Rare Earth Metals Become Recycling Gold For Cleantech Sector

Ultrapure Cerium
Ultrapure Cerium

Surging prices for rare earth metals and the possibility of hoarding have the cleantech sector on the offensive, spurring a new recycling effort to reclaim valuable elements from mountains of e-waste.

Japanese electronics firm Hitachi fired an early volley when it announced late last year that it would begin recovering two of these metals —neodymium and dysprosium — from magnets found in their own hard drives and air conditioners.

Those metals are two of a 17-member family known as rare earth metals, REM, that are critical — in small amounts — in the manufacture of hybrid and electric vehicles, solar and wind-power technologies, and personal electronics, such as Research In Motion's BlackBerry.

“Given that prices for some REMs have increased sevenfold since July, REM recycling is likely to emerge as a priority for large consumers going forward,” says Euan Sadden, analyst with cleantech research firm Pike Research.

Automaker Toyota , for example, recycles batteries for its Prius hybrid vehicle, and is now working with manufacturer Panasonic to break them down into higher value components, including plastics, base metals and precious metals like cobalt and REMs.

"Most, if not all of Japan’s large-scale electronics manufacturers are exploring new recycling technologies in-depth," says Sadden.

In Europe, REM recycling efforts have been “popping up around for some time,” says Eric Harris, director of government & international affairs for the Institute of Scrap Recycling Industries, ISRI, the recycling industry’s key trade group.

It’s understandable given the ascent of REM prices in the last year. China controls about 97 percent of known REM reserves and restricts their export.

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In March 2011, prices for Chinese-sourced virgin neodymium rose five-fold to $250 a kilogram, while dysprosium tripled to $900 a kilogram. Shares of Molycorp, a U.S. mining firm with access to domestic REM reserves, have risen from a 52-week low of $12 to almost $73 in April.

That said, not every REM is likely to become a cleantech bottleneck, says Greg Payne, vice president of portfolio management at Greenchip Financial. Cerium is one of them. The modest abundant REM is used as a fuel additive to reduce auto emissions as well as in touch screens and solar panels.

What is likely at this point is continued uncertainty about the supply of many rare earth metals, which is clearly a challenge for the cleantech sector.

“There are clear technology barriers that need to be overcome in order to make recycling economically viable,” says Payne. “Although given the current prices, that shouldn’t be too hard for most companies.”

One boon to REM recycling efforts is existing laws requiring some electronics firms to take back their products, creating piles of e-waste that need to be tackled, says ISRI’s Harris, who counts nearly 30 take-back laws across the US currently.

But he adds that new recycling methods are “getting very close to being competitive” with the cost of simply shipping e-waste to other countries for disposal.

Payne says specialist recyclers, like Europe’s Umicore, are also focusing on recovering these small -volume resources from trash generated by e-waste disposal regulations.

CNBC Investing In Green Tech 2011
CNBC Investing In Green Tech 2011

ISRI’s Harris agrees, adding that this specialization is a hallmark of his industry and more innovation can be expected if REM pricing allows it.

After all, his membership has been exploiting the “garbitrage” spread between commodity prices and unusual demand ever since the first piece of trash was discarded.

“Our guys are the most innovative guys you’ll find,” he says of his members, pointing out that the hundreds of current classifications for different kinds of scrap arose from specific customer demands filled by the recycling industry.

“If there’s a need, they’ll fill it,” he says.