China syndrome / rare Earth elementsIndustrial nations anxious about China's rare Earth elements policy
Annual global production of rare Earth elements totals about 124,000 tons — and China produces 97 percent of the global supply; world demand is expected to rise to 180,000 tons a year by 2012, and would exceed 200,000 tons per year by 2014; the United States led the world in rare Earth elements production until the late 1980s, but since then China has grown to dominate the market by aggressively undercutting other producers with government-subsidized lower prices
China’s recent halt of rare Earth metal shipments to Japan amid a diplomatic spat has reverberated throughout the world’s high-tech manufacturing hubs — now on heightened alert to the risks of relying on one country for materials that do everything from helping hybrid engines run to creating the color red in televisions.
Governments around the world are asking: What happens if China cuts off our supply, too? (see “Is rare Earth elements war in the offing?” 28 September 2010 HSNW; see also Forbes’s Patrick Chovnec, “The Politics of Rare Earth”).
The AP reports that as is the case with the rest of the world, Japan depends almost entirely on shipments from China, which produces 97 percent of the global supply of the metals known as rare Earth elements.
As tensions over islands claimed by both Japan and China ran high last month, Japanese companies reported that China had halted shipments of rare Earth elements — seventeen exotic minerals critical for advanced manufacturing. Hybrid car engines, like those in Toyota’s Prius, need lanthanum. Europium creates the color red in televisions. The electric generators in wind turbines use neodymium (“China restricts rare-earth metals export, so Japanese devise an alternatives,” 15 September 2010 HSNW).
“Some countries have started taking steps to seek various options,” Japan’s new Foreign Minister Seiji Maehara said Friday. “I think it is quite a healthy development for each country to start resource diplomacy after developing a sense of crisis because of the latest incident.”
China’s virtual monopoly is no accident. Former Chinese leader Deng Xiaoping once famously quipped that while the Middle East had oil, China had rare earths. The United States led the world in rare Earth elements production until the late 1980s. Since then, however, China has grown to dominate the market by undercutting other producers with lower prices (“Boeing helps search for rare earth metals in U.S.,” 22 September 2010 HSNW).
World demand is expected to rise to 180,000 tons a year by 2012. By 2014, global demand could exceed 200,000 tons per year, according to the report.
Concern about rare earths supply had been brewing long before September’s restrictions to Japan, which Beijing still denies. To cope with growing demand at home, China has been reducing export quotas of rare earths over the past several years.
