HardAssetsInvestor

Written by Tom Vulcan  |

May 14, 2009

Mark Smith: Why Rare Earth Metals Matter

Details

Vulcan: Outside their major use in hard disk drives, which currently uses more rare earths: clean energy or defense?

Smith: I would say at the moment, defense. That's because the clean energy technologies are still at the ground level trying to find their space in the market. But I also don't think that we're going to have a problem finding a space for things like hybrid vehicles, and I don't think we're going to have a problem finding a space for wind-generated power. The current administration is very, very supportive of using alternative forms of energy in conjunction with conservation to lower our dependence on hydrocarbons. What we need to be careful of is that we don't unknowingly change our dependence on foreign oil to a new dependence on Chinese rare earths. What have we really gained?

Vulcan: In which areas are rare earth metals of absolutely critical importance?

Smith: When I think of the critical importance of rare earth elements, I think of two areas in particular related to clean energy technology. One is the hybrid vehicles, and the other is wind turbines. There are two components within hybrid vehicles that we have to keep in mind when we think of the critical importance of rare earths. One is the nickel metal hydride battery, which uses lanthanum metal; and the other is the use of permanent rare earth magnets, which primarily use neodymium.

I think everybody is predicting that the battery side of the hybrid vehicle is likely going to change to lithium ion in the next 5, 10 or 15 years. However, until the lithium ion technology is fully developed, the nickel metal hydride batteries will be indispensable. Moreover, the one thing that cannot change in electric vehicles or hybrid vehicles is the use of permanent rare earth magnets in the motors and generators. There is simply no substitute for those magnets.

Vulcan: So hybrids and then wind turbines.

Smith: Yes, but there are some other uses of rare earth elements including energy-efficient lightbulbs that are also very important. Compact fluorescent lightbulbs use europium, terbium and yttrium. Without europium, terbium and yttrium, they don't work.

Vulcan: Because there's nothing to scintillate?

Smith: That's right. What is fascinating about these energy-efficient lightbulbs is that they are 70% cooler in terms of the heat they generate, and they are about 70% more efficient in their use of electricity to create the resulting light. The energy savings that you can get from these lightbulbs is tremendous.

Vulcan: Can you please tell me a little about defense uses?

Smith: I will start by using the term "dual use" electronics. When I say "dual use," that basically means both regular consumers (like you and me) and defense consumers who are utilizing the same basic devices. We all have iPods, computers, BlackBerries and cell phones; and all of those devices use rare earths, most typically the neodymium iron boron magnet. There isn't anything electronically that the Department of Defense does that does not involve the use of rare earth elements. Some other defense uses we like to talk about are guidance and control systems, smart bombs and Patriot missiles. None of these devices works without rare earths in them.

Vulcan: And please tell me a little bit more about water filtration.

Smith: In a contract that we worked on cooperatively with the Department of Defense, we were looking at how to create a system that could be put into a man-portable device that would clean and filter water for our soldiers to drink. The big concern was the Middle East and Afghanistan, which are known to have waters high in arsenic, and arsenic can be a very, very problematic element for us if we have too much of it.