Aug 1 (Reuters) – The United States has resumed mining rare earths after more than a decade, ending its total reliance on imports, mostly from China, for raw minerals Washington says are critical for the economy and national security.
Responding to a quadrupling of prices between 2005 and 2011 and growing anxiety about supplies from China, Molycorp’s Project Phoenix has sought to resurrect domestic production.
In 2009, the company started processing stockpiled concentrate. Last year it resumed mining at Mountain Pass in California’s Mojave Desert, which it had suspended in 2002.
Molycorp plans to raise output to 19,050 metric tonnes of rare earth oxide per year by the middle of this year, enough to satisfy more than 10 percent of worldwide demand. The resumption of domestic production comes after a period when shortages stoked tensions between the United States, the European Union and Japan and their main supplier, China.
In March 2012, the three consumers complained to the World Trade Organization (WTO) about China’s export restrictions on rare earths, tungsten and molybdenum, which they claimed were intended to reserve scarce elements for its manufacturers, discriminating against users in their own countries.
But the price cycle for niche commodities such as rare earths can be brutal, with sudden booms followed by equally traumatic busts.
China has already eased its restrictions, and with new supplies also becoming available from Mount Weld in Australia, prices have slumped since 2011, leaving producers struggling.
“After we achieve our full production run rate, it may make sense to dial back production until we can run the facility at lower cost,” Molycorp’s chief executive admitted to investors in May.
ECONOMY AND SECURITY
The National Research Council, the leading science and engineering adviser to the U.S. government, has identified rare earth elements as among the most “critical minerals”. In many applications rare earths have no practical substitutes and there are just a handful of sources of supply. (“Minerals, critical minerals and the U.S. economy” 2008)
Before 1990, the United States was largely self-sufficient. But increasingly stringent environmental regulations and growing competition from low-cost producers in China with access to high-quality deposits led to a collapse in domestic production.
By 2000, the United States had come to rely on imports for 100 percent of its requirements.
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