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Chinese Control of Rare-Earth Metals Could Stall Hybrid Growth

“In this headlong rush to go ‘green,’ we are essentially trading one type of import reliance for another,” business author Robert Bryce warns.

LA JOLLA, CA – China’s control of most of the world’s supply of lanthanides at the same time demand is increasing for the rare-earth metals could hurt the growth of hybrid-electric vehicles, author Robert Bryce says.

Lanthanum is a key ingredient in nickel-metal-hydride batteries that power many HEVs worldwide, and experts say new sources for the rare-earth metals have yet to be found.

Increasing U.S. corporate average fuel economy to a 35.5 mpg (6.6 L/100 km) fleet average by 2016 is “an ambitious goal, and it may well be laudable,” Bryce, author of the new book “Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future,” tells attendees here during a recent Toyota Motor Sales U.S.A. Inc. Sustainability Seminar.

The key question, he says, is whether there will be sufficient quantities of lanthanides to produce the quantity of hybrids needed to meet the mileage standards set by President Obama.

Using data provided by Toyota, Bryce says each Prius HEV contains about 25 lbs. (11 kg) of rare-earth metals, more than twice the amount in a standard vehicle, likely making it the most lanthanide-intensive consumer product ever made. Other HEVs also contain large amounts of rare-earth metals.

Lanthanides also are in demand for consumer electronics, such as computer hard-drives, cell phones and televisions; as well as in wind turbines, X-ray machines and precision-guided munitions.

China controls somewhere between “95% and 100% of the world’s supply of this entire row of the periodic table,” Bryce says, flashing a chart showing 15 elements such as lanthanum, neodymium and samarium.

The Prius’ NiMH battery pack contains 22 lbs. (10 kg) of lanthanides. Some 2.2 lbs. (1 kg) of neodymium is used in each Prius’ iron-boron magnets found in the motor-generator and batteries.

“There are no significant supplies (of lanthanides) that can come on stream in anything close to the time span the market needs,” Bryce says, noting studies show demand for lanthanides could outstrip supply as early as 2013.

Today’s market for lanthanides is about 100,000 tons (90,718 t) per year, he says. “Estimates are that within two-three years the market demand will be 120,000-130,000 tons (108,862-117,932 t) per year.”

The U.S. Geological Survey shows worldwide rare-earth reserves at 99 million tons (89.8 million t) but 2009 production at just 124,000 tons (112,490 t), with 120,000 tons of lanthanides mined in China and none in the U.S.

China, exemplified by the quote from former Communist Party leader Deng Xiaoping – “There is oil in the Middle East, there are rare-earths in China; we must take full advantage of this resource” – is well aware of its position of power on lanthanides, Bryce says.

“In this headlong rush to go ‘green,’ we are essentially trading one type of import reliance for another,” he warns of China.

Unlike the number of countries the U.S. relies on for oil imports and exports, the movement to produce more HEVs means “we are going to be more dependent on a single market, where there’s no transparency and one dominant market player who happens to own most of our debt already,” Bryce says.

China is cutting back on exports of rare-earth elements, while increasing export fees on lanthanides and encouraging companies using such metals to locate in China.

“This makes perfect sense from a strategic standpoint, an employment standpoint, from a balance and trade standpoint,” he says. “The Chinese don’t want to sell you the rare-earth elements that are needed to make a television. They want to sell you the television.”

Earlier this month, the U.S. Government Accountability Office released a report showing deposits of rare-earth ore are “geographically diverse,” with locations in the U.S., Australia, Canada and Greenland. However, the report found China is dominant in the ability to process rare-earth oxides into metals.

A U.S. mine in Mountain Pass, CA, operated by Molycorp Minerals LLC, was shuttered in 2002 partly after pollution concerns arose. Plans are to bring it back online later this year, but Molycorp is lacking in its ability to refine oxides into finished metals, the GAO says.

Molycorp reportedly hopes to raise $350 million-$500 million through an initial public offering to modernize and expand Mountain Pass, as well as fund new processes and technologies.

But the GAO report says it may take up to 15 years for the U.S. to rebuild its rare-earth supply chain, a scenario dependent on investments in processing infrastructure being made, new-technology development and acquiring patents.

Other U.S. rare-earth deposits have been found in Idaho, Colorado, Missouri, Montana, Utah and Wyoming, but they only are in the exploratory stages and could take seven to 15 years to come fully online after complying with state and federal regulations, the GAO says.

But Bryce warns U.S. sourcing of rare earths could backfire if the Chinese decide they are “not really crazy about competition” and undercut the price of U.S. lanthanides.

Reducing the need for rare-earth metals in HEVs is a noble goal, he says. But for some rare metals, there’s “just no replacements.”

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