Active coal mines could be the key to the renewable energy revolution

The huge increase in the number of renewable energy installations around the world is driving a surge in demand for key rare earth elements. While these materials are not as geologically rare as their name might suggest, their production is limited because the finite number of already established supply chains struggle to keep up with demand. As a result, prices are rising rapidly. Therefore, not only is there a huge economic opportunity in establishing new REE supply chains, but there is also a significant risk that incumbent market players will be able to continue to consolidate their influence on these fundamental clean energy building blocks.

Currently, China dominates rare earth supply chains. According to the Oxford Institute of Energy Studies, Beijing alone is responsible for 70% of global rare earth ore mining and 90% of their processing. Moreover, China is still the world’s only large-scale producer of heavy rare earth ores. This is not only because of the rich natural deposits of these ores in China. “This dominance has been achieved thanks to decades of state investment, export controls, cheap labor and low environmental standards,” Oxford says. The country has spent decades building supply chains around the world, expanding its energy and industrial influence into emerging markets in Asia, Africa and Latin America.

Currently, the United States is making a concerted effort to build its own rare earth supply chains to meet its own renewable energy needs as well as its significant military demand. Since 2020, the Department of Defense has awarded more than $439 million to establish domestic rare earth supply chains, and the Department of Energy is also committing billions of dollars to revitalize the domestic lithium industry.

The United States has been examining supply chains for key rare earth elements around the world, in recent years stepping up efforts to secure its own supplies by reaching out to countries such as Mongolia, South Africa and Mexico for potential trade deals. But concluding trade deals that China has not yet concluded has proven difficult. For example, China is aggressively developing a green energy empire in lithium-rich Latin America, but the United States has found it relatively difficult to enter the same market.

Fortunately, the United States is also geologically rich in many rare earth elements – it will just require building an entire mining and processing industry from scratch. Given the enormous and rapidly growing demand for these elements, as well as the geopolitical risks associated with one nation monopolizing their supply chains, such a timeline is not ideal.

But perhaps researchers at the University of Utah have found a shortcut. Ironically, the key to powering the U.S. renewable energy industry may be working with the U.S. coal industry to extract the ore faster and more profitably. A research team has discovered “elevated concentrations” of rare earth elements at currently operating mines in the Uinta coal belt of Colorado and Utah. Theoretically, this could enable existing mines to extract rare earths alongside the ore they already mine, with little additional overhead.

“The model is, if you’re already moving rock, can you move some more rock to get resources for the energy transition?” said study co-author Lauren Birgenheier, associate professor of geology and geophysics. “In these areas, we find that rare earth elements are concentrated in the fine-grained shales, or muddy shales, that lie above and below the coal seams.”

While the United States is in an important position to become competitive in the rare earths market, China still lags many years and billions of dollars in industrial development as well as diplomacy in striking deals with ore-rich countries. Moreover, it cannot compete with low labor costs, unilateral decision-making power and lax environmental oversight, which give Beijing an advantage in the market. But innovative approaches like those being tested by the University of Utah could open a potential path to reclaiming some of this land.

Author: Haley Zaremba for Oilprice.com

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