An estimated 1.4 billion vehicles drive the world’s roads and about 78 million new vehicles are sold every year. To head off the worst effects of climate change, every single one will eventually need to go electric.
Whether it rolls off a production line in Fremont, California, or comes together in a vast megafactory in Qinghai, China, a colossal amount of human effort must go into building the components and obtaining their base minerals.
For example, each vehicle has about 1kg of magnets providing the motion needed to fire engines and electrify windows. About 30 percent of this material is made up of rare earth magnet metals known as neodymium (Nd) and praseodymium (Pr) — together they are called “NdPr.”
This material is three times stronger and one-10th the size of conventional magnets — and essential to the process. In 2016, Japanese automaker Honda tried and failed to build a hybrid vehicle without rare earths.
Over the next decade, the use of NdPr in electric vehicle (EV) magnets alone is projected to soak up 40 percent of total demand, some projections have said.
Numbers that big are difficult to ignore and although Australia might have dragged its feet on climate change over the past two decades, the prospect of making a killing in the EV supply chain is getting attention — especially as the rare earths business is dominated by China.
Rare earths are a clutch of 15 minerals from the lanthanide series of the periodic table, although this number is extended to include scandium and yttrium. These minerals occur in low concentrations and in geological formations that can make extracting them costly.
RARE EARTHS 101
The science can be complicated, but it is because they oxidize quickly and the process can be extremely polluting, Geoscience Australia minerals advice director Allison Britt said.
“In a nutshell, rare earths are so chemically similar — they’re really, really tricky to separate,” Britt said. “In addition, some of the minerals they occur as can contain radioactive elements, like uranium and thorium.”
A rare earth like Nd begins life as a mineral encased in another mineral. Once pulled from the ground, the rock has to be crushed and cracked — a process that involves heating the material to break the chemical bonds that bind it together.
Next, there is “leaching,” where a chemical wash is used to dissolve the rare earth so that it can then be gathered up as a concentrate. From there, it is refined into a pure oxide and ready to be used in the manufacturing process.
The US Geological Survey said that last year, Australia contributed 17,000 tonnes of rare earths to the global supply.
That is nothing compared with the world’s largest supplier, China, which produced a whopping 140,000 tonnes of rare earths — not counting the volume added by the off-the-books trade.
China accounts for 58 percent of the world’s supply and most of the world’s refining capacity, thanks to its control of the intellectual property around the process, and its ability to run these industrial operations cheap and dirty.
The only other refinery outside of China is in Malaysia and is operated by the Australian company Lynas Resources.
John Coyne of the Australian Strategic Policy Institute said that none of this happened by accident.
“I don’t think you get this sort of dominance of the market when you aren’t well endowed with those rare earths. I think it was a natural extension of their economic miracle,” Coyne said. “Someone in China saw that opportunity early on and now they dominate the market.”
In May 2015, the Chinese government released a 10-year industrial development plan titled “Made in China 2025.” While the country had the capacity to make wind turbines, photovoltaic solar cells and EVs in huge enough quantities to make them cheaply, the ambition was to turn a low-tech industrial base into a high-tech manufacturing sector.
However, doing so, called for Chinese companies to ensure that 70 percent of the components and materials they used were sourced domestically by 2050.
This portion of the document was enough to spook governments in Europe and North America — particularly as China has shown a willingness to weaponize supply chains that it controls during moments of heightened tension.
In 2010, during a dispute with Japan over the Diaoyutai Islands (釣魚台), known as the Senkaku Islands in Japan, China slashed is global export of rare earths by 37 percent. The prospect of a supply shortage in an economy built around its electronics sector prompted the Japanese government to find alternative sources.
A similar incident occurred in 2019, when former US president Donald Trump started an ill-advised trade dispute with China. In response, Chinese President Xi Jinping (習近平) took a highly publicized tour of a rare earth production facility, while the People’s Daily floated the possibility of retaliation.
“Will rare earths become a counterweapon for China to hit back against the pressure the United States has put on for no reason at all?” the paper asked. “The answer is no mystery.”
Now that a couple years have passed and the COVID-19 pandemic has spread worldwide, it is tempting to view the situation in the context of rising geopolitical tensions with China.
Christian Downie, an associate professor in Australian National University’s School of Regulation and Global Governance, said that to allow this to continue further would be a mistake, as it would only work to undermine any global transition to a zero-carbon economy.
“With the growing strategic competition between the US and China, the risk is that supply chains that are essential for the rapid deployment of clean energy technology could be disrupted by these political rivalries,” Downie said. “You’d have to say that the way the critical minerals debate is being framed and the way countries are positioning themselves, suggests we’re moving down that pathway.”
Responding to trade tensions and worries about the security of supply, companies such as Apple have announced a next-generation iPhone that would rely on recycled rare earths — meanwhile, governments are talking tough.
ON A TIMELINE
Last month, a videoconference between the US, Japan, Australia and India held as part of the Quadrilateral Security Dialogue — a strategic partnership originally formed to counterbalance the influence of China in the Asia-Pacific region — focused on the urgent need to find alternative sources of rare earths and build more refining capacity.
Since then, there has been a flurry of activity as the Australian government has positioned itself to meet the new demand.
A Critical Minerals Strategy was released in 2019, but rare earths received special mention under Australian Prime Minister Scott Morrison’s US$1.5 billion National Manufacturing Priority roadmap in September last year.
Under the plan, rare earth projects could access dual financial support from Export Finance Australia and the Northern Australia Infrastructure Fund.
Elsewhere, Australian companies have been jostling for new business.
While the Malaysian government has moved to close Lynas Resource’s refining plant after sustained pressure over the environmental impacts from pollution, the company has proposed shifting production to Kalgoorlie, Western Australia.
Lynas Resources has also signed a deal to build a new refinery in Texas, which would be funded by the Pentagon.
Other companies are also planning rare earth projects. Arafura Resources is looking to break ground on its long-running Nolans rare earth project, 135km north of Alice Springs in the Northern Territory.
Managing director Gavin Lockyer said that it has taken 10 years to develop plans for the deposit, with its large concentrations of NdPr. The vision is for an all-in-one operation, where all remediation work takes place progressively over the mine’s projected 33-year lifespan, instead of leaving it all to the end.
“What makes us different is that we’re doing it all at the point of extraction, and we’re dealing with all our waste at the point of extraction. We’re just basically putting it back where it came from. We’re not transporting it around, or sending it to another country,” Lockyer said. “This is seen as very favorable, particularly among European companies that want traceability in their supply chains.”
The end product would be an NdPr oxide that is 99.99 percent pure and has the consistency of talcum powder. The only thing standing in the way is finance.
Lockyer said that with prospective customers not willing to sign on the dotted line for fear of retaliation from their Chinese-based suppliers and government-backed financial support yet to come through, the clock is ticking.
“Australia’s got an opportunity here not just to dig it up and ship it overseas,” Lockyer said. “We could become a world leader in this area. We’ve got good quality deposits and we’ve got good know-how — but we don’t have forever.”
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