Issues Magazine

Impacts of the Not-So-Rare Earths

Olympic Dam’s rare earth elements are worth almost as much as BHP’s entire Pilbara iron ore resources.

Olympic Dam’s rare earth elements are worth almost as much as BHP’s entire Pilbara iron ore resources.

By Gavin M. Mudd

Rare earth elements, for so long ignored by big mining companies, have recently become incredibly popular. Contrary to what their name suggests, they are not particularly rare. They do, however, pose technical and environmental challenges for the companies now rushing to find and extract them.

The growing demand for rare earth elements comes from the important part they play in modern technology. They help make electronic parts smaller and faster, magnets more powerful (especially in wind turbines), metal alloys stronger, flat screen TV pictures brighter, chemical reactions faster, fuel cells more efficient (especially for some types of hybrid cars) and pollution control better.

In short, they are extremely useful for a range of modern technologies, including numerous environmental technologies, and more uses are being discovered all the time.

Over the past two decades, China has dominated the global production and satisfied 90% or more of global demand. But recently China announced that it would severely restrict its exports of rare earth elements due to rising problems with its mines. There is evidence of polluted waterways and radiation exposure affecting not only workers but entire communities. These impacts are real and not rare at all.

The minerals that contain rare earth elements (such as monazite or bastnaesite) invariably contain some thorium and uranium – both radioactive elements. It’s not the sort of stuff you want to manage poorly, as China recently admitted.

While lack of supply due to China’s restrictions might be a short-term problem, the key long-term issues are what volume of rare earth element resources actually exist, and managing the mining and processing (especially the radioactive waste). Surprisingly, on both fronts we can be justifiably positive.

In the past, the world had little use for rare earth elements, so miners never bothered to look for them. Given the strong expected growth in rare earth element demand for fancy gadgets and green technology, however, there has been a global scramble over the past few years to identify rare earth element deposits worth exploiting. Mining companies are now looking very hard for any trace of rare earth elements – and they will continue to find them. That’s because rare earth elements aren’t, in fact, scarce.

According to Geoscience Australia, Australia has 59.0 million tonnes in sub-economic rare earth element resources in addition to its

1.83 million tonnes of economic rare earth elements. Some 53 million tonnes of the sub-economic variety can be found in the giant Olympic Dam ore body in South Australia. This places our rare earth element resources as about equal to China’s – yet as a nation we bow to the miners’ quarry vision of coal and iron ore exports and very little else (and the havoc that quarry vision is wreaking with exchange rates and pressures on the “courageously” coined phrase of the “two-speed economy”).

At the moment, the metals extracted from Olympic Dam include copper (valued at

$641 billion left), uranium ($280 billion left), gold ($150 billion left) and silver ($13 billion left) – making Olympic Dam alone the highest value mineral deposit in the world on these metals alone.

Compare this with the estimated value of the rare earth elements in the same ore body – at least a whopping $2650 billion (~53 million tonnes of rare earth elements at an average value of $50,000 per tonne of rare earth oxides). That’s more than double Australia’s current GDP, with rare earth elements worth some ten times the uranium alone.

In its current expansion plans, BHP Billiton (owners of the Olympic Dam site) are ignoring this remarkable value and positive environmental benefit. They consider rare earth element extraction “uneconomic” and claim the technology isn’t available, despite it being similar in most steps to the current processing at Olympic Dam (that is, mining, flotation and sulfuric acid leaching – the most common steps for processing rare earth ores worldwide).

The BHP Billiton proposition is hard to believe in the face of the incredible value of Olympic Dam’s rare earth elements – worth almost as much as their entire Pilbara iron ore resources. (If I were a shareholder, I’d certainly be angry at BHP Billiton and asking the hard questions.)

But even if BHP Billiton does not decide to make rare earth element extraction in South Australia a part of its future, the world’s rare earth element deposits are abundant enough to supply the world for decades to come (even allowing for substantial demand growth). For example, over the past decade the US Geological Survey has increased its estimate of global rare earth elements from 88 to 110 million tonnes of rare earth oxides.

Based on projects like Olympic Dam alone and other rare earth element projects in Australia (Mt Weld, Dubbo-Toongi, Nolan’s Bore, Cummins Range) – let alone the multitude of other deposits around the world known to contain substantial sources of rare earth elements – it is clear that there are substantial quantities of rare earths already identified by mining companies, and they continue to find more. With recent world annual production of the order of 130,000 tonnes or so, there are sufficient rare earths known to meet demand for many decades to come – but of course, geologic resources are not always equal to market supply.

Put simply, the amount of rare earth elements is not the problem. The radioactivity associated with them is.

Put simply, the amount of rare earth elements is not the problem. The radioactivity associated with them is.

The Mt Weld rare earth element project being developed by Lynas in Western Australia, for example, plans to ship a rare earth element concentrate to Kuantan in Pahang state, Malaysia, for the heavy chemical refining stages. The local Malaysian community has strongly opposed this project, in large part due to the significant environmental and public health impacts from the former Asian rare earths refinery in Bukit Merah, which is now one of Asia’s largest contaminated site clean-up operations.

This highlights the strong need to be upfront, transparent and thorough on all aspects of rare earth element production, especially the radioactivity inherent in rare earth element ores. These issues can be managed with appropriate engineering design, construction, operation and decommissioning, but this cannot be achieved without world-class regulation, community engagement and business stewardship.

Let us hope that the emerging global rare earth element industry meets the challenge of increased demand positively and that we all pay appropriately for the true costs of using rare earth elements in our daily lives.