by David Niebauer
The Story of Rare Earth Metals
A recent article in the WSJ peaked my interest about Rare Earth Metals. The article discusses how Toyota is searching for an alternative to neodymium, a rare earth metal, in the batteries of its electric and hybrid vehicles. I have heard other’s bemoan our use of rare earth metals (REMs) and how the earth’s crust only holds so much of the stuff. So I began researching the subject, expecting to find viewpoints similar to those in the Peak Oil debate.
What I discovered is quite a different story.
It turns out that REMs are not rare at all. They are a collection of seventeen chemical elements at the bottom of the periodic table found plentifully distributed in the earth’s crust (See here for more information). They were probably deemed to be rare when discovered in the late 19th Century because no one noticed them before. REMs have become a fixture in high technology devices and applications. They are common in all types of electronic devices, solar panels, wind turbines and many types of batteries and superconductors. Much of cleantech depends on them.
The problem with REMs and why they are so “rare” is that mining and refining for them is incredibly damaging to the environment. Extraction requires a huge amount of ore (making it highly energy-consuming) and toxic acids that eat into the soil and persist for decades. To make matters worse, REMs are often found with even heavier elements, such as uranium, making the mine tailings radioactive.
So what has the industrialized world done about this? Have we found new energy-efficient and environmentally safe ways to refine REMs for sustainable development? Have we subsidized and encouraged recycling programs so the REMs that we do use can be reused in new and more useful applications?
No. We have shipped our problem to China. China now accounts for the production of over 97% of the World’s consumption of REMs. The Chinese are apparently able to do long-term planning. They take on dirty, inefficient, labor-intensive work that no one else wants to do, and then make themselves indispensible to the global economy. But even the Chinese are realizing that something has to give. Recently, they have slapped on increasing tariffs and have started to squeeze the spigot of REM supply.
The Chinese have not always had a corner on the REM market. In fact, during the 1960s through the 1980s, world production of REMs was centered in Mountain Pass, California. If the price is right, I assume that the Mountain Pass rare earth mine will re-open.
Recyclers of electronics and PV panels do exist, but they are not exactly the darlings of the investment community – which means that the incentives are not there. It’s cheaper to consume voraciously and dump the waste in someone else’s backyard.
I usually finish an article like this by saying something along the lines of: something’s gotta give! But maybe it will take a crisis of historic proportions for anything to truly be done. Putting a price on environmental degradation would go a long way. But even trying to manage industrial carbon emissions appears to be too much for our short-sighted politicians.
But really, it’s not even the politicians. We all have our heads in the sand – or at least I do. So much of “business as usual” is rife with these kinds of inefficiencies and environmental time bombs. I continue to buy my electronic devices without thinking too much about what it takes to build them – only to toss them away when I no longer have a use or when I find a better new toy. I send them to the landfill – its only a drop in the bucket, after all.
I wish I had an answer. I suppose the rest of the world will begin refining REMs again and will eventually find more environmentally benign ways to do it. After all, it will now actually be in our back yard. Maybe even the time will come when we recognize that, in fact, everywhere in the world is our back yard; that living on the planet requires long-term thinking and technologies for sustainable development. Our future depends on it.
David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies. www.davidniebauer.com
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David Niebauer has over 20 years of domestic and international corporate finance experience, with a particular focus on clean energy and environmental technologies. He has represented numerous companies in complex M&A and financing transactions and acts as General Counsel (including IP strategy, protection and licensing) for innovative cleantech companies, including Smart Wire Grid (www.smartwiregrid.com), Brillouin Energy Corp. (www.brillouinenergy.com) and LumiGrow (www.lumigrow.com) David built a highly successful legal practice as a Partner with Graham and James LLP (now Squire Sanders & Demspey) where he specialized in Securities Law, Venture Capital Financing and Mergers and Acquisitions. He later joined DigitalVentures, Inc., a corporate venture capital firm, as General Counsel and Chief Operating Officer. David brings a wealth of experience, financing contacts and business acumen to his practice and has significant experience in renewable energy project development as well as all aspects of corporate finance and M&A transactions. David received his B.A. from the State University of New York, magna cum laude, his Masters degree from the University of Michigan and his J.D. from the Brooklyn Law School, where he was Articles Editor of the Journal of International Law.