Under current permits, the company could potentially double production, to 40,000 tons a year, beyond 2012. Smith says demand is likely to exceed supply for some years to come, even if Lynas Corporation’s Mount Weld mine outside Perth, Australia, begins production as expected in summer 2011. That company expects to produce 15,000 tons of rare earth elements a year by 2015.
Even with raw materials in place, U.S. manufacturers can’t produce many important technologies based on rare earth elements. Bastnäsite from the Mountain Pass mine can be processed on site to make didymium oxide, a powder that contains the element neodymium, which is critical for making lightweight permanent magnets. But didymium oxide requires further processing to make the neodymium-iron-boron alloy from which the magnets are made. The magnets found in a wind turbine require several hundred kilograms of neodymium.
No company in the United States currently has the technological capacity, or the necessary intellectual-property licenses, to make neodymium magnets. Yesterday, Molycorp and Hitachi metals announced an agreement to produce these magnets in the United States; the two companies plan to sign a definite agreement by April 2011. According to the DOE, only 10 companies, which are located in Germany, Japan, and China, are currently licensed to make such magnets. The intellectual property is owned by Hitachi Metals and by Magnequench, which is now part of AMR Technologies, a company based in Canada that was bought by a Chinese consortium in 1995. Molycorp’s Smith says that producing alloys for magnets could increase the company’s profit margins by 125 percent.
A recent report published by the U.S. Geological Survey estimates the total rare earth reserves in the United States at 1.5 million tons. But the report says it’s unclear how much of these reserves can be mined economically. The DOE report outlines a strategy of diversifying the international supply of rare earths, identifying substitute materials, and finding ways to use the materials more efficiently and recycle them. Researchers at Hitachi, GE, and the University of Delaware are collaborating on the development of an alternative magnet material that requires smaller amounts of rare earth materials, or none at all. But this and similar projects are still in the early stages.