Around the world are accustomed to the news of gas and oil detection, but last month Turkish President Recep Tayyip Erdogan surprised with an unusual news: locating a huge reservoir of rare elements in the Bailikova district of Eskisehir province in the west of the country.
The rare element industry is rolling in trillions of dollars a year and is currently dominated mainly by China, which controls more than 60% of the market. The industry actually includes 17 materials: sodium which is used to make LED bulbs; Scandium when in an alloy with aluminum is used for aircraft construction; And yes, 15 lanthanides – metals most of which are used to make steel. Each of these 17 materials is significant for the production of more than 200 products, such as smartphones, wind turbines and solar panels.
What are rare elements
Rare elements are a group of 17 substances in the periodic table. They are magnetic conductors and are used in the aerospace, aerospace, laser, pharmaceutical and computing industries. Despite their name, these elements are quite common on Earth, but they are expensive because they are not concentrated in one convenient place for production and extraction.
The second largest reservoir in the world, or “dirt”?
Ankara was quick to boast that it was, ostensibly, the second largest reservoir in the world – with an estimated reserves of 694 million tonnes. For comparison, the largest rarity database of all is in China, named Ian Obo – with 800 million tons of reserves. The Turkish government, and in particular the Minister of Energy and Natural Resources Fatik Dunmez, boasted that the reservoir has 17 different elements, ten of which will be produced on site.
Erdogan’s government, looking to the June 18, 2023 election, soon sought to present the discovery of the rare foundations as an extraordinary achievement. The national mining company, Etty Madden, has assisted with numbers that sound like impressive laymen: out of 570,000 tons of ore each year, they will produce 10,000 tons of rare oxides; 72,000 tons of Brit used for gas and oil exploration and even the health industry; 70,000 tons of fluorite used to make steel, to form fluoric acid and even as a substitute for glass in telescopes; And perhaps most fascinating of all, 250 tons of thorium, a radioactive chemical element that is a fuel in the nuclear industry.
Last week, Etty Madden boasted another achievement for itself: a 9% increase in the first half of 2022 in exports of boron and its related products, from $ 516 million in the same period last year to $ 565 million. Boron is used, among other things, as a raw material in the production of ceramics and glass, in the defense industry, in detergents, and even in the energy and technology industries.
In fact, the global boron industry is completely dependent on Turkey, as 73% of this chemical element reserves are in Turkey, which controls 60% of the market. In the past year, as part of a streamlining process in the local boron industry, Turkey has begun to process larger quantities from the ground up into ready-made or semi-finished products. Thus, profits from Boron increased in the first half of 2022, although exports shrank by about 100,000 tons.
The celebrations in the face of reality: It is not clear what the value of the mine is
However, in contrast to the celebration in Turkey, world-renowned experts landed the event of locating the database on the ground of reality. “Rare elements are not uncommon,” Christopher Eccleston, a mining strategist at the American investment bank Hallgarten & Company, told Market Watch.
“The statement ‘scope is king’ in the mining industry is still in place,” added John Hayekawi, president of StormCrow Capital, which conducts research for investment funds and specializes in the metals market. He explained that at the stage of Turkey’s discovery of the reservoir, it is impossible to determine whether the reservoir will contain the vast scope of elements that the Erdogan administration promises. There is also a scenario that in the mining process it will turn out that the amount of rare elements in the mine is small. “We call such material ‘dirt’.”
Another issue is production, which in this case is not a simple task. “If the production leads to a large-scale gold discovery then the way is clear,” Haykawi explained to Market Watch. “You mine the ore, pull out the gold and sell it easily because buyers will get to your doorstep. But if that is not the case, the road is harder.”
“The problem with rare elements is that they are not rare, and there is no shortage,” the CEO of mining company Elmonti Industries, Luis Black, summed up the issue of locating the rare elements before Market Watch.
Competition against the Chinese monopoly is not in sight
But in the meantime, Erdogan’s bureau seems to be not only ignoring the reservations, but already aiming for competition against China. “If Turkey succeeds in putting the huge pool of rare elements into production, it could help reduce the West’s dependence on China,” said Ryan Castillo, a senior at the Adams Institute.
But does Turkey have the ability to compete with the world’s rare elemental power? In the autonomous region of Inner Mongolia, in northern China, is the largest mine in the world, Bayan Ubu, which is estimated to have 100 million tons of rare earths – more than 40% of the world’s reserves. On the contrary, this mine, from which production began as early as 1957, alone accounts for almost half of the total world production. In fact, the entire Chinese rare earth industry depends on the Bayan Io mine, which makes up 80% of Beijing’s reserves.
China enjoys the fact that the annual demand for the rare elements doubled from 2006 to 2021, reaching 125,000 tons. It is estimated that demand will jump to 315,000 tons by 2030. For comparison, in 2018 and 2019 China produced 120,000 tons and 132,000 tons of rare elements – while the US reached 18,000 tons and 26,000 tons production.
These two countries will benefit from the growing demand, and it is clear that Beijing will rake in much higher profits. Among other things, because apart from the Bayan Obo reservoir, they operate quite a few mines across the country. According to Ryan Castillo, director and founder of the Adamas Intelligence Research Institute, there is still a long way to go to bypass China. “Both Europe and North America have lagged behind on this issue to the point that we will need more than ‘one Turkey’ to get rid of China,” he concluded.
So perhaps the new reservoir discovered in Turkey will not compete with the Chinese monopoly, or save Turkey from its economic crisis and unprecedented inflation. But that does not mean that Erdogan has no reason to celebrate. This mine, even if it turns out to be smaller than the administration’s estimates, has the potential to guarantee Erdogan another term at a residence in Ankara.