Rare earth elements or "RE" are important components in many high tech devices, especially those with military applications. Right now, about 96% of all world production of RE comes from China. That's not because China is the only place that the RE can be found. In fact, although RE is called "rare", they are anything but rare; there are major deposits in the USA. The reason that RE comes from China is that extraction of RE is a costly and environmentally messy process. The price obtained for most of the RE is not high enough to support profitable extraction of these metals.
A few years ago, that was not the case. China put export restrictions on RE. The Chinese required that for nearly all uses of RE, manufacture of the end product would have to take place inside China before the user could get RE. The result was a boom in the price of RE all over the world. Companies like Molycorp in the USA reopened or enlarged mines and the price of their stock soared based upon huge RE profits. Then the Chinese relented and started selling RE around the world at low prices again. It did not take long for the profits to disappear to be replace by losses. Molycorp filed for bankruptcy.
Now that we are possibly about to enter into a trade war with China, there is talk again that the Chinese might cut off exports of RE. In the short term, this could cause chaos in certain types of manufacturing that require RE. Alternatively, however, it might engender the destruction of the Chinese RE industry.
There is a move to replace the historic method used for RE extraction, one that might lower the cost of extraction and production of RE to levels that the Chinese could never meet with their current mines. A company called UCORE Metals has a process called "molecular recognition technology" or MRT that does not separate RE from surrounding materials by the traditional chemical processes. Instead, MRT uses receptors that actually recognizes the shape of the molecules of RE and removes them from a flow of liquid containing the material. It is a totally non-polluting process unlike the chemical method which requires large amounts of harmful acids that ultimately must be disposed of. MRT also does not require the mining of materials from underground. Right now UCORE is engaged in ventures to extract RE from both the waste liquids left in the production of petroleum from the Canadian tar sands and also from coal and coal ash in the USA. Think about that for a moment. The waste water left after the tar sand production are currently just a problem for which there must be a disposal solution. Getting this waste water costs nothing more than construction of a pipeline to bring the waste water to the UCORE plant. Similarly, there are countless fly ash ponds around the USA where the ash from coal fired electricity generating plants operate. This ash is also easily accessible and essentially free. Most utilities would gladly give up the ash in exchange for a share of the millions of dollars that the RE extracted from the ash would generate. If these processes work on an industrial scale (and they have already worked on a test basis), RE could be produced without the cost of mining, chemical separation, or pollution control. The cost of RE produced this way would be much lower than that of the traditional method used in China.
There have been moves in Congress for quite some time to have the federal government support the development of American sources of RE. Right now, there is a bill in the Senate that would provide $160 million over eight years to help get such production in place. The federal government already did a study of American coal fields to find if there were significant RE located there. Both in the Pennsylvania anthracite fields and in other fields in the west, commercially viable concentrations were located. The current threat of Chinese action to cut off RE supplies should provide further impetus to the passage of the bill.
For what it is worth, UCORE is a public company which trades in Canada under the symbol UCU and in the USA under the symbol UURAF. It sells for something like 18 cents per share. It is highly speculative, but, if any of these projects prove successful, it could easily go up by ten times or more.
A few years ago, that was not the case. China put export restrictions on RE. The Chinese required that for nearly all uses of RE, manufacture of the end product would have to take place inside China before the user could get RE. The result was a boom in the price of RE all over the world. Companies like Molycorp in the USA reopened or enlarged mines and the price of their stock soared based upon huge RE profits. Then the Chinese relented and started selling RE around the world at low prices again. It did not take long for the profits to disappear to be replace by losses. Molycorp filed for bankruptcy.
Now that we are possibly about to enter into a trade war with China, there is talk again that the Chinese might cut off exports of RE. In the short term, this could cause chaos in certain types of manufacturing that require RE. Alternatively, however, it might engender the destruction of the Chinese RE industry.
There is a move to replace the historic method used for RE extraction, one that might lower the cost of extraction and production of RE to levels that the Chinese could never meet with their current mines. A company called UCORE Metals has a process called "molecular recognition technology" or MRT that does not separate RE from surrounding materials by the traditional chemical processes. Instead, MRT uses receptors that actually recognizes the shape of the molecules of RE and removes them from a flow of liquid containing the material. It is a totally non-polluting process unlike the chemical method which requires large amounts of harmful acids that ultimately must be disposed of. MRT also does not require the mining of materials from underground. Right now UCORE is engaged in ventures to extract RE from both the waste liquids left in the production of petroleum from the Canadian tar sands and also from coal and coal ash in the USA. Think about that for a moment. The waste water left after the tar sand production are currently just a problem for which there must be a disposal solution. Getting this waste water costs nothing more than construction of a pipeline to bring the waste water to the UCORE plant. Similarly, there are countless fly ash ponds around the USA where the ash from coal fired electricity generating plants operate. This ash is also easily accessible and essentially free. Most utilities would gladly give up the ash in exchange for a share of the millions of dollars that the RE extracted from the ash would generate. If these processes work on an industrial scale (and they have already worked on a test basis), RE could be produced without the cost of mining, chemical separation, or pollution control. The cost of RE produced this way would be much lower than that of the traditional method used in China.
There have been moves in Congress for quite some time to have the federal government support the development of American sources of RE. Right now, there is a bill in the Senate that would provide $160 million over eight years to help get such production in place. The federal government already did a study of American coal fields to find if there were significant RE located there. Both in the Pennsylvania anthracite fields and in other fields in the west, commercially viable concentrations were located. The current threat of Chinese action to cut off RE supplies should provide further impetus to the passage of the bill.
For what it is worth, UCORE is a public company which trades in Canada under the symbol UCU and in the USA under the symbol UURAF. It sells for something like 18 cents per share. It is highly speculative, but, if any of these projects prove successful, it could easily go up by ten times or more.
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