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the battle for rare earths

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    If you use an iPad, smartphone, tablet, laptop, watch a flat-screen plasma TV or drive the latest hybrid, you may or may not know that you owe a vote of thanks for the product’s advanced efficiency to the use of ‘rare earths’ in its manufacture.


    Being excellent conductors of heat and electricity, this little understood family of 17 mineral elements have become indispensable in component production for a string of twenty-first century high-tech goods from iPods to nuclear reactors, the gearless engines in wind turbines to military missile-guidance systems.


    No surprise then that the world’s three leading manufacturers in many of the key fields, Japan, the United States (including news of a latest key find) and France, should lately unite to combat the heavy-handed manipulation of the global rare earth’s market by the world’s leading producer: China.


    Market manipulation

    The U.S. Geological Survey estimates global reserves of rare earths at around 110 million tons, found mainly in China, Russia and its former satellite countries, and the United States. The World Trade Organisation estimates the global rare earths trade to have grown at between 8-11 percent per year over the last decade. Though China is believed to hold between 35 and 50 percent of the world’s estimated deposits, it currently supplies 95 percent of the global market – and Beijing has in recent years gone out of its way to make sure it retains its market share. As China’s former president Den Xiaoping once put it, “The Middle East has oil, China has rare earth”.


    Of the 124,000 tons produced in 2009, around 120,000 tons was mined in China, mostly from a single iron ore mine in Inner Mongolia. In the 1990s China deliberately flooded the global rare earth market with cheap rare earth exports rendering numerous other mines unprofitable. In the second half of 2010, Beijing then began prioritizing supplies for domestic use, raising taxes on exports and simultaneously cutting around 70 percent of its foreign exports. Global prices soared with the cost of some rare earths tripling. Japan, in particular, felt the blowback from the Chinese marketing policy – and decided to act.


    China v Japan

    Though China has always denied banning exports of rare earths to Japan in the light of on-going tensions between the two countries, a number of Japanese companies attempting to shift production from low-margin markets, such as light electrical goods, to next-generation batteries for use in electric cars, were badly affected. Last year Toyota reported that its Prius car battery alone uses 10 to 15 kilograms of lanthanum, a figure likely to double under plans to increase the car’s fuel efficiency.


    In the light of China’s highly restrictive policies, the race has been on to re-open mines in the U.S., Canada and Australia. Meanwhile, Japan has responded to China’s restrictive market policies by scaling back the use of rare earths in cars and wind turbines. After yet another diplomatic clash with Beijing in late 2010, the Japanese Government earmarked $1 billion to fund research into different sources and alternatives to rare earths.


    In July 2011, the Japanese initiative bore fruit with its researchers announcing a major seabed find of an estimated 100 billion tons of rare earth elements on the Pacific seabed. According to the British journal Nature Geoscience, a team of scientists led by Yashuhiro Kato, an associate professor of earth science at the University of Tokyo, had discovered a “heavy concentration of rare earths” in sea mud at 78 locations in international waters to the east and west of Hawaii, which could fulfil up to “one-fifth of the current global annual consumption”. And in September 2011, Toyota stated that it was looking to develop alternatives to the use of neodymium and lanthanum in the production of induction motor magnets.


    Finally, in October 2011, Japan’s industry ministry announced it was holding the first of a series of joint workshops in Washington with the U.S. Department of Energy and the European Commission to discuss ways of stabilizing the rare earth minerals market. The Washington ‘jaw-jaw’ over strategy is not merely an empty gesture. China is not taking any threat to its virtual market monopoly status lightly. When the Australian producer Lynas suffered credit problems in 2009, it was a Chinese mining company that attempted to buy the firm. It was also a Chinese firm that tried to buy the largest U.S. rare earths mine, Mountain Pass, which was moth-balled in 2002. Congress stepped in to prevent any deal taking place. In 2010, when China placed an arbitrary ten-day embargo on exports to the U.S. and Europe, U.S. Secretary of State Hillary Clinton described China’s actions as a “wake-up call”. Five bills on rare earth production are currently making their way through Congress in an effort to boost domestic production.


    It is clear, Japan means business in the battle for rare earths. And if Europe wants to create the sustainable green economy its politicians expend so much rhetoric over, the European Commission needs to review the glaring omission of a policy addressing the scarcity of strategic metals so essential to its much-vaunted green energy roadmap; an omission that directly threatens European prosperity.


    And high-tech, efficient energy promoting rare earths have to be a win-win, for once, with environmentalists too, right? Er, actually, no.


    Green Conundrum

    Used in energy-saving light-bulbs, electric-car batteries, catalytic converters, wind turbine technology et al., rare earths still present environmentalists with a conundrum. The massive Baotou mine in Mongolia and the ‘heavier’ rare earth mines of China’s southern provinces of Jiangxi and Guangdong may be far from prying Western eyes, but both regions have been massively scarred. A five-mile lake of chemicals has extensively blighted farmlands around the Baotou mine. In the southern China region untrained miners drip sulphuric acid solution to help extraction. The lack of environmental regulations in China has led to the poisoning of water supplies, the destruction of crops and some marine life.


    No doubt the much stricter environmental procedures employed by, and stiffer penalties imposed on defaulters, in the West will help placate some. But as Japan, the United States, Europe, Canada and Australia join the race to produce rare earths, it is doubtful that many greens, who are against just about any and every new energy initiative, will see the thorough irony of their position. While they will continue to enjoy their latest high-tech smartphone ‘wizardry’, reading by the light of their energy-saving light-bulbs, powered by wind-sourced electricity and driving their highly symbolic hybrids, they are almost entirely oblivious of the debt they owe to rare earths.


    Even as the Japan-led forum is busy devising its rare earth mining plans, you can bet Friends of the Earth are busy devising a plan to undermine them. Irony upon irony, no?

    http://www.energytribune.com/articles.cfm/8796/The-Battle-for-Rare-Earths
 
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