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Larry Bell Contributor


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China's Rare Earth Metals Monopoly Needn't Put An Electronics Stranglehold On America



Rare earth minerals from Baotou, Geology exhib...

Rare earth minerals (Photo credit: Wikipedia)

By Larry Bell

China presently produces more than 95% of all rare earth materials that are vital in the creation of a big variety of electronic technologies including lithium car batteries, solar panels, wind turbines, flat-screen television, compact fluorescent light bulbs, petroleum-to-gasoline catalytic cracking, and military defense components such as missile guidance systems. It also dominates abilities to process them. This enables it to attract product manufactures to operate there as a condition of doing business, ration exports to maximize prices, and punish nations that don’t go along with its policy interests through supply embargoes. Beijing reduced rare earth shipments by 9% in 2010 over 2009, and has recently announced plans to reduce exports by another 35%.

China produces the vast majority of two particularly important rares, dysprosium (99 percent) and neodymium (95 percent). The motor of a Prius requires about 3 pounds of the latter. While other countries, including the U.S., have significant amounts of these, China’s low-cost labor and lax environmental restrictions has afforded it a big advantage in this mining-intensive industry.

Last year Congress required the Pentagon to examine the use of rare earth materials in defense applications to determine if non-U.S. supplies might be disrupted and identify ways to ensure adequate supplies by 2015. In response, the Pentagon sent back an unpublished report last month titled “Rare Earth Materials in Defense Applications” which concluded that the military is in pretty good general shape except for yttrium, an element used mostly in lasers. While China produced about 98% of the world’s yttrium in 2011, U.S. natural reserves of that material are about half as large.

Is it time to end that Chinese monopoly control of materials important to our military and to high-tech manufacturing?  Following years of unsuccessful efforts, the Obama administration now appears to realize the importance of doing so, announcing on  March 13 that it intends to press the World Trade Organization to force China to discontinue levying restrictions on rare earth exports. While WTO rules technically permit export quotas on natural resources for environmental purposes (which China claims to be the case in regard to rare earths), trade lawyers argue that China’s caps on its export violates that spirit.  They note that while Beijing has been cutting access to these vital materials by other countries through quotas, it has been slow to limit rigid production limits at home that might help to protect the natural environment.

Some other countries are also working to ensure access to rare earths. After China enacted a 2010 embargo on rare earth shipments to Japan for leverage in a territorial dispute, Japan now maintains a stockpile of seven rares and is talking about offering government loans that encourage companies to fund foreign investments private reserves.  The Toyota and Sojitz Corporations have already entered into tie-ins with Vietnamese rare earth claim-holders. Toyota is also operating a small rare earths mine in India.

Elsewhere in the Far East, South Korea announced plans last year to stockpile 76,000 tons of rares over the next five years, about 10% of all global production. The country has allocated a huge $8 billion war chest for this purpose, an amazing sum considering that its economy is one-fifteenth the size of ours.

In Europe, Sweden has declared a Norra Harr heavy rare earth project owned by Tasman Metals, Ltd. to be in its “national interest” under the Swedish Environment Act; and German Chancellor Angela Merkel recently inked an agreement to obtain rare earths from Mongolia.

American companies are on their own in the rare earth race, and some of them, along with taxpayers, may reasonably prefer to keep it that way… so long as government will get out of their way. A 2010 U.S. Geological Survey Report estimates that known reserves of rare oxides are about 1.5 million tons, and total domestic resources might be 13 million tons.  At peak 10,200 2007 U.S. consumption levels, supplies from known reserves would last nearly 150 years, and possibly more than one thousand years if other resources are explored and exploited. In addition, other friendly, stable countries like Australia and Canada have substantial rare earth deposits as well. The Australian mining company Lynas Corporation aims to annually produce 11,000 tons of rare earth oxides from its new Mount Weld mine.

Up until the 1990s, the U.S. dominated world rare earth production, primarily drawing upon the Mountain Pass mine in southern California. The mine was closed in 2002 in response to a combination of environmental restrictions and lower rare earth prices, although processing of previously mined ore from the site has continued. Molycorp Minerals, the current owner, is now reopening it with the goal of producing 20,000 tons of rare earths in the near-term, and 40,000 tons by mid-decade. It claims that a new milling process will enable material production at half of the cost that the Chinese are currently charging. W.R.Grace has announced a deal with Molycorp that could lock up three-quarters of Molycorp’s planned lanthanum production.

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  • spockv spockv 2 years ago

    The “rare” earth elements are not rare at all. It’s everywhere but most countries don’t want to mine them due to environment concerns. Why blame others for your own problems? Can China force the US to sell high tech products to her? Can China force the US to produce more oils? Your logic doesn’t make any sense. It’s better for the US to mine the rare earth herself!

  • Larry Bell Larry Bell, Contributor 2 years ago


    I can’t see anywhere you and I disagree on this. Seems our logic is quite the same.

  • spockv spockv 2 years ago

    Larry, indeed we agree! Sorry. I stopped reading once I saw Obama pressed WTO… I should have finished reading the whole article before posting. It’s illogical.

  • zhuubaajie zhuubaajie 2 years ago

    America has a lot of rare earths. But unless the environMENTALS can be overcome, the rare earths will stay in the ground. It is comparable to shale gas – everyone reflexively understand that it is good for America to be energy independent. But then the just always seems to have problems crop up – alleged cancer causing things pumped down into the ground water, flaming spigots, etc. So what is more important, development, or a pristine environment – no you cannot have both. The nut is actually harder to crack with rare earths – processing rare earth ores leaves thorium enriched tailings. While the value of thorium (itself possibly a novel nuclear fuel) CAN be high, today there is little demand, and it is radioactive. So much for massive exploitation in America.

    Actually there is a better solution.

    If access to rare earths (not so rare) is truly the goal, it would be a wonderful opportunity for America to gain a leg up on the other industrial players (such as Germany, Japan, and S. Korea) that are true peer competitors with America. China is still so very much lower on that tech step ladder, its industries are more complementary (rather than competitive) with American manufacture.

    WHY is this a good opportunity? China + America can easily control the pricing of Rare Earths. Do a cartel with China (maybe also include Australia in view of Lynas) and stick it to the other true peer industrial competitors. If processing the ores is too environmentally unfriendly, it can always be subcontracted out to China (来料加工), with finished products to the order of the ore supplier. Japan and German and S. Korea do not have the ores, and would thus be disadvantaged, and make American goods more competitive.

    Mining and exporting of the ores provide good jobs (see Australia). The refined rare earth materials (pure metals, instead of radioactive ores), imported at substantially lower prices (vis-a-vis the true peer industrial competitors) and to be processed further into high tech products by American companies in America – now that’s a viable industrial policy that takes advantage of the high end expertise of America.

  • That article on Rare Earth was the thing that I needed to calm down any fears I might of had for china control of our defense industry. Welcome back MolyCorp.!

  • The idea is that the US and Western Allied Forces should not use land mines but should look for unfound mines in the water. Where during peace time it is easier and safer to mine. Thus in case of German Socialist, or Soviet Socialist, or Communist Chinese invasion tactics of Tibet, Inner Mongolia, India, Taiwan, or other countries then we can go to mining on land and out of the sea. Thus saving natural resources in case they move like the other fascist mono party systems have.

  • efittery efittery 2 years ago

    Fighting in court will take years. Also, don’t count on winning. A parallel approach would include developing USA’s Rare Earth Metal mining, seperating, concentrating, etc… Good luck with the latter. You can lead a horse to water but you can’t make them drink. USA has its head in the sand like an ostrich.

  • Jorge m Jorge m 3 months ago

    No country can force another country to sell a natural resource. The US and other countries need to negotiate with stable governments that don’t have the capital and/or know how to build mining facilities.