Every time you talk on your mobile phone, listen to your mp3 player, or use a remote to lock your car, a certain kind of metal makes it happen.
They’re called rare earth elements – found in certain rocks and minerals. US Geological Survey expert Dan Cordier explains, “They came originally from the old earth crust, way back billions of years ago.”
There’s actually 17 of them — with names like neodymium, cerium, lathanum, and europium — and right now, manufacturers of everything from automobiles to MRI machines are nervous about a potential shortage.
“And they have reason to be,” says Patricia Mears, director of International Commercial Affairs for the National Association of Manufacturers. “There are probably going to be short term difficulties with this.”
China currently produces more than 95% of the world’s supply of rare earths. But it’s slashing exports – driving supplies down and prices up.
“They’ve gone up fairly dramatically in the past three months, some of the rare earths have jumped in price 400 to 700, possibly 900% ” says Cordier.
Rare earths are essential in industry and defense. They’re used to refine petroleum, create green energy technologies like hybrid batteries, wind turbines, and compact fluorescent bulbs. They also help operate radar and missile guidance systems, which is why the United States is “very concerned” about China’s actions.
NAM hopes a solution can be negotiated. “The best outcome, really, is to sit down with China, talk to them, and achieve a realistic settlement with them in the short term.”
China says it is cutting back for environmental reasons – which Mears explains, it has a right to do.
But others believe the real reason is to give Chinese companies preferential treatment and a competitive advantage. That, says Mears, would be illegal under World Trade Organization rules.
A spokesperson for the US Trade Representative said, “We have raised our concerns with the Chinese and we are continuing to work closely on the issue with stakeholders. If we determine that WTO litigation is the appropriate means of addressing our concerns, we will pursue our rights.”
The US actually has a good supply of rare earths.
“They’re not really rare, but the fact is they’re very difficult to extract.” says Cordier.
One former mine in Mountain Pass, California, is now coming back online. Owned by Molycorp, Inc, it used to supply almost all of the world’s need for rare earths until it shut down in 2002 because of competition from cheaper Chinese supplies. Other mines in Canada and Australia may follow. But it won’t be cheap.
“This is difficult mining, it’s environmentally difficult,” warns Mears.
And it could mean higher costs for our beloved gadgets, if demand continues to outpace supply.
BY MELANIE ALNWICK
- China to shake up rare earth industry (reuters.com)
- China Throws Rare Earths for Another Loop (fool.com)
- Rare-earth shortage? Afghans think they can help (foxnews.com)