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Once upon a time at Mountain Pass

The incredible tale of a California mine illustrates the geopolitical and economic war sparked by critical metals. Here is its story.

Yes, there is a tourism office in Mountain Pass, but tourists won’t see many sights. There are no casinos, like in the nearest big city Las Vegas, or bizarre landmarks, such as the tallest thermometer in the world, in Baker about 60 kilometres away. Interstate 15, the highway that leads to this hidden town in California, cuts through a rocky desert dotted with a few shabby motels sweltering under the hot sun.

But in a century or possibly sooner, this small American town could become a fascinating museum. Tourists of the future could come to relive the great battle for rare metals that began at the start of the 21st century, much like tourists of today learn about the Gold Rush in the 19th century by visiting the California Mining and Mineral Museum in Mariposa.

This is because Mountain Pass is home to an unusual feature – an open-cast mine measuring 222,000 sq. metres – whose story is strangely tied up with that of critical metals. It all began in 1949. At the time, Russia and the United States were competing to develop the most powerful atomic bomb, as they would continue to do throughout the Cold War. As a result, demand for radioactive materials increased and prospectors scoured America for uranium and plutonium. One prospector noticed abnormally high radioactivity in Mountain Pass. The Molybdenum Corporation of America bought the land and mining began in 1952.

But while the site did indeed contain traces of uranium and thorium, two radioactive compounds, it was other metals found there that would become famous: rare earth elements.

In the 1960s, production at Mountain Pass increased quite significantly in order to meet the demands for europium, a metal needed to make cathode tubes used in colour televisions. Then other elements – primarily cerium, lanthanum and neodymium – began to be mined here as well. Elements were so plentiful that by 1984 Mountain Pass alone supplied nearly 100% of US demand for rare earths, as well as 33% of global market.

CHINA MAKES ITS MOVE

But this domination was short-lived. “Starting in the late 1980s, China began to take a closer look at these elements,” says Guillaume Pitron, author of La Guerre des Métaux Rares, published in January 2018. “Deng Xiaoping (ed. note: leader of China from 1978 to 1989) predicted: ‘The Middle East has petrol, we have rare earths.’ At that moment, everything changed. The United States, which was the world leader in rare-earth production from 1960 to 1989, progressively left the market open to China.”

Once Chinese minerals made it to the market, prices dropped. Between 1992 and 1996, the price of one tonne of rare earths fell from $11,700 to $7,400. Mountain Pass became less and less profitable. And then an environmental disaster occurred: in 1998, pipelines carrying the mine’s wastewater exploded, spilling thousands of litres of radioactive mud into the Ivanpah Dry Lake. That was the final straw for the state of California, which decided to close the complex in 2002 – a decision that suited everyone involved. “Because of the disastrous environmental impact of rare-earth mines, Washington was very happy to get rid of the mine and leave extraction of these metals to China,” said Patrick Wäger, director of the technology and society department of the Swiss Federal Laboratories for Materials Science and Technology (EMPA) in Dübendorf. “Especially since at the time, these elements weren’t yet considered to be critical economically. They were used relatively infrequently and were a niche market.”

Little by little, countries gave up extraction and China took over, inundating the entire world with inexpensive raw materials. At one point, the country controlled 95% of the world’s rare-earth production, without anyone worrying about dependence on China. In 2011, however, Beijing decided to implement export quotas and prices skyrocketed. In July 2011, the price of dysprosium, for example, was up to $3,410/kg, a 10,500% increase from 2002! It was an extreme shock for the entire world, because during that time rare earths had become vital for the production of many products. Without rare earths, there would be no electric cars or new-generation aeroplanes, not to mention the fact that our smartphones and computers contain them as well.

WASHINGTON’S BELATED RESPONSE

Right in the middle of the panic-induced bubble, Washington decided to immediately restart its rare earths production in the US. The Mountain Pass mine, abandoned 10 years earlier, reopened in 2012. In addition to reducing US dependence on China, the site aimed to be an example for the entire world. “We want to be an environmentally-conscious mine,” said Mark Smith, CEO of Molycorp, the company running the site. Indeed, Molycorp strived to present itself as one of the cleanest rare earths producers in the world.

It thumbed its nose, environmentally speaking, at China, which was known to produce high levels of pollution, but it was not to last. In 2012, the price of rare earths began to fall. “I think Beijing understood very quickly that it made a huge mistake by implementing quotas,” said Guillaume Pitron. The sharp rise in prices led to an increase in criticalmetal extraction projects around the world: in the United States with Molycorp, in Australia with Lynas, as well as in Brazil and Canada. So China started back up again.”

As a result, prices fell as quickly as they rose. In 2015, one kilo of dysprosium cost only $32 and Molycorp shares, which were worth around $75 in 2011, dropped to just a few cents. After 13 consecutive quarters of losses and debt totalling $1.7 billion, the company abandoned ship on 25 June 2015. The Mountain Pass mine, which was supposed to be environmentally-friendly, was closed once again.

 

Elements were so plentiful that by 1984 Mountain Pass alone supplied nearly 100% of US demand for rare earths, as well as 33% of global market

 

Does the story end there? Not quite. In 2017, the California site was put up for auction. MP Mine Operations LLC offered $20.5 million to acquire the land. Who would pay such a sum for an unprofitable mine? At the centre of the consortium is an investor from Chengdu, the capital of the Sichuan province: China’s Shenghe Resources Shareholding Co. “China possesses approximately 40% of global rare-earth reserves, but accounts for 95% of global production,” says Florian Fizaine, author of Les Métaux Rares: Opportunités ou Menace? “Beijing knows that this position isn’t sustainable over the long term; China will inevitably have to import these metals at some point to supply its own industry. Its new policy consists of securing its supply by acquiring foreign resources.” The war of critical metals has only just begun and the story of Mountain Pass could continue.

 
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