A typical solar energy balance of system, especially solar panels, relies on many metals and minerals to convert solar energy into electricity. For the panels to work, we need several hard-to-source materials, known as rare earth elements (REEs), to help them work effectively.
Also known as strategic metals or critical metals, REEs are found in many products we use daily, including batteries, glass, MRI machines, radars, permanent magnets, computers, electric vehicles (EVs), and wind turbines. Without them, the finished products wouldn’t work as well or be heavier.
Though the name “rare earth element” is somewhat of a misnomer (some are as common as copper), they’re generally difficult and expensive to mine. This is because they’re often mixed in with other elements and must be separated using one of several processes.
Rare earth elements are also unevenly distributed, making it difficult to find large caches of certain ones. As geopolitical tensions rise with China, the world’s largest REE processor and exporter, the United States is investing time and money into finding new mining methods and strategic partners to ensure a steady supply of REEs.
Before discussing national security and all the clean energy goals tied to REEs, let’s step back and understand why they’re so important.
When we talk about rare earth elements, we’re covering 17 specific ones found toward the middle of the periodic table, including:
Lanthanum (La), Cerium (Ce), Praseodymium (Pr), Neodymium (Nd), Promethium (Pm), Samarium (Sm), Europium (Eu), Gadolinium (Gd), Terbium (Tb), Dysprosium (Dy), Holmium (Ho), Erbium (Er), Thulium (Tm), Ytterbium (Yb), Lutetium (Lu), Scandium (Sc), and Yttrium (Y)
Though sometimes called critical metals, they shouldn’t be confused with the United States Geological Survey’s (USGS) list of critical minerals. Though all the REEs are included, the USGS list is more comprehensive, featuring other elements like aluminum, nickel, tin, and zinc.
As noted earlier, rare earth elements are used across many industries. Although most products only have trace amounts of rare earths, they’re light and efficient compared to replacement materials.
For renewable energy initiatives like wind power and solar power, REEs are vital to advancing the country’s mission of transitioning away from fossil fuels toward renewable sources.
Because rare earth elements have so many uses, keeping the supply chain healthy and flowing is a national priority.
In 2022, the U.S. produced about 43,000 metric tons of REEs, up only 1,000 metric tons compared to 2021. Unfortunately, mining and processing REEs is difficult. To supplement domestic production, the U.S. and many other countries rely on China for imports – despite the country’s mining track record.
As mentioned earlier, China has a clear lock on many of the REEs the world needs to achieve its renewable energy goals.
The country processes about 40% of the world’s copper and 87% of all rare earth elements produced, making it the clear number one for global trade. Conflicting information from the American Geosciences Institute pegs the percentage even higher, at 97% of world production.
In any case, the data is clear: one country has monopolized the entire industry. China’s influence on the REE industry is further enhanced by the country’s decision to limit the number of rare earth elements it decides to produce and export. The move reduces supply and inflates prices, ensuring companies earn top dollar for what they process.
So, how did we end up relying on China for nearly all of our rare earth elements? The answer goes back several decades.
Through the 1980s, the United States was a top-dog REE producer. That all changed in the 1990s when Chinese companies began investing heavily in mining and processing, flooding the global market with minerals. The market imbalance made it harder for other companies and countries to compete with the ultra-low cost of products, leading to the closure of multiple mining operations.
The massive uptick in production also brought a critical eye to China’s operations, specifically how its REEs were sourced. There have been obvious concerns about the extent of environmental damage done to procure the elements, and questions have popped up about the country’s alleged use of slave and child labor to mine and process REEs.
It’s also worth noting that China has essentially cornered the market on gallium and germanium processing, putting them in complete control of global demand.
Recently flexing its position in the market, the country will soon start restricting exports of gallium and germanium to other countries, essentially using its position to warn the European Union and the United States tied to ongoing trade disagreements.
Gallium and germanium are important because of their use in many specialized products. Gallium is a component in semiconductors and LEDs, along with sensors. Germanium is used to make infrared products, night vision components, solar cells, and medical diagnostic equipment.
Reduced availability of either of these elements could force the U.S. to look for new trade partners, none of which can produce them at China’s level.
According to the USGS, our reliance on important rare earth elements is growing.
The agency reported rare mineral imports were up from $160 million in 2021 to $200 million last year. In the meantime, the time it takes to commission a new mining operation in the U.S. has ballooned to 16 years, making it nearly impossible to start domestic mining quickly. With that said, innovative technology and companies are opening the door for more domestic production in the coming years.
Resolution Copper, a joint mining operation between Rio Tinto and BHP east of Phoenix, AZ, is in the permitting phase but will likely be waiting for approval for some time. There has also been a cache of rare earth elements found in North Dakota, potentially giving the U.S. a chance to eventually reduce its reliance on imports.
If domestic production isn’t in the cards, the U.S. is exploring new partnerships with several trade-friendly countries. Though not on the same scale as China, exporters of gallium and germanium, including South Korea, Japan, Germany, Ukraine, Canada, Belgium, and Russia (though unlikely), are on the table.
Other countries are also exploring to see what they have, including Norway, which recently found a major phosphate cache holding titanium and vanadium. The discovery allows Norway and other nations to rely less on Russia’s stores, reducing overall supply chain risks.
If all else fails, there are always recycling efforts and REE substitutes. Recycling rare earth elements isn’t as easy as recycling metals like copper and aluminum, but it can be done. For its part, recycling is a great way to bolster domestic supplies as production ramps up. Although the USGS points out that many rare earth elements have substitutes available, they aren’t as light or effective as the elements themselves.
The U.S. and many other countries have tough decisions to make if they want to continue striving toward their renewable electricity generation goals.
If trade with the world’s major player slows or, worse yet, ceases, domestic production and increased trade with other countries will have to pick up the slack. Unfortunately, other countries will likely do the same, straining available supplies with other friendly trade partners.
Recycling is always a possibility, but the process can be difficult, and the payoff is small. Substitutions don’t have the same unique properties, resulting in lower-quality products with less performance.
One thing is certain – the need for a reliable and sustainable REE supply chain cannot be underestimated. Losing those materials could be the difference between hitting or missing crucial renewable power generation goals.
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