As political and military tensions grow between the US and China, prices for precious rare-earth elements (REEs) are now soaring, along with demand for skilled mining workers, Nikkei Asia reported.
China, which dominates the global rare-earth industry, is the only country that has a complete supply chain for rare earths from mining, to refining, to processing.
According to commodity research specialist Roskill, as of last year, it controlled 55% of global production capacity and 85% of refining output for REEs.
That dominance could actually grow, as Beijing has announced it would be open to “friendly cooperation” with Afghanistan’s new Taliban regime which — according to rare earth experts — is sitting on one trillion dollars’ worth of unmined minerals.
And each time China threatens to withhold or cut back on exports, panic worldwide causes the prices of rare earth metals to skyrocket.
REEs are crucial in cutting-edge technologies — everything from missiles, jet fighters like the F-35, to wind turbines, medical devices, power tools, cellphones and motors for hybrid and electric vehicles.
A Congressional Research Service report said that each F-35 required 417kg of rare-earth materials for critical components such as electrical power systems and magnets.
For Max Hsiao, senior manager of an audio component maker based in Dongguan, China, the squeeze is coming from a magnetic alloy known as praseodymium neodymium, Nikkei Asia reported.
The price of the metal, which Hsiao’s company uses to assemble speakers for Amazon and laptop maker Lenovo, has doubled since June last year to around 760,000 yuan (US$117,300) a ton this August.
“The rising cost of this key magnetic material has been overwhelming, and that knocked at least 20 percentage points off our gross margin … That’s really a huge impact,” Hsiao told Nikkei Asia.
“We don’t see this trend reversing anytime soon.”
Praseodymium and neodymium are used to make neodymium-iron-boron magnets.
They are essential to a swath of tech gear — everything from speakers and electric vehicle motors to medical devices and precision munitions.
Rare earths such as neodymium oxide — a key input for motors and wind turbines — have also jumped 21.1% since the beginning of the year, while holmium, which is also used in magnets and magnetostrictive alloys for sensors and actuators, have surged nearly 50%.
Amid looming supply shortages, experts say the surge in REE prices could eventually boost the cost of consumer electronic goods across the board.
Meanwhile, the soaring demand for REEs is beginning to be felt on the other side of the world, in Nevada’s high desert.
In Nevada, about 15,000 people are employed by the state’s mining sector. Nevada Mining Association (NVMA) President Tyre Gray said that puts the industry “about 500 jobs under where it should be” — and that’s been the case for years.
According to a report in Northern Nevada Business Weekly, the need for more miners is only growing as the US looks to secure the domestic supply chain for REEs and other important minerals such as lithium.
First proposed in the 1970s and produced commercially by Sony in 1991, lithium batteries are now used in mobile phones, airplanes and cars.
Lithium batteries have a much higher energy density than other batteries.
They also have a lower discharge rate than others, losing around 5% of their charge in a month compared to a nickel-cadmium batteries which lose 20% in a month.
“There’s a need to fill the jobs that we currently have open, and there’s going to be a need to fill jobs that are going to be created due to increased demands in the mining sector,” Gray said.
To that end, Gray pointed to the proposed lithium mine project at Thacker Pass in Humboldt County near Orovada.
“They’re going to need construction workers in order to develop their mine, but then they’re going to need about 400 full-time employees to run the mine,” Gray told NNBW.
“Where are they going to get those 400 from when we already have a shortage of 500 people?”
Pausing, he succinctly added: “We need workers.”
The workforce woes aren’t unique to Nevada. Mining and geological engineering employment is estimated to grow only 4% from 2019-2029, according to the Bureau of Labor Statistics (BLS).
As demand keeps rising for critical minerals, there are fewer skilled employees to fill job openings.
According to a representative for Nevada Gold Mines, “We are lucky to be experiencing unprecedented growth in our business. However, this also adds the challenge from a workforce perspective.
“We believe the immediate reason behind this has been the pandemic and the resulting cultural change happening in the US.
“After the disruption caused by the pandemic to all aspects of people’s lives, like all other companies in the US, we are seeing some of our workforce relooking at their life choices.”
This is despite jobs in the industry paying well.
In Nevada, the median annual salary of an underground mining machine operator and extraction worker is US$52,400; double and more for mining and geological engineers (US$93,800-US$156,000), according to BLS figures.
Adding to the challenge of luring new talent into the sector, Nevada’s mines are carved out in remote areas of the state — not everyone’s cup of tea.
Then there is the “perception” issue, Gray said.
Some people think of dirt and soot-covered miners working in dangerous conditions, using outdated machinery puffing black clouds of smoke. A stark Dickensian image.
“Unfortunately, a lot of the time, people still view the industry as the 1860s industry or even the 1960s industry,” Gray told NNBW.
“When, truly, we are really at the cutting-edge of technological advancements. We’re using the most advanced, the most available technologies in order to excavate material in the safest way.”
Meanwhile, the US is pushing hard to lessen its dependence on China amid deteriorating Sino-US relations and an emerging technology war:
- The Trump administration issued Executive Order 13817 directing the government to adopt a strategy for critical materials;
- The Department of Defense has, as a consequence, offered tens of millions of dollars in grants to help bring processing capacity;
- The Pentagon has signed contracts with American and Australian miners to boost their onshore refining capacity and Congress ordered the DoD to eliminate all Chinese REE sources from the national defense supply chain;
- The Department of Energy is funding research to make separating rare earths easier and more efficient, and to promote recycling;
- And just weeks ago, Congress introduced a bipartisan bill that would provide tax credits for the domestic production of permanent rare earth magnets.
“The government is investing in new capability trying to establish every element of the supply chain,” said Jeff Green, president of lobbying firm J.A. Green & Co. “The question is whether we can do this economically.”
This is because the US has very stringent regulations concerning human health and environment which tends to make production more expensive.
Ironically, China’s demand for REEs is so high that it has consistently exceeded domestic supply over the past five years, prompting a surge of Chinese imports.
“China’s own rare earth security isn’t guaranteed,” said David Zhang, an analyst at Sublime China Information, a consultancy.
“It can disappear when the US-China relationship deteriorates or Myanmar’s generals decide to shut the border.”
Sources: Nikkei Asia, CNBC, Northern Nevada Business Weekly, Power Technology, BigThink.com, Nevada Mining Association, Marketplace.org, Financial Times