As Ever, Reuters Fails Economics – Rare Earth Metals Edition


One of the problems we face in economic understanding is that the people who supposedly inform us – the media that is – doesn’t really get economics. A good example being this from Reuters about rare earth metals:

Deep sea robots reveal mineral riches in the abyss

Well, no, not really. Minerals sitting at the bottom of the sea bed aren’t riches. They’re valueless in fact. For the very simple reason that bringing them up from the sea bed costs a lot of money.

The scientists, from the University of Bergen in Norway, are sending robots 2,500 meters (8,000 feet) down into the waters between Norway and Greenland, to try to understand the environments potentially rich with rare earth minerals.

Now, the actual work being done is fun and useful. Something interesting was found in the Pacific Ocean a few years back:

You might recall a couple of years back there was a similar Japanese claim. There it was that the plumes from underwater volcanoes were rich in rare earths. This makes good sense as rare earths are constituents of pegmatites, pegmatites come from volcanoes. Thus, given that these are underwater volcanoes, instead of the REs becoming part of the rock they’re floating off through the water as dust. Further, the floating through the water part does some of the separation of the REs from the other components (as surface water does some of the sorting of alluvial deposits as they weather out of the same types of rocks) so there were areas of sediment that were RE rich.

Great, the Atlantic has volcanoes fuming in that Mid-Atlantic Ridge, we might well find that same sorting by seawater going on, great, let’s go find out.

However, it’s not really something of value, the minerals themselves that is:

And yes, it’s true, scientists have located vast deposits – hundreds of billions of tonnes of rare earths – at a depth of 5,000 metres under the ocean. The paper is here and thanks to the miracles of people with full Nature access I’ve been able to read it. The basic problem is the difference between what is technically possible and what is economically possible.

What they’ve found is that there are vast plains of silt in various parts of the ocean where there’s a decent concentration of the rare earths: 1,000 to 2,000 ppm sorts of levels, a kilo or two per tonne, 0.1 to 0.2 per cent. They surmise that the cause is iron fumes that come out of the mid-ocean vents collecting and concentrating the rare earths from the seawater before falling to that ocean floor. Some of the beds of these silts are tens of metres high (up to 50 in places), according to their estimates. Yes, there’s an awful lot of rare earths there.

OK, but:

However, a concentration of 1,000 to 2,000 ppm isn’t actually anything all that much to write home about. That red mud which went splat over Hungary has about the same sort of concentration. As does the other 40 to 80 million tonnes a year produced, including the 2 billion tonnes lying around in ponds. We’ve known for decades that we can extract the rare earths from this stuff: wash it in acid and get a nice solution of the metals. However – and here’s the problem – you have to use so much acid that you can’t make a profit doing this.

I say this not just on the Friedmanite basis that hundred dollar bills don’t appear on pavements: for if they did someone would already have picked them up. It isn’t that no one does this as yet, which would prove that it can’t be done. It is that people have tried to do this (at least I have, in Greece, a couple of years back) and have found that the cost of getting the materials out is more than people will pay you for the materials you’ve got out. And this is a nice fine silt lying in ponds at ground level, silt which people will pay you to take away, not silt you’ve got to lift through 5,000 metres of salt water.


There’s a linguistic distinction used in the mining industry, the one between dirt and ore. Your veg patch and the North Sea bed both contain gold and uranium, but they’re still just dirt really. Extraction would cost more than the value of what is extracted. If we can extract the metals at less than the price we’ll be paid for them, then, and only then, the dirt transforms into ore.

So far, at least as far as I can see, the researchers have just found a very large amount of rare earth containing dirt, not an ore.

That there are concentrations of rare earths down there I’ve no doubt at all. But they’re dirt at our current level of technology, not something valuable.

But, you know, Reuters, economics, they say it and the world starts to repeat it:

Deep sea robots reveal mineral riches in the abyss

No wonder there’s such a lack of understanding about economics, eh?