Privatization of rare earth mining: Today’s need for India

Privatization of rare earth mining: Today’s need for India

T. Srinivasagan
V.V. Mineral, Thisaiyanvilai, India

ABSTRACT: This paper highlights the importance of Rare Earths Mining in India. Monazite is the important ore and source of Rare Earth Elements (REE). The Monazite is abundant in India and found along the coast of Tamil Nadu, Kerala, Andhra Pradesh and Odisha. Monazite is found as placer deposit and deposited along with other associated heavy minerals viz. Ilmenite, Rutile, Garnet, Zircon, Leucoxene, Sillimanite etc. Although our country is blessed with more than 10.93 million tons of Monazite reserves, due to several constraints it is severely under utilized. The Monazite Mining/processing being a government monopoly, due to which REE being imported from China. Processing and Production of Monazite by private entities are not allowed in India due to co-occurence of prescribed substance Thorium. In view of the REE’s strategic application, heavy demand prevails for REE. Hybrid vehicles, Magnets, Rechargeable batteries, Catalytic Converters are few of the end uses of REE.

1. INTRODUCTION

Rare Earth Elements (REE) are a group of 17 Elements. These elements are moderately abundant in the earth’s crust, some even more abundant than copper, lead, gold and platinum. Some elements are more abundant than many other materials, because of their geochemical properties, REEs are typically dispersed; most of them are not concentrated enough to make them easily exploitable economically. It was the very scarcity of these minerals that led to the term as “rare earth”. There are 17 rare earth elements; 15 within the chemical group called lanthanides, plus yttrium and scandium. They are classified into two types i) Light Rare Earth Elements (LREE) (More Abundant) and ii) Heavy Rare Earth Elements (HREE) (Less Abundant).

          Fig. 1. Periodic table showing rare earth elements and rare metals.

1.1 Light rare earth elements
(a) Lanthanum (La)
(b) Cerium (Ce)
(c) Praseodymium (Pr)
(d) Neodymium (Nd)
(e) Promethium (Pm)
(f) Samarium (Sm).
1.2 Heavy rare earth elements
(a) Europium (Eu)
(b) Gadolinium (Gd)
(c) Terbium (Tb)
(d) Dysprosium (Dy)
(e) Holmium (Ho)
(f) Erbium (Er)
(g) Thulium (Tm)
(h) Ytterbium (Yb)
(i) Lutetium (Lu)

(j) Yttrium (Y)
(k) Scandium (Sc).

2. ABUNDANCE OF REE’S IN EARTH CRUST

Together the lanthanides, Yttrium and Scandium are commonly referred to as REE’s, although this is a misnomer since most of the REE’s are common mineral constituent as compared with other metal elements. The term “rare” is not due to availability, whereas due to the metallurgical process needed to isolate the individual metal species are complex and early technology prevented commodity-level production.

The abundance of REEs in the earth’s crust relative to other common metals is presented in Table 1.

TABLE I. Abundance of Elements in the Earth’s Crust

Elements Crustal Abundance (Parts per millions)
Nickel (28 Ni)

Zinc (30 Zn)

Copper (29 Cu)

Cerium (58 Ce)

Lanthanum(57La)

Cobalt (27Co)

Neodymium(60Nd)

Yttrium (39 Y)

Scandium (21Sc)

Lead (82Pb)

Praseodymium(59Pr)

Thorium (90Th)

Samarium (62 Sm)

Gadolinium (64 Gd)

Dysprosium (66 Dy)

Tin ( 50 Tn)

Erbium (68 Er)

Ytterbium (70 Yb)

Europium (63 Eu)

Holmium (67 Ho)

Terbium (65 Tb)

Lutetium (71 Lu)

Thulium (69 Tm)

Silver (47 Ag)

Gold (79 Au)

Promethium (61 Pm)

90

79

68

60

30

30

27.0

24.0

16.0

10

6.7

6

5.3

4.0

3.8

2.2

2.1

2.0

1.3

0.8

0.7

0.4

0.3

0.08

0.0031

10-18

* REE – Lanthanides, Scandium and Yttrium is presented in bold face type.

The major minerals of RE of commercial importance are presented in Table 2.

TABLE II.

Minerals Chemical Formula Countries of Origin Appx REO% Remarks
Bastnaesite (Ce, La)

FCO3

USA, China & Australia 75% Processing relatively simpler,  more content of Europium.

In China associated with Iron ore mining

Monazite (Ce, La, Th&U) PCO4 India, Australia, Malaysia, Brazil, Thailand & Korea 65% Available in beach placer deposit. RE content more or less uniform. Contains Th&U which are radioactive.
Xenotime YPO4 Malaysia, China & India 60% Yttrium major constituent. In Malaysia associated with Tin Mining
Gadolinite (Ce, La, Nd,Y) Fe Be2 Si2 O10 USA 60% Source of Yttrium. Recovered as by-product from Bastnaesite.
Ion Exchange Clay Weathered Apatite & Xenotime ore concentrated China Unique deposits found only in southern China. Though less content of RE easier to concentrate. Rich source of Y, Eu, Tb & Dy.
Apatite Ca5 (PO4)(F, Cl, OH) CIS, South Africa 19% Occurs in Copper, Tin, Phosphate Mining
Loparite (Ce, La, Na, Ca, Sr) (Ti, Nb)O3 CIS 30% Contents above 40% Titania

I.    History of REE

From the 1960s until the 1980s, the United States was the world leader in REO productions. In fact, in 1984, the Mountain Pass Mine in California supplied 100 percent of US Demand and 33 percent of the world’s demand for rare earth. In the late 1970’s, China started increasing Production of REEs, and as illustrated in Figure 3.1, rapidly because the world’s dominant producer. Active mining Operations at Mountain Pass Mine were suspended in 2002. As REE production in the US has declined, China has become the world’s leading producer of REE’s and is currently responsible for more than 95 percent Global Production.

I. Major End Uses And Applications of REE

Currently the dominant end uses of Rare Earth Elements in the United States are for Automobile Catalysts and Petroleum Refining Catalysts, Use in Phosphors in Color Television and Flat Panel Displays (Cell phones, Portable DVDs and Laptops), Permanent Magnets and Rechargeable Batteries for Hybrid and Electric Vehicles and Numerous Medical Devices (See Table III). There are important Defense applications such as Jet Fighter Engines, Missile Guidance Systems, Antimissile Defense and Satellite and Communication Systems. Permanent Magnets containing Neodymium, Gadolinium, Dysprosium and Terbium (Nd Fe B magnets) are used in Numerous Electrical and Electronic components and New Generation Generators for Wind Turbines. About 75% of the Nd Fe B Permanent Magnet Production is concentrated in China. Another 22% is produced in Japan.

TABLE III. Rare Earth Elements – End Uses

Sl. no. REE Symbol End Uses
1 Scandium Sc Light aluminium-scandium alloys for aerospace components, additive in metal-handle lamps and mercury-vapor lamps, [4]radioactive tracing agent in oil refineries.
2 Yttrium Y Yttrium Aluminium Garnet (YAG) laser, yttrium vanadate (YVO4) as host europium in TV red phosphor, YBCO high-temperature superconductors, yttria-stabilized Zirconia (YSZ), yttrium iron garnet (YIG) microwave filters, energy-efficient light bulbs, spark plugs, gas mantles, additive to steel.
3 Lanthanum La High refractive index and alkali-resistant glass, flint, hydrogen storage, battery-electrodes, camera lenses, fluid catalytic cracking catalyst for oil refineries.
4 Cerium Ce Chemical oxidizing agent, polishing powder, yellow colors in glass and ceramics, catalyst for self-cleaning ovens, fluid catalytic cracking catalyst for oil refineries, ferrocerium flints for lighters.
5 Praseodymium Pr Rare earth magnets, lasers, core material for carbon arc lighting, colorant in glasses and enamels, additive in didymiumglass used in welding goggles  ferrocerium Firesteel (flint) products.
6 Neodymium Nd Rare-earth magnets, lasers, violet colors in glass and ceramics, didymium glass, ceramic capacitors.
7 Promethium Pm Nuclear batteries, luminous paint.
8 Samarium Sm Rare-earth magnets, lasers, neutron capture, masers.
9 Europium Eu Red and Blue phosphors, lasers, mercury-vapor lamps, fluorescent lamps, NMR relaxation agent.
10 Gadolinium Gd Rare-earth magnets, high refractive index glass or granites, lasers, x-ray tubes, computer memories, neutron capture, MRI contrast agent, NMR relaxation agent, magnetostrictive alloys such as Terfenol-D.
11 Terbium Tb Green phosphors, lasers, fluorescent lamps, magnetostrictive alloys such as Terfenol-D
12 Dysprosium Dy Rare-earth magnets, lasers, magnetostrictive alloys such as Terfenol-D
13 Holmium Ho Lasers, wavelength calibration standards for optical spectrophotometers, magnets
14 Erbium Er Infrared lasers, vanadium steel, fiber-optic technology
15 Thulium Tm Portable X-ray machines, metal-halide lamps, lasers
16 Ytterbium Yb Infrared lasers, chemical reducing agent, decoy flares, stainless steel, stress gauges, nuclear medicine
17 Lutetium Lu Positron emission tomography – PET scan detectors, high-refractive-index glass, lutetium tantalate hosts for phosphors.

II. Demand for Rare Earth Elements

The world demand for REE was estimated at 1,36,100 tons in 2010, with global production around 1,33,600 tpa.

III.             Rare Earth – World Reserves, Production & Consumption – 2015

TABLE IV. Country-wise Reserves, Production & Demand

Country Reserves(tons) (with % of total) Production (tpa)(with % of total) Global RE Demand (2010)
China

 

Brazil

 

Australia

India

 

United States

Malaysia

 

Thailand

Others, including Russia

550,00,000 (43.6%)

220,00,000 (17%)

32,00,000 (2.5%)

31,00,000 (2.5%)

 

18,00,000

(1.4%)

30,000 (0.025%)

 

NA

410,00,000 (32.5%)

 

1,05,000 (86.6%)

 

 

10,000 (8.2%)

0

 

4,100 (3.4%)

 

200 (0.2%)

 

2,000 (1.6%)

NA

China

 

Japan

 

Europe

 

 

US

 

Rest of Asia

54%

 

24%

 

10%

 

 

8%

 

4%

Total 1261,30,000 1,21,300    

Source – USGS 2016

From the above it is evident that the countries, Brazil and India are having surplus REE reserves they are not keen to produce any REE.

Following are the reasons for US to control their REE production

  1. Higher cost operations
  2. Environmental restrictions.

Following is the turn of events in the monazite sector during the last 107 years in India.

  1. Heavy mineral deposits of Manavalakuruchi in the state of Travancore (now Tamilnadu) were discovered by Schomberg, a German Scientist in 1909 which was proved richer and economical compared to rest of the world. Initially, the raw material itself was exported to other countries and later Mineral Separation Plants were set up and produced Ilmenite and Monazite were exported. After independence, the export of Monazite was restricted and hence a Processing Plant for Monazite was set up by M/s. Indian Rare Earths Ltd (IREL), PSU to produce Thorium Nitrate for Gas mantles and Rare Earths. Monazite contains 65% Rare Earths Oxides along with 9-10% thorium and 0.35% uranium.
  2. In 1965, all the closed down Mineral Separation Plants were acquired by IREL. Till 1998, the Beach Sand Mineral(BSM) mining operations other than Garnet and Sillimanite was with the Public Sector only.
  3. In 1998, Mining and Separation of all beach sand minerals other than Monazite were opened up to private sector in India by DAE.
  4. In 2002, Monazite processing was stopped by IREL due to Thorium storage bottlenecks and high production costs of REE by IREL.
  5. Mining policy, Environmental policy and Land Acquisition Bill of India are the bottlenecks for PSU regarding REE production.
  6. The present AMCR by Government of India aims at exploitation of the entire suite of beach sand minerals on the utility of thorium alone, which will have a negative impact on other beach sand minerals and also on titanium, zirconium and rare earth productions in India.
  7. Environmental restriction for handling and storing associated Thorium compounds.
  8. As per IAEA documents none of the countries in the world, other than India are planning for thorium based reactor.

 IV. REE Mines in operation

A.    Bastnaesite :

  1. China – Baiyan Obo & Sichman
  2. USA – Mt. Pass
  3. Vietnam – Dong Pao
  4. Australia – Dubbo Trachyte

B.    Monazite:

  1. China –  Guangdong
  2. Australia – Mount weld
  3. India –  IREL
  4. Malawi –  Kangankunde
  5. SA –   Zand kopsdrift, Steenkampskaal

C.    Xenotime:

  1. Brazil –  Ptinga
  2. Malaysia – Lahat Perak
  3. China –  Guangdong

D.    Apatite:

  1. China –  Nangang, Gangdong
  2. Australia – Nolaus Bore
  3. Canada – Hoidas Lake

E.    Eudialyte:

  1. Canada –  Zeus
  2. Greenland –  Steenstrupine

F.    Loparite:

  1. Russia –  Lovozersky

G.    Fergusonite:

  1. Canada –

V. Properties and Chemical Composition of the Mineral Monazite

Composition %
REEs as Re2 O3

P2O5

ThO2

CaO

S1O2

MgO

U3O8

Fe2 O3

Al2 O3

PbO

TiO2

ZrO2

59.37

27.03

8.88

1.24

1.0

0.63

0.35

0.32

0.12

0.18

0.36

0.49

  1. Honey Yellow to Golden yellow. Also pale yellow
  2. Specific Gravity – 4.6 – 5.47
  3. Crystal –  Monoclinic
  4. Hardness –  5 to 5.5 on Moh’s scale
  5. Bulk Density – 3200 kg/m3

 VI.   Conclusions

Based on the study, it is inferred that now is the suitable time for India to go for Private Sector Participation in Monazite Production and Processing considering the Rare Earths Market in the World, which is dominated by China.

A.    Radiological Safety in Processing of Monazite:

The radiological safety aspect to be covered in the processing of Monazite is very simple, when it is compared with operation of Nuclear Reactors. Due to the lesser composition (in PPM level) of radioactive elements in Monazite, the radiological safety standards can be easily achieved by the Private entities and the same can be regulated by the existing radiological safety regulatory authority viz. AERB. Appointment of Exclusive Radiological Safety Officer (RSO) deputed from DAE/AERB would make the system safer.

Already Private entities who are all involved in the processing of BSM facility are holding a valid license under Atomic Energy Radiation Protection Rule, 2004.

B.    Stacking and Handling of Thorium rich concentrate:

The present scale of Mining of Beach Sand Minerals (BSM) by private entity is about 10 lakh tpa. During the Process about 50 tons Thorium concentrate is expected. The system is very simple and with a few laid down procedures, stacking and handling Thorium concentrate can be easily achieved with the aid of the regulatory authority AERB.

C.    Change in policy

Heavy mineral deposits of Manavalakuruchi in the state of Travancore (now Tamilnadu) were discovered by Schomberg, a German Scientist in 1909 which was proved richer and economical compared to rest of the world. Interestingly, Mineral sands then mined from rich seasonal Beach washings for only one mineral, i.e. Monazite, which produce incandescence by infusing the paraffin mantle in a solution of thorium and cerium compounds, lost its worth due to arrival of filament lamp. During 1947, Indian first Prime Minister Pandit Jawaharlal Nehru exercised control (not banned, but restrictions) over the export of Monazite and Thorium Nitrate. However, in 1995 DAE issued a gazette notification, listing prescribed substances, including Monazite, that are subject to export licensing by the DAE.

Here it is important to mention that in 1947, India exercised control over export of Monazite “not merely a financial matter, it has international implication”.

The mineral Monazite is utilized for only commercial purpose only and not for any strategic purpose. Also, as per IAEA documents, about the national nuclear programs of different countries, does not give any indication that any country, is planning significant use of thorium either in the reactors currently under operation as also in the near future.

Thus, it is the right time for DAE to allow Private entities to Produce and Process Monazite mineral for meeting the increased demand for Rare Earths in the world with stipulations regarding safety and misuse of Thorium and Uranium.

The additional REE available by opening up will pave way for the development of downstream industries in India using REEs as the raw material which will have additional financial as well as strategic implications.

References

  • US Geological Survey, Mineral Commodity Summaries, January 2016.
  • Latest Scenario in Rare Earth and Atomic Minerals in India, Dr. R. N. Patra, CMD, Indian Rare Earths Ltd.
  • Rare Earth Elements: A Review of Production, Processing, Recycling and Associated Environmental Issues, 2012, Engineering Technical Support Centre, Cincinnati, OH.
  • Rare Earth Elements: The Global Supply chain, 2013, Marc Humphries.
  • India’s Rare Earths Industry – A case of Missed Opportunities, S.Chandrasekar& Lalitha Sundaresan.
  • The Process of Mining REEs and other Strategic Elements.
  • Extractive Metallurgy of Rare Earths, Nagaiyar Krishnamurthy and Chiranjib Kumar Gupta

Privatization of REE – By Mr.Srinivasan

 

Mining Industry is in danger – Part-9

Due to the latest amendments to the act and the rules notified, now there is no possibility of new mineral discovery.

As green field areas cannot be auctioned under the existing regime, these would remain unexplored, maybe for a long time till GSI identifies the same. The role of GSI is very important in this regard and also in providing pre-competitive baseline data of high standard but there are limitations in the role of GSI in terms of carrying out detailed exploration.

In this context, it maybe stated that many large Mineral deposits in India have not been discovered by GSI. A few examples can be cited as that of Rampura- Agucha lead/zinc deposit, Banwas copper deposit and Jhamar Kota rock phosphate deposit etc. in Rajasthan alone. These deposits are chance discoveries by individuals or by other agencies or based on old workings etc. The GSI has undoubtedly done commendable work in identifying potential areas and hundreds of prospects but all these may not qualify for Auction mainly because of insufficient (G-3 or G-4) level data on one hand and no economic viability for investment decision on the other. As the economic viability of a mineral deposit is prima facie the sole criteria to attract the private investment, certain relaxations in the Auction rules in terms of incentives may deserve merit, in order to attract investment in Greenfield or unexplored areas.

Conclusion :  The national planning commission constituted a High Level Committee to study and submit a report about the amendments to be bring in act to encourage the mining industries. It is available in http://planningcommission.gov.in/reports/genrep/rep_nmp.pdf 

Unfortunately, since now the BJP Govt., has come to power, they completely ignore the High Level Committee report by making irrelevant amendments. So direct and indirect new employment in private sector for two million people is not generated.

Mining Industry is in danger – Part-8

The negative impact in mining sector for discouragement of private investment in mineral exploration and development.

Discouragement to Private Investment in Mineral Exploration and Development

 The National Mineral Policy 2008 of Government of India vide item 5.2 states that “while Government Agencies would continue to perform the tasks assigned to them for exploration and survey, the private sector would be the main source of investment in reconnaissance and prospecting and government agencies would spend public fund primarily in areas where private sector investment are not forthcoming”. However on the contrary, 11 Central and State PSUs have been notified as agencies for carrying out exploration under section 4(1) of the MMDR ACT 1957. This may not yield any result, since detailed exploration is not the core activity of these agencies. On the other hand, the National Mineral Exploration Policy 2016 (NMEP) states that Private agencies could be engaged to carryout exploration work in identified blocks/areas with the right to a certain share in the revenue (certain percentage of royalty/premium) when Mineral blocks on the basis of successful exploration are put on e-auction.

It may be mentioned that private investment is a function of risk and return in prospecting and because of uncertainty in this proposal, the private investment is not foreseen and may not materialize.

Mining Industry is in danger – Part-7

The export duty rates in India are again on the heights which are ranging from 10% to 20% for Ore extracted and 10% to 40% for processed ore. The rates are 10% for refined metals. Mica has the highest export duty of 40% with no exemption. The export duty on iron ore and concentrates has the export duty of 30% with an exemption of 20% resulting in the effective rate of 10%.

International Comparison of Taxes on Mining Exports: 2012

 Country Ore extracted Processed ore Refined metal
Argentina 5.00% 5.00% 5.0% – 10.0%
Australia N/A N/A N/A
Brazil 0% 0% 0%
Canada N/A N/A N/A
Ghana N/A N/A N/A
India 10% – 20% 10% – 40% 10%
Philippines N/A N/A N/A
Russia depends depends depends
South Africa N/A N/A N/A
Ukraine N/A N/A N/A
United Kingdom N/A N/A N/A
United States N/A N/A N/A

Source:  (Basic data) PricewaterhouseCoopers, 2012

Mining Industry is in danger – Part-6

The royalty rate also very high in India compared to other mineral rich countries.

International Comparison of Minerals Specific Royalty Rates: 2012

 

Country Iron Ore Coal Copper Gold
Australia 6.5%-7.5% 7%-10% 2.7%-3.5% 0% – 2.5%
Brazil 2% 2% 2.02% 1%
Ghana 5% 5% 5% 5%
India 15%* 14%* 4.20% 2%
Indonesia 3% 3%-7% 4% 3.75%
Kazakhstan 2.8% 0% 5.7% 5%
Philippines Min 5% Min 5% Min 5% Min 5%
Russia 4.8% 11-57/tonne 8% 6%
South Africa 0.5% – 7% 0.5% – 7% 0.5% – 7% 0.5% – 5%
United States 2%-5% 2%-5% 2%-5% 2%-5%

Source: (Basic data), PricewaterhouseCoopers, 2012 and Ministry of Mines, Government of India (2014)

* Recent Rates, 2014

Mining Industry is in danger – Part-5

The Corporate Income Tax rates in India are very high compared to the other major mining countries. The effective tax rate is around 34.61% for income exceeding Rs. 100 million for the domestic company and for the foreign company the rate is 43.26% (KPMG, 2015). A minimum alternative tax (MAT) is levied at 18.5% of the adjusted profit of the companies where the tax payable is less than 18.5% of their book value.  The government has also started charging “carbon tax” which would add to the percentage furthermore.

Mining sector is capital intensive and utilizes specialised mine equipment that is usually imported.  Higher import duty on mine equipment has a direct negative impact on mine projects, especially in the initial years of the mine project.  Even the royalty rates in India are at the highest level. The rate of royalties on iron ore is 15% and that on coal is 14% which is way more than the other countries of the world .

       International Comparison of Corporate Tax Rates: 2015

 Country Corporate Tax Rate
Argentina 35%
Australia 30%
Brazil 34%
Canada 26.5%
Chile 22.5%
China 25%
Germany 29.65%
India 34.61%
Indonesia 25%
Mexico 30%
Peru 30%
Philippines 30%
Russia 20%
South Africa 28%
Tanzania 30%
Ukraine 18%
United Kingdom 23%
United States 40%

 

Mining Industry is in danger – Part-4

The Risk involved in Mining has shifted towards Mining Business and Return towards Government.

The case was other way around few years back as shown in the figure below:

From the above mentioned, facts it is very clear that the margin for doing Business in Mining has been substantially reduced. It would be an impetus for Indian Mining Industry if the overall taxation is reduced to around 40% (Global Average).It may also be mentioned that after the enactment of the amended act, out of 42 mines only one dozen mines could be allocated through auction. No fresh mine has come to the production as of now.

Mining Industry is in danger – Part-3

After amendment of new mining law,  the overall tax rate is increased.

 Graph showing increase in overall Taxation after enactment of MMDR Amendment Act, 2015

Mining Industry is in danger – Part-2

Table Showing Direct and Indirect Taxes paid by Mine owners -Effective Tax Rate (ETR):

All over the world, in India alone approximately 59.8% of total revenue has to be paid to Govt., by way of various tax by the existing mine owners and 64% by the new mine owners. The comparison chart is given below.

 

Mining Industry is in danger – Part-1

In the world Except water, food, and timber all products are from minerals. Unless, the mining operation is not going there is no development for human being.  For the reasons best known to them, some people protest the mining activity. On going through the draft mining report prepared by FICCI the following facts are came to light.

High Taxation on Minerals: Pre and Post enactment of MMDR (Amendment) Act 2015

 Mine owners have to pay a mix of other Direct and Indirect taxes administered by different authorities. The same has been furnished in the table below: