clapper, Director of National Intelligence, in 2013 identified the Chinese domination of the heavy rare earth market in his Worldwide Threat Assessment of the US Intelligence Community. Substitution of heavy rare earth elements is extraordinarily difficult. Consequently, it is imperative that the United States takes measures to encourage domestic production of heavy rare earths as a means to become independent of China and to stimulate downstream processing of rare earth metals. Although the most immediate needs would be centered in the defense sector, any future supply disruptions would affect companies of all types, especially consumer electronics companies such as Apple, whose products have a heavy reliance on rare earth elements.”
Texas Rare Earth Resources(OTCQX: TRER)is currently developing one of the world’s largest and most profitable heavy rare earth deposits just 80 miles southeast of El Paso, Texas. It seeks to provide an alternative to China’s monopoly of the heavy rare earth market. In addition, it will create byproducts such as uranium, lithium and beryllium which adds considerable value to the project.
