(Green) rare earths are the energy raw materials of the future. But how are they actually formed?
As magnetic metals in wind turbines and electric motors, rare earths such as neodymium oxide and dysprosium oxide have become indispensable to the energy transition. However, these key components of green technology face a dilemma: their production often causes environmental pollution and is therefore, unfortunately, frequently anything but green.
Even today, well over 90% of the rare earths used in Europe still come from China. Their production is scarcely regulated in terms of environmental and labour standards. In the West, by contrast, supply chains are becoming an increasingly important selling point. This means that Western governments are not only diversifying their supply chains, but are also placing growing emphasis on environmentally responsible, sustainable production.
One company helping businesses develop mining projects for a climate-neutral raw material supply is Deutsche E-Metalle AG (DEUMAG). It follows the ESG approach, an acronym for sustainability in terms of environmental aspects (“Environmental”), social responsibility (“Social”), and corporate governance (“Governance”). There are already two highly promising projects, one in Wyoming, USA, and one in Norway, which meet the criteria reviewed by DEMET to a very high degree.
Western Rare Earth in the USA, a subsidiary of American Rare Earth, has revolutionised the purification and extraction process for rare earths with a special protein. Compared with previous separation methods, the extraction approach based on the lanmodulin protein requires far fewer chemical solvents. As a result, rare earth production leaves a significantly smaller ecological footprint than conventional mining projects. There is also a further stroke of luck: the mine’s allanite ore contains only very low levels of uranium and thorium—radioactive elements that are otherwise produced as by-products in rare earth production.
The second major innovation in rare earth separation comes from Norway. Since 2019, the company Reetec has been operating a demonstration plant in the Herøya industrial park for an entirely new and pioneering process for producing “green” rare earths. This was previously tested for four years in a pilot plant. The process is based on extracting rare earths from phosphate rock. The idea emerged from a project with the fertiliser company Yara and the research institute SINTEF. The fertiliser manufacturer had previously always left the rare earths in the fertiliser produced, meaning that these production-critical raw materials were wasted as an additive during fertilisation instead of being used industrially. In addition, this project has a very low energy requirement. Electricity consumption is based 100% on hydropower sources from Norway’s green grid.
These groundbreaking innovations show that it is indeed possible to produce “green” rare earths. However, these are still research projects for the future. Rare earths will remain very scarce for at least another 10 years—and this against demand that is set to rise to up to five times today’s level. Investing now offers good prospects of future returns, including tax-free purchase and tax-free sale after a holding period of one year.