A fortune in fly ash? Neumann Systems digs for rare earths in power plant waste

 (The Gazette 6-1-2012) Outside the Ray Nixon Power Plant south of Colorado Springs sits 3.3 million tons of coal ash, the remnant of three decades of coal-fired power generation. Nationwide, 20 percent of that residue, called fly ash, is recycled into concrete, but the 80,000 to 100,000 tons of fly ash produced each year by Colorado Springs Utilities’ two coal power plants doesn’t consistently meet construction industry standards. So, it collects in a landfill that grows by hundreds of tons every day.
David Neumann, CEO of Neumann Systems Group in Colorado Springs, sees that ash as a gold mine. Well, not literally a gold mine, but a source of equally valuable rare earth elements such as neodymium, yttrium and europium. Those and other rare earths are vital ingredients in high-tech devices such as cellphones, advanced batteries, wind turbines and solar panels.
Chinese mines have a near-monopoly on rare earth production, but Neumann believes he can extract the same materials from fly ash at competitive prices.
Neumann Systems Group has applied for three patents on the process and formed a subsidiary, NeuMetals Inc., to commercialize the system.
“We got pretty excited about this going back to last summer,” Neumann said. “We put about $600,000 to $800,000 worth of new equipment in to begin to go after this.”
Rare earth extraction dovetails nicely with Neumann Systems Group’s primary business of developing emissions control systems for power plants. Neumann is the inventor of NeuStream, a new technology to clean coal plant emissions that Colorado Springs Utilities has been testing at its Martin Drake Power Plant. As a by-product of scrubbing the emissions, the NeuStream system can produce precursors to sulfuric acid and nitric acid — some of the very chemicals needed to dissolve rare earths out of the ash.
“By using the acids generated by the flue gasses, you can use those and come up with a very selective, clean process,” said Claire Ohman, a principal scientist for Neumann Systems Group. “You get what you want and you’re left with clean fly ash.”
Rob Fredell, Neumann Systems Group’s vice president for business development, likens it to the Plains Indians who hunted buffalo and used every part of the animal. With Neumann’s system, he said, “basically, you’re using every part of the coal.”
There’s not a lot of rare earth in fly ash: A few parts per million — far lower concentrations than are found in the handful of rare earth mines around the globe. However, Neumann said, those mines have to blast the minerals out of solid rock and process them, whereas fly ash can simply be scooped up from coal plants and his system promises to capture it more efficiently than mines can manage. Also, he said, most mines contain only have a few varieties of rare earths, whereas fly ash offers a panoply of the metals.
It all sounds pretty tidy, but the devil is in the details of getting the pieces to work together, Neumann said.
“It’s not uncomplicated,” he said.
But potentially rewarding, Fredell said. The company believes it can extract about $600 worth of rare earths from every ton of ash. The waste from the Martin Drake plant alone could produce as much as $49 million worth of minerals a year.
“It’s a substantial amount of money,” Fredell said.
Even at $600 per ton, it’s not yet clear how profitable the system could be. A vertical integration in which the company produces both the raw materials and products built around rare earths, Neumann said, may be more viable than just extracting rare earth elements.
There is also the potential that electric utilities could invest in the system at around break-even levels to have better options to dispose of their fly ash waste, he said.  
Neumann has offered Colorado Springs Utilities a deal in which Utilities would get an equity stake in NeuMetal in exchange for its fly ash. Utilities has already invested $63 million in the NeuStream technology, although plans for a full-scale, $121 million installation at the Drake plant were slowed earlier this month while the City Council and Mayor Steve Bach discuss removing the downtown power plant. If that happens, Neumann said, he expects the NeuStream system to be installed at the Nixon plant instead.
“What we’re being told is that the chance of an outright cancellation is zero,” he said.
Utilities has been a good partner, Neumann said, so he won’t begrudge the delays while the city works out its plans.
The next step is to raise $10 million to $20 million from grants or investors to build a pilot plant that would process several tons of fly ash a day. Not pocket change, Fredell said, but a fraction of what Colorado-based Molycorp is spending to reopen its Mountain Pass rare earth mine in California.
“Starting a new mine is really an intensive, time-consuming business,” he said. “We’re not creating any new mines. We don’t need any approval to remove a mountain top.”
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