Turning Coal into Critical Minerals: Is a $5M DOE Grant Game Changing?

Highlights

• DOE awards $5 million to UK researchers to develop innovative techniques for extracting rare earth elements from coal ash.
• Potential to reduce U.S. dependency on China’s rare earth processing by creating a domestic, sustainable supply chain.
• Research aims to produce high-purity rare earth oxides and graphite through advanced extraction processes.
• Potential economic and environmental benefits.

---

The U.S. Department of Energy (DOE) has awarded a $5 million grant to a team of engineers at the University of Kentucky (opens in a new tab) (UK) to explore how coal can be transformed into rare earth elements (REEs), graphite, and other critical materials. Led by Dr. Rick Honaker, (opens in a new tab) this research aims to extract and purify valuable materials, such as dysprosium, neodymium, and ultra-pure graphite, from coal and coal ash. These materials are essential for clean energy technologies, batteries, and electronics, offering a potential domestic alternative to vulnerable supply chains.

As reported (opens in a new tab) by the University of Kentucky, the grant will fund the development of innovative processes, including microbubble-assisted solvent extraction and plasma distillation, to purify REEs to a minimum of 90% purity and produce graphite with 99.95% purity. A pilot plant will be established to refine these methods and lower production costs by 20%. The goal is to scale these techniques for commercial plants capable of producing 1-3 tons of purified rare earth oxides daily.

If feasible at scale, extracting REEs from coal ash could be a game changer because it would reduce reliance on China’s near monopoly over rare earth mining and processing. Today, China controls about 85-90% of global rare earth processing and a significant share of mining, giving it immense geopolitical and economic leverage.

So, how could coal ash extraction shift the dynamics?

A reliance on domestic resources would be a huge change. Coal ash, a byproduct of coal-fired power plants, is abundant in the U.S. and often treated as waste. Repurposing it as a source of REEs provides a domestic, untapped supply without the need for new mining operations, reducing dependency on foreign sources.

This could lead to supply chain independence. China’s dominance in REE processing gives it control over critical materials needed for clean energy technologies, defense systems, and electronics. Extracting REEs from coal ash in the U.S. could establish a localized supply chain, enhancing national security and economic resilience.

Could there be economic and environmental benefits?  Using coal ash creates an additional revenue stream for utilities and industries, offsetting disposal costs and turning waste into a valuable resource.

Plus, repurposing coal ash reduces waste and mitigates the environmental impact of coal residue storage, which can leach toxic substances into water systems.

Other benefits involve the boosting of clean energy goals and the move to coal ash for REE, which could transform geopolitical leverage in this sector.

Major Challenges

Major challenges are introduced, however. What is the economic viability? For example, can extraction processes compete with China’s low-cost operations?

From an environmental point of view, how will the extraction processes manage byproducts and avoid additional pollution?

Plus, issues of scalability are paramount. Can coal ash processing meet the scale required for critical industries?

For investors, critical questions include:

1. Market Viability: Can domestically sourced REEs and graphite compete on price and scale?
2. Regulatory Impact: What environmental regulations could affect scaling and production?
3. Supply Chain Integration: How will this project address current gaps in refining and manufacturing capacity for REEs in the U.S.?
4. Technological Readiness: How close is the technology to commercialization, and what are the risks of technical failure?

This DOE-funded project positions the University of Kentucky as a leader in repurposing coal waste for high-value materials but also highlights the need for balanced environmental and economic assessments as it moves toward commercialization.

Researchers take raw coal and turn it into a fine graphite powder through a multi-step process.