Get Mark Smith talking about his company's biggest asset and the feeling is one of being transported back to a high-school chemistry class. Cerium, lanthanum, praseodymium, neodymium . . . The mine described by the head of the Denver-based Molycorp Minerals contains deposits featuring some of the more esoteric reaches of the periodic table.
“It is really a challenge to explain to investors what we do,” Mr Smith concedes.
Yet these so-called minor metals and rare earths are as critical as copper and aluminium to the global economy. From the cobalt in mobile phone batteries to the neodymium in Toyota's hybrid Prius cars, “minor metals and rare earths are involved in every aspect of modern life”, says Guy Darby of the London-based Minor Metals Trade Association.
Take cars. At the start of the 20th century they were typically made up of about five raw materials: wood, rubber, steel, glass and brass. But today, according to a report by the National Academies, which has been written by experts who advise the US on science and technology, “a typical automobile may contain up to 39 different minerals in various components” – including several obscure metals.
That increased demand has pushed prices up, with many types trebling or more in value in the past five years. With China dominating much of the supply, and with its own industry's demands to satisfy, policymakers and business in the west have started to worry about future availability. The National Research Council of the US, another scientific group, after studying the market in 2007 concluded that the reliance on foreign sources could “expose a range of US industries to political, economic and other risk”.
The result: raw materials as little-known as terbium, samarium and ruthenium are starting to command a level of attention once reserved for energy and food security. “Rare earths are to China as oil is to the Middle East,” Deng Xiaoping proclaimed when he was leader as far back as 1992.
With volumes still small, even rumours of tiny variations in supply or demand can send prices up or down by a factor of 10. But because the overall trend is upward, China faces the prospect of losing its total grip as the increase in prices makes other countries' production more viable economically than before. Molycorp's Mountain Pass mine, which sits on the California-Nevada border, was shut in 2002 when prices plummeted as Chinese production flooded the market. Now, Mr Smith says it could be reopened.
The growth of “green technologies” such as wind turbines is also expected to boost the sector. The environmental applications of rare earth elements “have increased markedly” over the past 30 years, according to the US Geological Survey, a government agency, which expects the trend to continue. Avalon Rare Metals, a Toronto-listed mining company, reckons that about 25 per cent of new technologies rely on minor metals and rare earths.
“Minor” metals and “rare” earth elements owe those designations more to a lack of familiarity than true scarcity. Some, including manganese, are as common as base metals such as nickel or precious metals such as gold. However, as the US Geological Survey notes, in contrast to ordinary base and precious metals, minor metals and rare earths are so dispersed that production is feasible only in the few places where they are present in high enough concentrations.
Most supply thus comes from a handful of mines. Bayan Obo, in the Chinese region of Inner Mongolia, is the world's largest, followed by Mountain Pass, then Mount Weld in Australia. Like Mr Smith's facility, Mount Weld is currently inactive, though production there is also likely to restart.
