A continuing challenge in most technology development is striking a careful balance between ways the technology stands to benefit society and whether the costs of that technology outweigh those perks. Recovering rare earth elements (REEs) from coal and coal by-products is no exception. REEs are a crucial component of many modern technologies, making them vital to national security and technological innovation. Currently, the global market is dominated by inexpensive off-shore production sources, but new, domestic sources would help to ensure U.S. security. Therefore, researchers must assess, through cost-benefit analysis, whether REEs can be separated and recovered from coal-based feedstocks in an economically feasible fashion.

NETL is addressing these questions through the development and implementation of techno-economic analysis (TEA) models to evaluate the international REE market and to assess the economics of commercially producing REEs from existing conventional, novel, and advanced separation and recovery processes.

The objectives of TEAs are to understand the cost and performance of REE concentration and separation from various feedstocks. Once this is understood, research and development needs for the extraction of REE’s from coal feedstocks can be identified. Additionally, TEA analysis allows for the evaluation of the economic benefits of NETL in-house transformational separation processes that are being developed within the REE supply chain.

NETL is incorporating TEA into the process designs for all currently funded REE separation and recovery projects. The purpose of this early focus on economics in the design process is deliberate. At its core, TEA modeling orients and directs research efforts to ensure that researchers are aware of the economics of their processes as early in the design phase as possible—allowing for adjustments to be made in designs prior to scale-up. The overall intent is that if economic hurdles exist with a design, mitigation strategies or design changes can be implemented early in the development process to help advance commercial readiness without having to attempt major design changes after the process is physically built.

NETL has developed a flexible discounted cashflow model to help evaluate the economics of REE separation systems. The model inputs can include: capital expenditure, operating and maintenance costs, financing scenario (debt/equity ratio, tax rate, cost of debt, cost of equity, payback period, etc.), construction period, assumed plant life, deprecation rate, feedstock price, and product prices. The outputs for the model are variable depending on what inputs are available, but include required return on investment, product price (basket price), and/or net present value.

Researchers at NETL are using this model to independently assess project capital and operating expense, evaluate a wide range of financing scenarios to determine favorable economics (e.g., tax incentives, guaranteed product pricing, government loan guarantees, etc.), conduct sensitivities around product recovery rates and consumable usage, highlight processing bottlenecks to be solved with research and development, and to help develop an economic path to producing REEs from coal and coal-based materials.

Some initial findings from the analysis team’s research follow:

• More economic uncertainty exists for projects in early development due to an emphasis on process performance with little attention paid to process economics. Highlighting economics early in the development phase will raise awareness of the economic impacts associated with design decisions.
• Driving down operating expenses will have a bigger impact on reducing required revenues than lowering capital costs. Evaluation has indicated that operating costs far exceeded an annualized capital cost, on a per ton of product produced basis. This further emphasizes the need to make sound design decisions early in the development process.
• Processing multiple products in addition to REEs can greatly improve project economics. This is particularly true for coal-based feedstocks due to the low REE concentrations.  

NETL engineer and economic analyst, Morgan Summers, emphasized the importance of TEA stating, “Applying TEA to the early stages of these design concepts will improve the chances for economic success by making researchers not only ask how we can recovery rare earths from coal-based materials but also, how can we do it economically to compete in the global rare earth market.”