Supply of critical rare-earth elements about to expand

There are rare-earth elements in your computer, digital camera, television, smartphone, in the batteries of hybrid vehicles, in long-lasting lightbulbs and serving as critical magnets in guided missiles.

Yet the available supply of rare-earth elements has been cut in the past few years. Nearly all the world's processing facilities are located in China, which started reducing export quotas about two years ago, then restricted exports further following a dispute last year with Japan over an island. China is also closing some of its rare-earth processors, citing environmental concerns.

Together, the actions have increased the costs of rare-earth minerals, which have soared by 1,500 percent on average during the past year, alarming the U.S. government.

Some relief may be coming. Efforts to diversify the supply of rare-earth minerals should get a boost later this year when two mines, one in the U.S. and one in Australia, ramp up production. (Watch a video of the U.S. mine here: http://www.youtube.com/watch?v=R748lCp8Fic&feature=channel_video_title.) Supplies aren't expected to match demand for years, however, triggering a worldwide rush to locate and extract rare-earth elements. (The minerals are known as elements once they are mined.)

"It's gotten the attention of Congress," said U.S. Geological Survey researcher Thomas Frost, noting that the USGS's 2011 budget includes a directive to research rare-earth minerals.

"We've realized we need to better understand what potential sources of rare earths there are in the U.S., and in the world, that are not controlled by China, and that hadn't been considered before," he said.

The U.S. mine, owned by Molycorp, has reopened after closing in 2002 following radioactive wastewater spills and price competition. The largest spills, from a pipeline to Nevada, occurred in the late 1990s, in protected lands in the Mojave Desert. The company has since changed its ownership structure.

"We want people who buy from us to know we do things the right way," said Mark Smith, Molycorp CEO, who says Molycorp has a new, environmentally friendly mission. "We care about the environment and we care about what we do, and we think that makes a difference with customers today," he said.

Molycorp's facility, in Mountain Pass, California, will expand production dramatically. It's being rebuilt to produce up to 40,000 metric tons of rare-earth elements by 2013, which would be a 700 percent increase from its production target for the end of this year.

Just off of its own exit on Interstate 15, about an hour's drive from Las Vegas, the Mountain Pass mining site is nestled in a small valley between two mountain ranges in the desert.

The carbonatite deposit, which contains a variety of ore types, was discovered by prospectors in 1949, according to a U.S. geologist. About 8 percent of the deposit contains rare-earth minerals, a good ratio in rare-earth mining.

Seventeen elements on the periodic table of elements are considered rare earth, including neodymium and terbium. Molycorp mines 10 of the rare-earth elements by hauling ore-laden rocks from the ground, crushing them, and then chemically extracting the elements.

"Molycorp picked it up pretty quickly and really developed the mine," said Keith Long, a mineral economist and geologist with USGS, who believes Molycorp is a pioneer in the technology to extract rare-earth elements.

Molycorp remained a big player in the global market even as it competed for the lowest price with China, according to Long.

"Starting in the 1980s, China was able to start taking over the rare-earth market, which it was able to do because its mining industry is at a primitive, low-cost model," he said.