The development of a Western source of rare earths would
secure the supply chain for consumers but with a domestic
supply still years away some end-users are looking for other
ways to limit their exposure before it's too late.
"Arguably somewhere between 90 and 97 percent of rare
earths, depending on who you talk to and when, comes from
China. I think the real issue is how fast market demand goes up
and whether or not the supply chain can keep up with that
demand," said Steve Constantinides, director of technology at
Rochester, N.Y.-based Arnold Magnetic Technologies Corp., which
manufactures samarium-cobalt magnets at its Swiss facility.
"We have visited our suppliers in China and they've assured
us that we will not experience a shortage of raw materials.
However, that doesn't mean they can guarantee the supply. To
some extent, because China is not a totally free market, there
is a possibility of government intervention either with export
quotas, tariffs or (some other form of) intervention in the
market. So we have a concern, but we think that it is not an
Sources in the permanent magnet and technology sectors say
consumers can take a more proactive role by implementing a
number of mitigation strategies, from recycling to
One is General Electric Co., a large-scale consumer of
critical materials that spends some $4 billion on metals and
alloy purchases every year. Although rare earths are
indispensable to many of the company's final products-like
neodymium in its new generation of incandescent light bulbs-GE
is still working to mitigate its rare earths exposure through
reclamation and recycling, optimized manufacturing and, when
applicable, materials substitution.
"Once an element is identified as high risk, a comprehensive
strategy is developed to reduce this risk. This can include
improvements in the supply chain, improvements in manufacturing
efficiency, as well as research and development into new
materials and recycling opportunities. Often a combination of
several of these may need to be implemented," Steven Duclos,
chief scientist at GE's Global Research Center in Niskayuna,
N.Y., told a U.S. House of Representatives Science and
Technology subcommittee, which is investigating the possible
material shortage. "An optimal solution is to develop
technology that either greatly reduces the use of the at-risk
element or eliminates the need for it altogether."
But other downstream manufacturers say such a shift is
easier said than done. Although using rare earths more
efficiently and implementing closed-loop recycling processes
could alleviate some of the anticipated supply pressures,
sources said rare earths recycling would be risky, challenging
and downright expensive.
It's risky because only the Chinese currently have the level
of expertise needed to recycle rare earths, they said. "Since
virtually all of the chemical processing of the raw material to
the oxide and to the metal is taking place in China, that means
sending what is going to be recycled over to China for
reclamation," Constantinides said, noting that even if
recycling capabilities were to evolve stateside the process
would be extremely challenging. "There's not a real simple way
to take the little magnets out of so many devices and
efficiently and effectively feed them back into a company that
could go through that reprocessing effort."
But the real deterrent would be the cost, sources said.
Recycling has been wildly successful in other sectors of the
metals industry, but with rare earths prices averaging between
$11 and $13 per kilogram reclamation is significantly less
"It's a very good idea for somebody to develop recycling
technologies that would be economical, particularly in line
with the fact that these rare earths are not that expensive.
You don't have that tremendous payback on recycling," said
Peter C. Dent, director of business development at Electron
Energy Corp., Landisville, Pa.
The push for substitution also brings its challenges.
Although Duclos said GE has been successful in inventing new or
utilizing existing materials to minimize supply risk, other
consumers say rare earths are one place where substitution is
rarely an option.
"In terms of alternative materials, the rare earth magnets
have properties that make them so superior to alternative
materials for weight, power, temperature capacity, etc. that
there is no simple substitute," Constantinides said. "In terms
of chemical composition variations, we're all looking at ways
to reduce demand for the more sensitive rare earth materials in
these applications, but that search has been going on in excess
of 20 years. There still is no substitution that has been
announced or is in sight at this time."
Dent agreed, noting that while the next generation of
permanent magnets is looking to reduce the amount of rare
earths material needed by adding up to 30 percent more iron,
there's no guarantee such a shift will take off
"There is a very high risk of some sort of failure to get
rid of rare earths in these very high-strength permanent
magnets. And even if you do, you're still going to be at less
performance than what's available now," Dent said.
So while internal mitigation strategies might make sense in
the long term, consumers say other strategies-like filing a
World Trade Organization case against China or developing a
federal stockpile-must be implemented immediately to ensure
today's concerns don't become tomorrow's crisis.
"You can do some things in terms of mitigation, but you're
going to spend a gazillion lifetimes trying to mitigate or
replace this stuff when these elements have some superior
characteristics that are really important, so why not just fix
the problem? Make rare earth metals not rare metals in the
great scheme of things," Dent said. ANNE