Interview with geoscientist Martin Erdmann on rare earths “Germany and Europe lack the Risk Capital needed for new Supply Chains in Mining.”

Related Vendors

Fastems Systems GmbH

item Industrietechnik GmbH

The debate surrounding the procurement of rare earth elements - particularly against the backdrop of Europe’s lack of strategic sovereignty in this sector- shows no sign of abating. The hurdles for prcurement remain significant, as Dr Martin Erdmann of the Federal Institute for Geosciences and Natural Resources explains in an interview with Aerospace & Defence.

Given the dependence on China in this field, there is considerable discussion about deposits around the world, including in Europe. However, establishing new supply chains, including processing capacity, typically takes at least a decade. The Federal Institute for Geosciences and Natural Resources (BGR) operates under the authority of the Federal Ministry for Economic Affairs and advises policymakers on all matters related to raw materials. Dr Martin Erdmann has authored numerous publications on the subject of rare earth elements.

What is a realistic timeframe for becoming less dependent on China?

Bringing a new mining project into production typically takes at least ten years, and even then you are only at the stage of extracting concentrates from the ground. At the same time, downstream processing facilities would also need to be built. If you look at projects in Brazil that are close to starting, things could move more quickly. However, it is important not to focus solely on mining but also on the subsequent steps. In fact, these are the real bottlenecks, as there are many rare earth mining projects worldwide.

At present, there is a facility operated by Silmet in Estonia and another by Solvay in La Rochelle. Do we need a plant in Germany?

Concentrates from a deposit should at least be processed to the extent that most of the radioactive accompanying elements - geologically always present- are removed as far as possible. This is necessary simply to obtain permission to ship the concentrates so that they can then be further processed in Europe, for example. The facility in Estonia has existed for a long time and is now being expanded as a kind of EU flagship project. The original plant dates back to the Soviet era. Many of the concentrates processed there still come from Russia and are not affected by sanctions. The plant in France has historically been linked to the recycling of fluorescent tubes. Technically, it is capable of processing rare earths.

What are the obstacles to building new plants?

First of all, a great deal of expertise has been lost because we have relied on imports. In addition, the investment required for such a facility is very high. You cannot simply build many small plants; costs quickly reach one billion euros or more. There are also plans in Poland to build such a facility, where concentrates from Malawi would be processed. This is a project supported under the EU’s Critical Raw Materials Act as a strategic initiative.

What about recycling?

Germany is relatively strong in this area, as significant funding has recently been invested in research. There are also existing facilities, for example in Bitterfeld, although they are not yet fully utilised because demand for the relatively expensive products is limited. Imports of primary materials- especially from China - remain cheaper. Moreover, recycling requires sufficient scrap material. For instance, permanent magnets from wind turbines are still relatively new, so there is not yet much to recycle. And as long as demand continues to grow as strongly as it does now, primary materials will still be needed.

Deposits in clay soils, such as those found in China, Myanmar or Brazil, are comparatively easy to extract. Then there is conventional mining, such as the Mountain Pass mine in the United States. Can this help us in the short term?

The United States will primarily aim to meet its own demand, which is also growing rapidly. While imports would generally be possible, the volume produced there represents only a small share of global demand. Given the substantial funding provided by the US Department of Defense for domestic mining projects, it is likely that “America First” will apply here as well, meaning domestic demand will be prioritised before exports.

Which rare earth elements are mainly used in the defence sector, as far as is known?

As in the civilian sector, magnet metals such as praseodymium, neodymium and samarium are particularly important, especially for high-precision motors used in propulsion systems. These are significant in terms of volume. Other elements are used in smaller quantities but are essential, such as europium for night-vision devices. Additional elements are required for sensors, for example in guided or remote-controlled missiles. Yttrium is also crucial. It belongs to the heavy rare earths and is used, for instance, to make ceramics in high-temperature jet engine turbines heat-resistant. In the optical industry, cerium and lanthanum are needed for polishing glass. These are among the most abundant rare earth elements.

In 2022, it was reported that rare earths had been found in Kiruna, Sweden’s well-known ore deposit. How do you assess this?

The announcement came from the mining company LKAB, which operates the iron ore mine. There are deposits in tailings from iron ore extraction that were previously considered unimportant. These contain apatite, a by-product of iron ore mining, which in turn contains rare earth elements. However, this is not yet an established process, and new processing methods would need to be developed. The quantities are limited. In addition, the newly discovered Per Geijer deposit nearby has considerable potential in terms of tonnage. But again, it will take years before production can begin.

When it comes to mining companies, we often hear about Australia, Canada and the United States securing extraction rights worldwide. Where does Germany stand?

Germany no longer has any mining companies focused on metal mining, which is a major problem. In the countries you mentioned, international mining companies invest risk capital to explore and potentially develop new deposits. Germany, by contrast, has many end users, but they do not invest risk capital in rare earth mining because they require relatively small quantities.

The issue of dependency was already recognised in 2022, with “de-risking” becoming a key term. What has been done politically since then?

Unfortunately, governments have not invested significant sums to support this effort. This contrasts sharply with the United States, which is investing vast amounts directly in mining projects. At the European level, the Critical Raw Materials Act has at least been introduced. However, other crises - such as the need to secure energy supplies following Russia’s invasion of Ukraine - have taken priority. Germany also has a raw materials fund, which companies can apply to for project financing. However, at around one billion euros, this is only a drop in the ocean. It is estimated that at least two billion euros would be needed just to establish an alternative supply chain for rare earths—and even then, full independence from China would not be achieved.

China’s extraction and processing of rare earths is carried out on a large scale, often involving environmentally harmful methods. It seems as though Europe is reluctant to get its hands dirty—would you agree?

Mining does not have a particularly good reputation in Europe. New projects often face strong public opposition, which makes it easier to develop them in other regions. That said, environmental standards in China have improved significantly in recent years. Nevertheless, greater public acceptance of resource extraction would be necessary if Europe wants to become more independent.

Are there viable deposits elsewhere in Europe besides Sweden?

There is a deposit in Norway, southwest of Oslo. Greenland also has significant rare earth deposits, including one of the largest known reserves of heavy rare earths. However, the conditions for extraction and the required infrastructure are extremely challenging. It may therefore be easier to expand processing capacity in regions such as southern Africa, Brazil or Australia.

To conclude: if we look at the timeframe, is it realistic to say that in ten years perhaps a quarter of rare earth imports will no longer come from China?

A quarter is rather optimistic. The EU’s Critical Raw Materials Act aims to ensure that no single country supplies more than 60 per cent. That is ambitious but achievable over time. Perhaps we could reach around ten per cent of our own supply within ten years. Unfortunately, companies often revert to “business as usual” after resource crises and return to cheaper and simpler supply chains - namely China. That said, there does seem to be a growing awareness that these dependencies need to be reduced.