Wednesday, December 01, 2010

Shortage of Rare earth Metals made worse by Smuggling.

Rare earth (RE) metals find application in devices inlcuding wind turbines, hybrid and electric cars, LCDs, fuel cells, nuclear reactors and lasers. China controls some 97% of the world supply of REs, and in July announced a 72% reduction in exports of REs for the second half of 2010, compared with the previous year. It is predicted that in 2012, Chinese domestic consumption of REs will match domestic production, and this year will see a peak in availability and a demand-supply gap emerging on the world markets.

REs are not lacking in the earth's crust, and for example cerium ranks as the 25th most abundant element at 68 parts per million, in fact similar to copper. There are however few economically concentrated ores of the metals and their very similar chemical properties make the separation and isolation of individual REs in pure form difficult and expensive.

While China attempts to secure its dominance of the world markets for these metals, the scarcity of REs is compounded by smuggling. As much as 20,000 tonnes or one third of total exports of REs were smuggled out of China, which both reduces the price of the metals and ensures the more voracious depletion of the resource.

In my previous article, I wrote about the British focus on wind-power to meet its renewable energy targets for the European Union, by 2020. I commented that the rate of progress in building the required more than 4,000 new wind turbines had been rather slow to date, and now it appears debatable that there will be sufficient neodymium with which to fabricate the magnets for them, even if the manufacturing could be speeded-up.

China has been making strenuous actions to buy mines of RE ore around the world, to maintain its dominance of the global markets, and I wonder whether this will extend to Greenland, where the melting ice-sheet is likely to ease access to the rich veins of REs and other elements that the world needs to maintain its technologies and energy supplies.

Related Reading.
"Smuggling key factor in rare earths' scarcity," December 2010, Chemistry World, p6.


Mark said...


In order to break out from the rare earth mineral stranglehold the Chinese have over us do we need to reexamine some fundamental economic principals we hold near and dear to gain some independence? Will we have to subsidize some rare earth producers to protect them from Chinese market manipulation?

Here in California there is an effort underway to restart the Mountain Pass Mine sometime next year which until recently was a major supplier of rare earth minerals. But will that effort be for naught if the Chinese decide to dump rare earth minerals on the market to force Mountain Pass to close.

China has shown it could manipulate its currency and dump products to force producers from the market,why would rare earth minerals be any different?

Towards the end of the American Civil the president of the Confederate States of America said something to the effect that if the confederacy dies it was because it died of a theory. Could not the same be said be said of capitalism and free trade if nothing is done to limit Chinese market manipulation?

Professor Chris Rhodes said...

Hi mark,

you may indeed have a point! It's not just the biggest payer but the need to secure one's own national markets.

many in the UK think it is a terrible mistake to sell-off all our water companies, cars factories, energy suppliers, since such essential things shopuld not be in foreign hands.

It would be madnes to allow a resource like TREs to fall into the hands of a single nation -0 any nation - who could simply hold the world to ransom.

Energy resources like oil and gas and indeed water supplies will prove the fulcrum of political and military angst in the future, if indeed oil has not been the cause of middle astern conflict already.

I would think that your Californian mine could prove a very wealthy investment per se since the RE metals are so important in those devices that almost define the modern world, and some of its future plans for communication and energy.

So, yes, I think subsidies might be appropriate to preserve some global balance of power rather than to feed a leviathon.