Scarcity of rare earth elements hurts West very badly

The West's push to build a homegrown magnetssupplychaintoreduceitsreliance on China—led by massive U.S. backing for Nevada-based MP Materials—isrunning into a critical problem: the scarcity of so-called heavy rare earth elements.

- Eric Onstad, Reuters

Jars containing rare earth minerals produced by Australia's Lynas Corp from its Mount Weld operations are seen near Laverton, northeast of Perth, Australia, on Aug 23, 2019.

(File/Reuters)

The United States and allies have been scrambling to create an alternative supply chain to make super-strong rare earth magnets, which are vital components in everything from defence technology and electric vehicles, to electronics and wind turbines. MP Materials aims to integrate the entire supply chain from mining rare earths to magnet production and has ambitious plans to produce magnets within years, buoyed by a July deal comprising billions of dollars in U.S. government support. It trumpeted its success earlier this month, boosting processed output of two light rare earths by 518 this quarter.

But shortages of heavy elements dysprosium and terbium could be an Achilles heel for MP Materials and the West's campaign to forge a magnets industry away from geopolitical turbulence that has constricted supply from China, analysts say. MP's Mountain Pass mine in California contains only traces of those two elements, which are used in small quantities in the magnets but are vital. Dysprosium and terbium help magnets retain their magnetic qualities under high temperatures, such as in EV engines. “MP Materials may have a formidable challenge,” said Ilya Epikhin, senior principal with consultants Arthur D. Little. “They'll need to go to Brazil or Malaysia, or some African states to find those resources, but it can take a lot of time.”

In an analysts conference call on Nov.6, Chief Operating Officer Michael Rosenthal said MP was “actively engaged” with a number of potential feedstock providers for heavies, but did not name them. Another source of feedstock will be recycled materials supplied by Apple that contain heavy rare earths under a $500 million deal for MP to supply magnets to the tech giant.