Japan has identified a large rare earth deposit of its own, but it’s not going to change global supply dynamics. Here’s the situation.
Rare earths are typically a byproduct, so the bottleneck isn’t ore access; it’s processing capacity. And China has a monopoly on the processing. Japan may have found a massive deposit, but that’s just step one. The deposit is located near Minamitorishima Island, under 8km of water, and extraction just isn’t economically viable as of now.
This is just another example of Japan having to get creative with the hand it’s been dealt.
Hey all, Peter Zeihan here. Coming to you from Colorado, several people have written on the Patreon page asking about the new Rare Earth project that the Japanese are poking into offshore. It’s called the Minamitorishima, I think way too many syllables. Anyway, the idea is that it has significantly higher concentrations of rare earths and some of the production sites around the world today.
And is this something that is going to change the math of rare earth production? Probably not. Let’s start with how we do it now. Rare earths are not something we use in large volumes. Like, your car probably has less than a 10th of a gram of the stuff in it. But that doesn’t mean it’s not critical.
It changes the electrical properties of a lot of things. And so we’ve got, I think, 13 different rare earths that we use in different concentrations, in different things, just in microscopic amounts, typically. Well, what that means is there really, until recently, hasn’t been anything called a rare earth mine. What you do is you produce something else. Iron ore, copper, silver, for example.
And then you take the tailings and you process the tailings that might have a higher concentration of, these things, which sends it through several hundred vats of acid over several months and from somewhere from a half a tonne to several tons. After that amount of time and that amount of acid, you get one ounce of the stuff. So it’s really available in very small volumes. Now, the, the mud that they have dredged up from meto Minamoto or Ashima, has a reasonably high concentration somewhere in the range of 6 to 8000 parts per million, which, compared to a lot of the mines out there, is pretty low. But if you compare it to the handful of mines that have popped up in recent years as part of this kind of geopolitical scramble, for the stuff, some in China, mountain passes the United States, for example.
It doesn’t compare all that great, the richest rare earth mine, if you want to use that term, is in South Africa, and it’s about ten times the concentration of what the Japanese are dredging off the seafloor. Mountain pass is probably about 4 or 5 times the concentration. It is richer than some of the clays that the Chinese are mining.
But you got to remember when you’re talking about South Africa, a mountain pass or, China, you can basically drive a truck to it and put a shovel on the ground and start doing it. The mean a meter or Cima deposit, while huge, absolutely huge, is at the bottom of the seafloor on the abyssal plain under eight kilometers of water.
So you have to bring it up and then dry it and then start the processing. So you’re already talking about costs that are on average, in order of magnitude higher than anything, anywhere else. About the only thing about meter millimeter or Cima, that is really interesting is the concentration variation. There’s two different kind of buckets for rare earths, lights versus heavy.
And most of the deposits in the world are for the light ones, and the heavy ones are the really rare ones. Whereas the Japanese on this abyssal plain have found one where it’s about a 5050 split. But in order for it to be economically viable, you’d have to see the price of these things not go up by a factor of 2 or 3 or 5 or 10, but probably 50 or 100, in order to justify economically the infrastructure.
And at the moment, there’s no sign that that’s going to happen, because, again, rare earths are a byproduct of other mining. And the limiting factor is not not, not not the actual access to the or the limiting factor is the processing capacity, which the Chinese basically have a lock on at the moment.
We are seeing that change in pollutants, places like Mountain Pass are building it out, and there are a number of countries out there, Australia, Malaysia come to mind, that have some of these facilities dormant.
But for them to be economically viable, the price of the stuff has to go up. So the Chinese will continue to have the leverage until such time as countries decide to kind of marry national security to their economic decision making on these things. And if that happens, this will all kind of work itself out in a year or two.
And even in that scenario, I really don’t see the Japanese stuff coming to the forefront. Just keep in mind that the Japanese, among the major powers are the least resource rich country in the world. And so they will be always trying out new technologies and new places to see what they can make work. And most of them will never pan out.
But, they have to try. And every once in a while generates, big advances and things like efficiency, which is one of the reasons why Japan is the most energy efficient of the major countries in the world, because it’s been forced to by its geography, kind of think of what’s going on with railroads in that category.
