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China’s Rare Earth Elements Industry: What can we learn?

China controls approximately 97 percent of the world’s rare earth element market. These elements, which are not widely known because they are so low on the production chain, are critical to hundreds of high tech applications, many of which define our modern way of life. Without rare earth elements, much of the world’s modern technology would be vastly different and many applications would not be possible.Over the past few years, China has come under increasing scrutiny and criticism over its monopoly of the rare earth industry and for gradually reducing export quotas of these resources.

China, however is faced with its own internal issues that, if not addressed, could soon stress the country’s rare earth industry. This paper by Cindy Hurst* is designed to give the reader a better understanding of what rare earth elements are and their importance to society in general and to U.S. defense and energy policy in particular. It also explores the history of rare earth elements and China’s current monopoly of the industry, including possible repercussions and strategic implications if rare earth elements supply were to be disrupted

Download the report

Download The USGS report on rare earths

*Cindy Hurst is an analyst for the U.S. Army’s Foreign Military Studies Office, Fort Leavenworth, KS.
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Posted by on October 8, 2011 in Natural Resources

 

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European Union to Build Stockpile of Rare Earth Elements

The European Union has announced it will build a stockpile of rare earth elements to boost domestic supply and safe-guard against Chinese dominance.  Rare earths are necessary components in a wide array of clean energy and high-tech devices, and China largely controls global supply, supplying 97% of the world’s demand.

As China’s domestic clean energy production and demand has grown, it has imposed export quotas with an eye towards preserving its rare earth resources for its own future use.  These limitations have had a significant negative impact on clean energy and technology manufacturers in the West, sending governments into a frenzied search for new mining sources.

The EU plans to store rare earth elements in the form of a mixed carbonate.  So far, EU proposals call for an annual procurement of 3,000 tons.

Strategic initiatives to secure rare earth supplies have also taken hold in the United States and Britain.  Because the rare earth element supply chain cuts across the manufacturing, defense and science and technology sectors of the global economy, the United States Department of Defense considers the supply of rare earth elements to be a natural security issue.  More information can be found in this key briefing, available here:  “Rare Earth Metals and U.S. National Security.” The British government has likewise implemented a “strategic metals plan” to guard against future supply shocks stemming from China’s export policies.

Read more here…

 

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Japan Discovers Vast Rare Earth Deposit in Pacific

In an important news update, Japan has discovered vast deposits of rare earth minerals along the floorbed of the Pacific Ocean. Located in an international zone stretching east and west of Hawaii as far as Tahiti, scientists say these minerals can be extracted easily.

Rare earth minerals are crucial components in the manufacturing of clean energy and high tech devices around the world.  This space has been wrought with tension as global manufacturers become increasingly concerned with China’s domination of nearly the entire market.  Export quotas imposed by Beijing have prompted many hi-tech nations such as Japan and the United States to accelerate the search and development of alternative rare earth resource sites.

“The [Pacific] deposits have a heavy concentration of rare earths,” says Yasuhiro Kato, associate professor of earth science at University of Tokyo.  “Just one square kilometer of deposits will be able to provide one-fifth of the current global annual consumption.”

The total amount contained in this new discovery is estimated at 80-100 billion tons of rare earth minerals.  This find would nearly double total global reserves; which were previously estimated by the U.S. Geological Survey at 110 million tons spread across deposits in China, Russia and the United States.

These particular seabed deposits are rich in the heavier rare earths used extensively in flat-screen TVs, LED lighting and hybrid cars.  The team of Japanese scientists say mineral extraction can be successfully completed with simple pumping processes.

This is a significant discovery, particularly for Japan.  A heavy user of rare earths, Japan was previously stung with an embargo by China following a diplomatic dispute.  It has actively been trying to break dependence on Chinese supplies, and with this new discovery, it just might have succeeded.

Read more here…

 

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Rare Earths Rise as China Hoardes Valuable Supplies

Rare earth element prices have risen dramatically over the past few weeks as companies have begun “hoarding” supplies.

Attempting to make sense of the recent spike, analysts note many companies are buying and holding on tightly to their rare earth investments with the expectation of future price increases.

This speculation has contributed to the recent rally, which has been particularly notable in some of the heavier rare earth elements.

The 17 rare earth elements are used extensively in a wide variety of high tech and clean energy technologies including electric vehicles, fluorescent lights and wind turbines.  China produces over 90% of global rare earths and dominates this lucrative market.

The Chinese govenment’s fluctuating restrictions on rare earth export quotas has been a major cause for concern in the market, particularly amongst high tech and clean energy manufacturers in the United States and Japan, the world’s largest rare earth importers.  in 2010, China cut rare earth export quotas by 40% and, following a political dispute, temporarily halted shipments to Japan.

Click here to watch a BBC Video on Rare earths mining:  China’s 21st Century gold rush

China has been successful in capturing much of the rare earth market thanks to many years of mining under rather loose environmental standards.  However, Chinese regulators have begun to tighten up their mining standards and shut down illegal mines.  As these efforts continue, it is likely much of China’s rare earth producing power will be concentrated into fewer, but larger, state-owned mines.

Anticipating sustained increases in demand, particularly as it’s domestic clean energy industry grows, China instituted a stockpiling program in 2010 to ensure that it retains sufficient domestic rare earth supplies.  Eventually, China aims to store 200,000 tons of rare earth elements – nearly twice its annual production.

Uncertainty over high prices and China’s future rare earth policies has prompted increased mining activity for rare earths in many other parts of the world, including the United States and Australia.  Rare earth supplies are crucial to the energy security of the United States, says the U.S. Department of Energy (DOE), which published a Strategic Plan for developing and acquiring alternative resources without increasing dependence on China.

Learn more – read our FAQ:  “What are rare earth metals?”

 

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Japan Crisis May Impact Rare Earth Prices

The aftermath of the devastating earthquake and tsunami in Japan  has resulted in a precipitous drop in demand from one of the world’s major users of rare earths. As a result, analysts report rare earth prices may ease temporarily.

Over the long term, however, rare earth prices are heading higher, as global demand trumps supply over the coming years. Rare earths are essential components of devices ranging from wind turbines to smart phones.  China now  controls nearly 95% of rare earth production.  However, Chinese reserves account for only one-third of total global reserves.  Over the long term, China may become a net rare earth importer as its domestic demand increases.

In fact, a new refining operation in Malaysia currently under construction by Australian mining company Lynas may give China a run for its money in the rare earth market.   Upon completion, the new plant on the eastern coast of Malaysia may be capable of processing about 11,000 tons of rare earth oxides a year; potentially meeting one third of total global rare earth demand in as little as two years.

 

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Japan Aims to Cut Use of Rare Earths with New Research & Recycling

In an effort to reduce its dependence on Chinese exports, the Japanese government aims to reduce rare earths usage by one-third over the next few years and fund research in alternative substances and rare earth recycling programs.

Typically, China supplies about 82% of Japan’s rare earth supplies, but a land dispute resulted in an essential halt to rare earth exports for part of 2010.

The experience spurred Japan to seek out new supply sources and new ways to recycle and reuse rare earths.  The government is also funding research into different substances to use as possible replacements for the crucial rare earth metals, which have wide-spread usage in clean energy technologies and high tech devices.

The Japanese trade ministry will invest nearly 33.1 billion yen to launch 160 new projects led by Japanese companies such as Intermetallics Co and Hitachi Metals Ltd.  By spring of 2012, the government expects a total combined investment of 110 billion yen (or US$1.34 billion.)

Last October, the Japanese government announced 58 billion yen worth of subsidies to develop alternative materials to rare earths and acquire overseas mines.  Read more…

 

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China Announces New Rare Earth Export Quotas

China currently dominates the world’s crucial rare earth minerals market, which are essential components for many clean energy technologies and high-tech devices.  Last year, China cut rare earth exports by 40%, causing panic among clean energy and technology companies and manufacturers all over the world.

We have been monitoring all news coming from China regarding its rare earth export policies.  Considering they control nearly 97% of the market, China’s policy decisions have ramifications all around the world.

Based on new announcements, China will now place annual quotas on rare earth mining and exports. This reflects a Chinese effort to rein in environmental costs and damages associated with mining, increase the dominance of some of its biggest state-owned players, and secure future supplies for itself.  Rare earths are crucial for clean energy technologies, which is a top investment priority for China.

China will cut export quotas by 35% for the beginning of 2011, but has not announced final quota numbers for the year.  Export tensions have run high between China and its trading partners in the United States, European Union and Japan.  Many are “alarmed” at the prospect of a rare earth supply shortage, and have been scrambling to begin production on new rare earth mines to diversify resources.  Read more…

 

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