Here is the text from the WSJ article, published 19hr ago:Businesses and governments across theWest are gearing up to counter China’s dominance in a key component of moderntechnology: the magnet.
But the dozens of companies jostlingfor government support will struggle to establish a supply chain to rivalChina’s rare-earth magnet industry, which has a decadeslong head start andsteadfast state support, analysts and executives say.
Powerful magnets made ofrare-earth minerals are essential components in electric-vehicle motors, windturbines and other technology. China mines over 70% of the world’s rare earthsand is responsible for 90% of the complex process of turning them into magnets,analysts say. That dominance gives Beijing sway over makers of variousfast-growing technologies.
The U.S. government isinvesting tens of millions of dollars in efforts to mine and process rareearths. President Biden in February signed an executive order directing a review of supply chainsfor critical materials, including rare earths. His recent infrastructure plan also pledged investment in rare-earth separation projects. Officials in Europe, Canada, Japan and Australia are getting their checkbooks out too.
Yet Western companies aremostly years away from contributing to astable supply of rare earths, or processing them into separate minerals and turning them into useful products like magnets, analysts say.
“For these minerals to go from a holein the ground to an electric motor, you need vast skills and expertise, whichbarely exist out of China,” said Constantine Karayannopoulos, chief executiveof Neo Performance Materials ULC, one of a few Western companies able toprocess rare earths and make magnets.
“Many producers will find itdifficult to compete head-to-head against China on price without some level ofongoing government assistance,” he said.
Among those receiving U.S.funding is Rare Element Resources Ltd. , which together with its partner, defense contractor General Atomics, recently secured a $22 million Energy Department grant to process rare earths.
The miner hasn’t received permissionto tap its deposit in Wyoming eight years after applying. It paused itsapplication in 2016 when funds were tight.
“It’s not easy,” Chief ExecutiveRandy Scott said of getting a mine up and running.
With its mine yet to be developed,the company said the plan is to process material it collected when testing thequality of its site.
But that stockpile will likelyproduce just 100 tons of rare earths, Mr. Scott said, equivalent to the weightneeded to make magnets for 6,000 Toyota Prius vehicles. Toyota sold almost 2 million electric and hybrid vehicles in 2019.
Should Rare Element Resources get amining permit, a regular supply of processed rare earths is six to nine yearsaway, Mr. Scott said, given the time it will take to permit, finance and buildthe mine.
Pini Althaus, the chief executive ofUSA Rare Earth LLC, wants to establish a U.S. mines-to-magnets supply chain andhopes to take the company public this year.
Some consultants question the qualityof USA Rare Earth’s deposit in Texas after a 2019 assessment found ore grades,which measure mineral concentration within earth, of 0.06%. That compares with3% at rival Rare Element Resources’ site and 7.06% for MPMaterials Corp. , which has America’s only producing mine. Mr. Althaus says minerals at his site are among the most valuable of the 17 rare earths.
Consultants also question thefeasibility of USA Rare Earth’s plan to have processing and magnet-makingfacilities up and running next year.
USA Rare Earth boughtmagnet-manufacturing equipment from Hitachi Ltd. following the Japanese firm’s decision to close down a magnet factory in 2015. The kit currently sits in a warehouse in North Carolina.
Even if his company is successful,Mr. Althaus says the 2,200 metric tons of magnets it plans to produce annuallyis a fraction of the 408,500 tons in global demand forecast by the end of thisdecade.
“It will take two decades or tens andtens of billions of dollars [for the West] to get even close to China,” saidMr. Althaus.
A major factor holding back Westerncompanies has been stricter environmental rules. Rare earths, for instance, areoften processed from ore that contains radioactive materials, a factor thatminers need to focus more attention on, analysts say.
Pensana PLC won approval to mine in Angola, and is now pitching for U.K. government support to process material in Britain but hasn’t said what it will do with the radioactive byproduct. Pensana declined to comment.
Up until the 1980s, the U.S.led the world in mining rare earths and also developed the technology toprocess these minerals into something usable. In the 1970s, GeneralMotors Co. used them to create a magnet that would last longer in engines.
Western production ebbed amidcompetition from China and increased environmental regulations.
Currently rare-earth mining andmagnet production outside of China relies on a handful of small companiesdotted across the globe working on wafer-thin margins—their challengesunderscore those that new entrants can expect.
Chinese businesses can producerare-earth magnets cheaply. Australia’s Lynas Rare Earths Ltd., a rare-earth miner, spends $10 to mine a kilogram of the minerals, versus $7 for most Chinese producers, according to James Kennedy, a consultant. Lynas declined to comment.
High costs mean even the mostsuccessful Western companies barely break even.
Near Liverpool, England, Less CommonMetals Ltd. takes processed rare earths and turns them into the metals that arethen made into magnets. Up to 90% of revenue goes to pay for the costs of rawmaterials, LCM says.
“Our other costs and our returns areall in that 10%, how can you survive doing this in the West?” said Ian Higgins,the company’s managing director.
A basic rare-earth magnet is 20%cheaper from China than Europe, according to Clarence Martin, whoseMichigan-based company, Eypex Corp., supplies Chinese magnets to U.S. carmakers.
Mr. Martin said he’d welcome theability to diversify his supply out of China.
“But it will be quite a while beforea meaningful shift in our supply chain occurs,” he said.
