Rare earth metal recycling, role of circular economy in energy transition
Tina Tosukhowong, Anil Achyuta, and Hitomi Kondo from TDK Ventures
Rare earth elements (REEs) consist of 15 lanthanide elements, plus yttrium and scandium. Many electronic components are made from REEs such as magnets, batteries, phosphors, and catalysts. They are relatively plentiful in the earth’s crust, but REEs are typically dispersed and often found in low-concentration rare-earth minerals. Consequently, economically exploitable ore deposits are “rare”. REEs are categorized into two types by atomic weight: light REEs and heavy REEs. Heavy rare earth elements are only one-tenth as abundant in ore deposits as light rare earth elements. Therefore, typically heavy REEs are more valuable than light rare earth elements, though they also have smaller markets.
Chinese Dominance of Rare Earths
China plays a big part along the value chain of REE. From 1990, China government has been controlling the amount of the REE allowed to be produced and exported. Once their global production share reached over 90% around 2010, now the share has been maintained at over 60% since 2019. Separation and refining operations are still heavily concentrated in China, with almost 90% market share in 2019. China has traditionally co-located refinement factories close to mines. In this way, the raw material can be quickly reduced to production-ready metals and metal oxides. This practice increases production efficiency and lowers transportation costs, making it difficult for other countries to compete in the global market.
Environmental and social concerns in REE production
REE production and processing negatively impacts the environment and workers’ health in long term.
Environmental impact (hazardous waste): Current practice of rare earth mining involves creating a leaching pond where chemicals are pumped into the ground to leach out REEs. Through this process, toxic and radioactive materials are produced, and they can leak into groundwater. The extraction of one ton of REE produces 1,300 to 1,600 m3 of excavation waste. REEs are typically associated with radioactive uranium and thorium and the separation of radioactive elements is a particular challenge. In the case of monazite (a primarily reddish-brown phosphate mineral that contains rare-earth elements), disposal of mine tailings containing thorium has led to radioactive pollution. Even after mine closures, abandoned mines pose ongoing environmental hazards while residual chemicals continue to leach into local groundwater.
Social impact: Those toxic chemicals cause major health and safety issues, including fatalities for employees working at sites and people living near the site.
Current Life Cycle of REEs
Currently, there are two major waste streams in the rare earth magnet life cycle. One is from end-of-life magnets, the other is from production swarf and scrap. Without a recycling process, those would end up in a landfill.
Advantages and Challenges of Recycling REEs
Today’s Market Activity from Incumbents
Rare Earth Elements Recycling Process
REE magnet recycle operations often include the following steps:
- Demagnetization: Magnets are taken out from end-of-life products such as EV motors, hard disks, and wind turbines, and need to be removed from other non-ferrous and ferrous materials.
- Size Reduction: Next is to reduce the particle size into a powder form by crushing, shredding, and grinding process.
○ Hydrogen decrepitation is a process also commonly used to create extremely small grain sizes for rare earth elements. Normally grain size of Neodymium is 5 micrometers. In this process, hydrogen is used to embrittle metals by entering the grain boundaries and creating pressure at the weakest point. This causes micro-cracks that begin to propagate through the grain structure and helps achieve particle size reduction
- Extraction: Currently there are two types of methods mainly used to extract REEs from the rest of the material; the hydrometallurgical method and the pyrometallurgical method.
○ The pyrometallurgical method separates elements from electronic waste by heating to very high temperatures to oxidize all rare earth elements into oxides. This method is a highly mature technology and requires a high amount of energy. After that the oxides can be extracted and purified.
○ The hydrometallurgical method is another common method currently in use. The wastes are dissolved in strong acids, such as sulfuric acid, hydrochloric acid, and nitric acid. Subsequently, extracted metals are purified by a series of solvent extraction. This method has a high recovery efficiency. However, wastewater needs to be managed properly.
○ Newer extraction approaches include an electrochemical process and a biological recovery, which are more environmentally friendly. Biosorption and bioleaching are areas of active development for REE recovery.
- Metallization: In the metallization process, rare earth oxides are converted to rare earth elements through halogenation in an electrochemical process.
Key Startup Landscape
Key Insights and Takeaways
· Due to the geopolitical and environmental concerns around REE supply that developed countries are facing, there is a strong call for countries or regions to establish the domestic supply chain by promoting recycling.
· Considerable effort has been directed in recent years toward the development of new approaches tailored for recovery from end-of-life products or secondary sources. Organizations/institutions have been working to develop recycling technologies in the last decades.
· The most challenging part of REE recycling is separation, which is an expensive and labor-intensive process.
· In recent years governments around the world started to invest more in REE magnet sector, including recycling as one of many strategies to achieve decarbonization and a circular economy.
· New hydrometallurgy technologies or novel methods such as biosorption and bioleaching need to be validated as such processes have not been proven at scale.
· There are many new emerging startup companies in the US that are developing new processes to recover REEs from various sources, such as from recycling end-of-life magnets or recovering REEs from the tailings of iron-ore mining or bauxite mining.
· While there are clear opportunities and strong government policy support for startups in the Western Hemisphere to develop new supply chains for REEs, challenges that must not be overlooked include:
○ Supply chain development for magnet waste collection. This is a very nascent industry. For example, currently the HDD magnets are shredded in the e-waste collection facilities and REE is not recovered. Motor magnets can be recovered. However, this is a manual labor-intensive process, currently done in India and Southeast Asian countries.
○ Scaling up a first-of-a-kind plant will involve scale-up risks. It is important that the companies are backed by strong investor syndicates and have very experienced management teams.
TDK Ventures Perspective
· There are a lot of parallels between battery manufacturing, production, and recycling with rare earth production and recycling process.
· We believe that the demand for rare earth elements will increase significantly as part of the energy transition megatrends as rare earth elements are used in neodymium magnets.
· The current market for rare earth is still relatively small at $2.8B in 2021, but it is projected to grow fast at a CAGR of 10.0% to become a $5.5B market in 2028.
· Currently, we have not found startups that aim to capture the complete value chain from magnet separation, all the way to produce individual rare earth elements. However, the situation may change in a couple of years given strong government support and funding in US and Europe to develop a domestic rare earth supply chain.
· We believe that the startup that is the “King of the Hill” in this rare earth recycling space must have the following characteristics:
o Ability to secure very large supplies of raw material.
§ If the source is the end-of-life magnets, the startup must have secured contracts with large motor and magnet waste collectors and have a viable process to extract just the magnet from the material.
§ If the source is from mine tailings, the startup must have a strong partnership with the mining company to be able to operate their process on the mine tailing site.
o Ability to make magnet grade material with strong unit economics:
§ Rare earth recovered from motor magnets or from mine tailings come with other comingled metals. The separation process must have a robust design to achieve high-purity rare earth metals, as well as salable grades of by-product metals.
o Ability to secure offtake agreements with existing magnet material suppliers who supply to magnet companies.
At TDK Ventures, we are looking for startups that can recycle more safely and sustainably and produce pure rare earth elements for magnets. We believe the energy transition is going to bring a lot of opportunities for cleaning up the environment while creating economic activity. From the perspective of rare earth recycling, this market is ripe for disruption.
