The Geopolitics of Rare Earths

9 12 2009

Rare earths elements are used in electronics, in renewable energy infrastructure as well as high-tech military materials. In a way, rare earths are the pillars of next generation technologies. The demand for these metals is expected to grow at such a pace in coming years that obtaining a secure supply could become critical.

Rare earths are a tiny industry. Global demand is of about 125,000 tonnes a year. In the last 10 years, China which currently produces 95 per cent of rare earths increased production from 40,000 to about 125,000 tonne per year. Demand is predicted to rise to 200,000 tonnes per year in 2014.

With China setting up policies to restrict the exports of rare earths to benefit from the comparative advantage that they provide for its domestic industries; importers, such as Japan are worried that the supply available will not be sufficient to meet their needs. The U.S. Geological Survey has however iterated that the long-term outlook for rare earth elements “appears to be for an increasingly competitive and diverse group of rare-earth suppliers”. If all the rare earths projects currently envisioned were coming on steam shortage scenarios could be avoided.

As a result of expected demand many new source of supplies are being considered (I plan on briefing you on new plays in an upcoming entry). In addition, countries such as the United States, Japan, Australia and South Africa that used to have a production capacity until operations became uneconomic as a result of competition from China could be resuming their operations.




2 responses

23 12 2009
Rare Earth Plays outside China. « Just Digging: a Mining and Metals blog

[…] Earth Plays outside China. 23 12 2009 I recently tipped you on the importance that rare earths elements (REE) would have in the coming years. I had then promised that I would follow up with a list of the up […]

4 02 2010

China has suspended all military links with the United States on account of the weapons sales by the United States to Taiwan. China produces 95% of the World’s rare earths elements and it does not want to export them any more, for a number of reasons. One of them is that China sees the United States as an adversary and therefore for geopolitical purposes may withhold exports of rare earths elements that have critical defense applications. Another more fundamental reason is that China’s economy is expanding at break neck speed and China needs all the natural resources it can get its hands on to use in its industries (and to hedge against a falling dollar).

China, it is estimated, will be unable to export rare earths elements by 2014 as it will be consuming all of its own production.

Mandeep S. Sidhu

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: