As much as a ton of neodymium is used in a typical industrial-scale wind turbine. (Photo by Super Symmetry via Creative Commons)

As much as a ton of neodymium is used in a typical industrial-scale wind turbine. (Photo by Super Symmetry via Creative Commons)

‘Mineral security’ and the clean energy economy: Are rare earths the new oil?

Copper, nickel, rare earth minerals and other metals are crucial to cell phones, computers and other modern technology that Americans depend upon.

Meanwhile such elements are also central to the production and further development of clean energy technology including batteries, electric vehicle motors, transmission lines, wind turbines and solar panels.

According to an April report by researchers at MIT’s Materials Systems Laboratory and Ford Motor Company, the supply of two particular rare earths, neodymium and dysprosium, will need to increase exponentially if wind energy and electric vehicle production are to really take off globally.

But ironically even as replacing fossil fuel-based energy with clean energy can address long-standing environmental and geopolitical problems, the mining of metals necessary to construct renewable energy technology can create some of the same types of problems as the extraction of coal and gas.

Currently 98 percent of rare earths are mined in China, according to MIT, while China has about 50 percent of global supply. The U.S. is thought to have significant deposits of rare earth metals, which are not actually that rare, but they are not currently mined in significant quantities.

Environmental impacts have prodded many in the U.S. to fight against the resurgence of hard rock mining that is underway thanks to high copper and other metal prices. Meanwhile the American Resources Policy Network (ARPN), an industry group promoting mining within the U.S., says that the troubling environmental, labor and human rights practices of governments and corporations in other countries are a reason to increasingly mine the metals needed for clean energy and other technology here in the U.S.

The network laments how long it takes to get permits for new U.S. mines. A recent report by mining advisory group Behre Dolbear ranked the U.S. second to last, before Papua New Guinea, among 25 mining countries in how long (7 to 10 years) it takes to permit a mine.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 includes a provision placing reporting requirements on companies sourcing minerals from the Democratic Republic of Congo (DRC) and adjoining countries, where the mineral trade is known to finance human rights violations and violence. This provision addressing “conflict minerals” is modeled on the international campaign against “blood diamonds.”

While the law applies only to these African countries, ARPN principal Dan McGroarty said the law dovetails with a push for general “mineral security” based on increased domestic hard rock mining. McGroarty talked with Midwest Energy News recently.

Midwest Energy News: How do you define mineral security?

McGroarty: I see it in terms of resource security. We often discuss the concept of energy security and see it in the context of the petroleum-based global economy we’ve had for decades. To what extent do countries feel secure in their input of energy? Are there [geopolitical forces] that could disrupt it? The same concept can be applied to hard rocks: metals and minerals increasingly used in our manufacturing, our high tech economy, the transition to clean tech energy.

How does mineral security apply specifically to clean energy development?

When you’re talking about wind power these would be things like neodymium, where you need one ton per industrial sized windmill. Or copper — where you need three tons plus per windmill. These become critical inputs. The question is where do you get that copper or that neodymium. If it’s solar, where are you getting the selenium and copper for next generation flat panels?

That’s really what resource security means – you have a secured supply. If you are relying on foreign imports, how secure are those countries? Are they politically stable? Are they competitors that could use that supply as a lever?

Take a look at China – China has hundreds millions of citizens that it needs to bring away from subsistence and into some kind of middle class existence. That will drive up their metals needs significantly. They mine a lot of these metals. They may be an exporter now, but as their demand goes up on the consumer side, there could come a day they will not have those metals and minerals available for users around the world.

Along with the elements you’ve already mentioned, what other metals and minerals are crucial to the development of batteries, wind and solar or other clean energy technology?

Neodymium is maybe unfamiliar to people; meanwhile copper is having this incredible new utility when it comes to wind power. For solar you need selenium, tellurium, gallium, indium — indium comes from zinc mines. Just like the petro engine was petro-dependent, wind and solar will be dependent on some hard rock metals, rare earths.

Why are these elements so important for wind and solar? Do they have special properties that don’t have substitutes?

In wind turbines the neodymium is fashioned into extremely powerful magnets [running the wind turbine’s gears]. You could have a mechanical system in a wind turbine high up on a mountain ridge or in the ocean. If it has problems or goes off-line you could have to journey to it, go out in the open ocean, repair it. The neodymium magnets give you portions of that gearing that become magnet-based, not electrically driven, therefore they break down far less frequently and don’t require as much replacement. We know wind is fickle, you don’t want your turbine to be fickle also.

So in advocating for mineral security, you are saying there should be more mining of rare earths, copper and other metals that do exist in the U.S.?

My point is if the U.S. has known resources of some of these metals but is not extracting them, we are just allowing ourselves to have a foreign dependence that we needn’t have. It’s like foreign dependence on oil – it makes our economics uncertain, it can distort our foreign policy and our national security policy.

But private companies, in most cases foreign companies, are extracting these metals when they do mine in the U.S. Aren’t they just going to sell them on the open market, including to China or wherever the demand is? They are not going to give a discount to manufacturers in the U.S. are they?

If [U.S.] mines don’t have buyers here they are going to find them elsewhere. It’s like if I can’t get the Keystone pipeline through the U.S. I will go through Canada to [export oil to] China. But the problem in the U.S. is we have a permitting system where it takes 7 to 10 years to bring a new mine into production.

If you are an American manufacturer [deciding where to buy metals], it’s very hard to take a wait-and-see approach to see if mines can come through this process. If we don’t want to trade oil dependency for resource dependency in the hard rocks, we have to do a much better job creating a public policy environment that takes into account the dangers of being so dependent.

For example companies in Europe looking at a rare earth mine in Kurdistan – those companies might have wanted to look at American or Canadian suppliers, because even though the price might have been good in Kurdistan, security would be better in an American or Canadian system.

You are talking about metal supply for foreign companies from U.S. mines. But how does that fit with U.S. resource security?

It goes together. [Manufacturers] would engage in forward purchase [of metals] where you say we are going to buy X tons of copper or X tons of whatever mineral you need at a price we agree on today…so basically you say to the mine, “We’re going to pre-buy your production.” And the mine says, “OK, we can borrow and advance the mine against that. We can raise capital because we’ve pre-sold X percent of our product.” This is how these things can happen under a free market mechanism. We’re also saying to manufacturers, “If you locate here you’ll have access to minerals.”

But if the policy environment is causing mines to take 7 to 10 years to go through the process…then at end of the day we’ll buy those turbines from a foreign supplier instead.

Are you saying it’s cheaper for a manufacturer of wind turbines or batteries in the U.S., for example, to buy metals mined nearby rather than abroad?

It could be more expensive to get metals out of the ground [in the U.S.], that chips away at the cheaper transportation costs. You have to weigh all these things against each other. Also here you won’t have someone in Washington say, “I like that mine” and nationalize it. You do have that in other countries.

The American Resources Policy Network has released statements in support of the Dodd-Frank Act provisions on conflict minerals and what that means for domestic mining. Are any conflict minerals necessary for clean energy?

If you’re just talking about the Dodd-Frank Act, it’s one country, in fact one portion of one country, and four metals that you’re talking about: tin, tantalum, tungsten and gold.  I don’t know if they attach immediately to clean energy applications. But I will say more broadly that the concerns we have in many places around the world about human rights abuses in the process of extracting metals and minerals do present themselves [in relation to clean energy].

We know copper is used in clean tech applications. It is mined here in the U.S., but also mined elsewhere – we still import more copper than is mined here. The DRC (Democratic Republic of Congo) mines copper, Angola, Russia, Iran, Pakistan mine copper. If you are looking from a moral position about how confident we can be about [the history of] the metals used in our products, this is much wider than the DRC. If you are concerned that your metals are conflict-free, if your metals are mined in America they will prove to be conflict-free.

But doesn’t this still become less relevant when you consider that it’s mostly foreign companies doing the mining in the U.S.? And many of them have operations in these same countries you just mentioned?

The biggest mining companies tend to be multinational. The ownership may be British, Australian, with large American components of investors.  But they are mining in America, the jobs are rooted here, the regulatory regime under which they work is the American regulatory regime. There are lots of ways to feel comfortable with that even though they could sell elsewhere and so on. It’s up to American metals users to take advantage of the metals that are available. If you look at the risk profile it’s probably better to buy from an American source than be subject to dangers and disruptions of foreign sources.

With private companies it seems clear that the metals will just go wherever the market dictates. Is there concern though that with state-owned mines for example in China, U.S. manufacturers will be cut off for political reasons?

Yes. For example China and Japan were having a conflict over islands in the East China Sea, where there was a collision with a Chinese fishing vessel and the Japanese captain was taken into custody, there were lots of strong statements on both sides. Japan is a metals importer and a sophisticated high tech manufacturer. All of a sudden they saw Chinese rare earth exports to Japan go to zero. … That was a wakeup call.

And it’s not just rare earths. The USGS says there are 19 metals and minerals for which the US is 100 percent import-dependent. And in 80 percent of the cases we have known resources that we could bring into production.

So in your view what needs to happen to spur more US mining of metals crucial to clean energy? Are environmental regulations the main thing slowing the process down?

A lot of it is just our permitting process. There are different portions of the process that run consecutively when they could run concurrently. We could learn from other countries. It’s not that we’re advocating no regulations. For example Australia has an advanced democratically elected industrial democracy, but they permit mines in 18 to 24 months, and we do it in 7 to 10 years.

Also lately we have seen unilateral action out of the EPA…For example with a large multi-metal deposit in Alaska [the controversial proposed Pebble Mine near Bristol Bay] – the EPA tried to intervene before it was even in the permitting process. That has a huge chilling effect in terms of the tens of millions of dollars needed to bring a mine into production.

Has clean energy significantly increased demand for many metals and minerals?

Absolutely. Elisa Alonso at MIT [the aforementioned study] looked at if on a global basis wind was introduced at the pace governments around the world intend, what effect would it have on metals demand. She found that for a couple rare earth metals including dysprosium and neodymium, usage would go up huge percentages, by 2,600 percent and 700 percent [respectively] by 2025. One hundred years ago the only use for the 17 rare earths was as a catalyst for flame in oil lamps. Now they are used in our iPods, iPhones, smart bombs, computers, electric batteries, wind turbines.

Before we simply didn’t have any of those technological advances that would tell us we would need those metals in such quantities. These rocks have been around for millions of years but we’re still always finding new things to do with them.

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