Thursday, February 17, 2011
WILL RARE EARTHS BECOME A PRODUCT OF THE BLUE REVOLUTION?
My early career crossed paths with these rare earth elements twice. First, when I worked at the Lawrence Livermore National Laboratory on laser fusion in the 1970's, I happened to deal with Neodymium YAG lasers. Neodymium is a rare earth, and the Y part of YAG is another, Yttrium. The Shiva laser at LLNL used a neodymium glass laser.
Leaving Livermore, I went on to the U.S. Senate in 1979, and my first task was to manage the Hard Minerals legislation, dealing with seabed metals, where Sen. Spark Matsunaga was the chief sponsor. The bill made it through Congress and became the Deep Seabed Hard Minerals Resources Act, but as a curious sidelight, there was a lot of intrigue regarding Howard Hughes' Glomar Explorer and the CIA. The cover story was that this ship was built to harvest manganese nodules, when the reality was that it was secretly commissioned to find the sunken Russian submarine, K-129, lost in 1968. Depending on who you believe, full to partial success was attained, as at least part of the sub was recovered in 1975. The Glomar Explorer was mothballed during the period of this legislation, was considered by Lockheed for deep seabed applications, then converted into a deep sea drilling craft in the late 1990's. It is now looking for oil in Indonesia, and owned by, of all the companies, Transocean, the firm with British Petroleum that was implicated for the Gulf Oil disaster.
Rare earth elements are seventeen metals, fifteen lanthanoids, plus scandium and yttrium. These rare earth elements are used in various high tech components and military applications. Actually there is a lot of this stuff in the Earth's crust. However, they are so dispersed that, at present, China happens to be one location where there is some consolidation. Interestingly enough, from the 60's to the 80's the Mountain Pass rare earth mine in California supplied most of these metals. Today, China produces over 97% from Inner Mongolia.
How China gained a monopoly was by undercutting the prices of competitors, who mostly abandoned operations over the past two decades. Now, partly politics, but certainly shrewd business sense, China announced they will be reducing exports over the next few years, no doubt to jack up the price. It is also clear that China wants to upgrade its exports from low cost commodities to finished electronics. Japan panicked last year and went to Vietnam to provide these resources, and this week signed an alliance with India. Even Afghanistan has come into the picture as a future source.
I have in particular been closing watching, Molycorp, a Canadian company, and kicking myself for not jumping in last September, when that China-Japan brouhaha occurred over the Senkaku Island issue (watch a clip of a Chinese trawler ramming into a Japanese patrol boat). From 12 at the end of last July to 63 last month, the stock price has settled to around 50 today.
Rare earth deposits in the U.S. are in as many as 14 states. Quantum Rare Earth Development, another Canadian company, is exploring in the State of Nebraska. It turns out that nuclear waste tailings are becoming economically attractive now, too. Can you imagine, though, the environmental impact problems to be faced by any company wanting to commercialize this operation in the USA?
The most intriguing potential of high interest for me, after all those Law of the Sea (another treaty the U.S. signed, but has not yet ratified) exercises and the fact that the Institute I directed at the University of Hawaii was the Department of Interior's national center for seabed mining, is the deep ocean. Charles Morgan, who was part of that center, chaired a gathering in Honolulu this past fall, where the conferees tended to agree that, finally, the time had perhaps come to explore the deep oceans again. Not for the manganese, but these nodules (about the size of a potato) also contain copper and nickle. The added value of rare earths, plus those national security implications, have changed the interest dynamics. Certainly, Charley, who once worked for Lockheed on this effort, should gain some funds to assay the 5,000 or so nodules he still keeps. Japan, for sure, will be exploring seas.
Hmm...I wonder if the Blue Revolution should link with this resource? I suspect not at this point, as it will difficult enough trying to get OTEC and next generation fisheries going.
The Dow Jones Industrials crept up 30 to 12,318, with world markets almost all also increasing. The NYMEX petroleum is at $86/barrel, while the Brent Spot is at $103/barrel. Many commodities (corn, soybeans, etc.) today leaped 3%.
Those three tropical cyclones in the Indian Ocean are still bringing some rain, but there appears to be no real threat at this time about any serious strengthening.