ON A hazy summer afternoon, before the giant thunder clouds have had chance to unleash their fury, one of the most breath-taking sights you can witness is the Painted Desert of northern Arizona looming iridescently out of the mist. Even after swooping among the spectacular outcrops, mesas and buttes of Sedona, or nosing along the rim of the Grand Canyon, from the cockpit of a light aircraft 4,000 feet (1,200 metres) above the ground nothing can compare with the Painted Desert's palette of multi-coloured rock formations stretching off to the horizon. 

The blues, grays and lavenders come from the geologically rapid formation of sediments when water covered the land over 200m years ago. The reds, ochres and pinks hail from the much slower deposition during the Triassic's dryer periods, when erosion and oxidation had time to work their magic. The pigments that give the fine-grained rocks their hues come largely from the iron and manganese compounds they contain. Other colours found along the desert's southern fringe stem from the fossilised remains of a prehistoric coniferous forest. How such naked beauty could ever be labeled “badlands” beggars belief. The overall impression is one of geological majesty and extraordinary mineral wealth. 

Amid such elemental abundance, your correspondent could not help pondering, as he turned for home, the recent moves by the Chinese to restrict their exports of rare-earth elements—scandium, yttrium and lanthanum, plus the 14 so-called lanthanides. Today, China supplies 97% of the world's demand for rare-earth metals, thanks to a far-sighted government policy going back to the 1960s that envisaged the rare earths as “the oil of the twenty-first century”. 

Now, with burgeoning demand for them at home, the authorities in Beijing have cut back significantly on the export of rare-earth materials. Over the past year, China has reduced exports of them from an annual 50,000 tons to 30,000 tons. In July, the Ministry of Commerce announced exports would be slashed to just 8,000 tons for the remainder of 2010. 

With worldwide demand for rare-earth metals amounting to 134,000 tons last year, and only 124,000 tons being produced, the difference has had to be made up from dwindling stockpiles. By 2012, demand is expected to reach 180,000 tons, which could exhaust the world's remaining inventory. The result has been panic throughout industrial countries.

What makes the rare earths so special is the way they can react with other elements to get results that neither could achieve alone. They are used, a pinch here and a pinch there, to make powerful permanent magnets for lightweight electric motors, phosphors for colour television and flat-panel displays, catalysts for cars and chemical refineries, rechargeable batteries for hybrid and electric cars, generators for wind turbines, as well as numerous optical, medical and military devices. To give just one example, every Toyota Prius has over 25 pounds of lanthanum in its nickel-metal hydride battery. 

A misnomer if ever there was one, the rare earths may be strategic and in short supply but they are certainly not rare. Some are as abundant in the earth's crust as nickel, copper, zinc or lead. Even the two rarest (thulium and lutetium) are around 200 times more common than gold. Minerals containing rare-earth elements are to be found all over the world, especially where iron deposits paint the landscape as red as northern Arizona. The largest source today is a by-product of China's huge iron-ore mining operations in Inner Mongolia.

The problem is that, though widely dispersed, the rare-earth elements occur in extremely low concentrations. Only a handful or so places exist—in Australia, Brazil, Canada, China, India, South Africa and the United States—where deposits have been found rich enough to justify mining them. Even then, abundance in their host minerals is usually measured in concentrations of a percent or two. 

Because of their similar chemical properties, the rare earths tend to clump together in rocks, often along with radioactive thorium or uranium. That makes extracting, separating and refining them difficult. A lot of water, acid and electricity has to be used in the ion-exchange, fractional crystallisation and liquid-liquid extraction processes used to manufacture them. Handling the radioactive and chemical waste produced in the process adds significantly to the cost. Lax environmental standards, along with low wages, has allowed Chinese producers to undercut competitors abroad and corner the market.

Out of curiosity, on his way back from Arizona, your correspondent made a detour via the richest source of rare-earth metals in America. The Mountain Pass mine, on the Californian high plateau, lies on restricted land close to the Nevada border. The discovery was made by prospectors looking for uranium, only to be disappointed when the radioactive samples sent for analysis turned out to contain nothing more than worthless lanthanides along with traces of thorium. That was in 1949. Today, some of the more valuable rare earths can fetch $1,000 a pound ($2,200 per kilogram). 

What the prospectors found at Mountain Pass was an igneous ore containing mainly carbonate, sulphate and silicate phases. However, 10% of it was a reddish-brown mineral called bastnaesite—a phenomenally rich source (by rare-earth standards) of cerium, lanthanum, neodymium and other members of the lanthanide family. 

For decades, the mine and processing plant at Mountain Pass, owned by Molycorp Minerals of Colorado, was the biggest supplier of rare-earth metals in the world, extracting as much as 20,000 tons of ore a day. It was europium from Mountain Pass, for instance, that made colour television possible. Since 2002, however, the huge open-cast mine there has been dormant, a victim of China's drastically lower labour costs, California's increasingly stringent environmental requirements, and delays by state regulators in renewing the mine's operating licence.

A report published in late July by the Congressional Research Service in Washington, DC, noted that, though global reserves and undiscovered resources ought eventually to be large enough to meet the world's long-term demand for rare-earth metals, getting new mining projects into production could easily take ten years. Such fears have prompted companion bills in Congress to boost the country's rare-earth industry through the creation of government stockpiles and loan-guarantees to kick-start mining and refining operations. 

Meanwhile, the urgency has prompted Molycorp to raise $500m through a public offering to get its Mountain Pass mine restarted. Not to be left out, Ucore Rare Metals, a Canadian mining company, has begun drilling for rare earths in Alaska. The Lynas Corporation based in Sydney has restarted work on its rich lanthanide deposits at Mount Weld in Australia. Similar developments are now underway in Canada and South Africa. 

But digging up more rare earths is just the beginning. Developing a supply chain for them is equally important. In other words, more emphasis needs to be put on downstream operations, such as creating highly pure versions of the metals, fabricating them into alloys, and turning them into permanent magnets, advanced batteries and other components needed by the defence and high-tech industries. 

That, after all, is what the far-sighted Chinese are doing. Slashing their exports of rare-earth metals has little to do with dwindling supplies or environmental concerns. It is all about moving Chinese manufacturers up the supply chain, so they can sell valuable finished goods to the world rather than lowly raw materials. 

Your correspondent just hopes that, in the rush to exploit rare-earth reserves, America's wilderness is not ripped as ruthlessly apart as China's has been. Beneath the Painted Desert of northern Arizona, for instance, doubtless lie mineral treasures galore. The country is all the richer for leaving them in place.