by Michael Kan – PC World – Published: October 6, 2010
Imagine a cellphone the size of a shoe. Or a laptop weighing 10 kilograms.
That’s what we would be carrying around today, if not for the rare earth metals, a group of materials with unique properties that have enabled the miniaturization of electronic components including capacitors, lasers and powerful magnets.
From computer hard drives to hybrid cars, many of today’s high-tech devices rely on components made with rare earth metals to properly function. But demand for those metals is beginning to outstrip supply, forcing governments and manufacturers to find new sources of raw materials.
The rare earths are a group of 17 metals including neodymium, used in magnets, and erbium, used in lasers.
Countries such as the U.S. have long possessed their own sources for rare earth metals, but despite this they have turned for their supplies to China, where mining costs have been cheaper and environmental rules more lax. This has made China the world’s largest producer of rare earth metals, mining more than 90 percent of global demand, analysts say.
China’s tightening control over supplies became apparent last month when media outlets reported that it had stopped exports of rare earth metals to Japan following a diplomatic spat between the two countries.
“What China’s action has done is create uncertainty,” said Dudley Kingsnorth, a rare earth metals expert at the Industrial Minerals Company of Australia. “Undoubtedly people will diversify their sources of supply to reduce their reliance on China. But that can’t happen overnight.”
Japan, a major importer of rare earth metals, is actively exploring for new sources in Canada and Australia, as well as looking into recycling old electronic devices as a way to create new supplies of the materials.
The U.S. Congress is working on legislation, passed by the U.S. House of Representatives last week, to revitalize U.S. sources of rare earths. But China’s dominance over the rare earths market will likely continue for the next two to three years, as manufacturing firms are forced to depend on limited supplies and dip into their stockpiles, Kingsnorth said.
Demand for the rare earths has long been expected to accelerate. Some projections suggest that demand could nearly double by 2015, with hybrid car engines and wind turbines big drivers behind the need.
Looking narrowly at costs, a shortfall in rare earth metal supplies might mean just a minimal price hike, or no increase at all, for the electronic gadgets that use them, analysts say. This is because many of these products only contain tiny quantities of rare earth metals.
“Something like a laptop computer probably only has got about 50 to 80 cents’ worth of rare earth in it,” Kingsnorth said. “Even if that tripled in price, it won’t stop people from buying it.”
For many electronic products, rare earth metals are key to miniaturization and making the products run efficiently. One such component the metals are needed to produce are neodymium magnets, which are present in hard disks, loudspeakers and cellphones. Without high-performance neodymium magnets, manufacturers would be forced to use larger and heavier ones.
“You wouldn’t have a laptop without these powerful magnets,” Kingsnorth added. “It would have to weigh four to five times heavier.”
Shifts in the supply of rare earths could have broader economic consequences for manufacturers and their employees.
An extreme situation in which rare earth metals are no longer available is highly unlikely, said Gareth Hatch, a co-founder of consulting firm Technology Metals Research.
However, the world could be faced with a scenario where China not only mines most of the raw rare earth metals on the globe, but also becomes the leader in manufacturing components and products containing them.
Due to the increasing domestic demand for rare earths, China has already placed caps on its exports of the metals. In response, foreign companies may decide to relocate their manufacturing bases to the country in order to get better access to China’s rare earth supplies, Hatch said.
“In the pursuit of the ‘lowest cost provider’, the West has been the architect of its own quandary here, unwittingly or otherwise,” he said.
There could also be consequences for the environment, or for the development of cleaner mining technologies, if rising prices allow new mining operations to open elsewhere.
The owner of the largest rare earth mine in the U.S., Molycorp, believes the U.S. can counter China’s control of the market by leveraging its own existing rare earth supplies.
The mine at Mountain Pass, California, was shut down in 2002 because of environmental concerns and competition from low cost mining operations in China. Molycorp is working to reopen the mine and expects to be producing 20,000 tons of rare earth material by 2012.
China “would rather export value-added rare earth products, rather than just the raw material rare earths,” said Jim Sims, a Molycorp spokesman. “That’s probably a model America should try to emulate.”
With demand starting to exceed supplies, manufacturers are already asking Molycorp if it can produce more rare earth metals, Sims said.
“The prices for some rare earths have gone up more than 700 percent in the last 45 days,” he said. “It’s a very serious situation right now. Predictions of a tight market are no longer predictions. They are reality.”
You hit the nail squarely with this one:
This lowest-cost-at-all-costs mentality is pervasive. I sent an inquiry to a guy at USGS and got back the following reply:
” I am interested to hear more about your concern over mineral production (or lack thereof) in the United States and am curious about the reason(s) for that concern. Are you concerned for national strategic reasons or for business reasons, or for some other reasons? The economic paradigm in which we work appears to be that the most efficient producer (as measured by the lowest price in the market place) is the producer that survives. This process assures that your company gets the materials that it needs at the lowest possible price. Similarly, your clients get their products at the lowest price. This is a desirable outcome. In addition, it promotes economic development in geographic areas that have mineral resources. Where is the problem? I have heard that manufacturers of military equipment seek to apply this economic paradigm not only to minerals and raw materials supplies, but also to parts and components. ”
So our own “gummint” people aren’t the least bit concerned. We can all go out of business, we can all go on food stamps (until we run out of money), we can slide into third-world status, but hey, we got our minerals at the lowest possible cost.
“Where is the problem?”
in the USA we have excessive overlapping bureacracies wherein no single agency has ultimate, total responsibilty for this debacle[REEs] or most other commodity shortfalls[reference energies with no clear detail strategy/plan for years, except for presidential rhetoric- “energy independent”]. the USGS person was doing what they do–get and document information.
please send your next querry to “THE RESPONSIBLE AGENCY/DEPT CHIEF”. let us know who that is.
“While these Acts together promise to give U.S.-based rare earth producers a remarkable edge in the race to replace specialty metals now dominated by China, very few domestic projects have the qualifications of Bokan as a strategic military and technological asset,” said Jack Lifton, a leading REE expert and a party to the initial drafting of proposed RESTART legislation. “As the largest historically documented Heavy rare earth deposit in the U.S., Bokan is a counterpoint to Molycorp’s primarily Light rare earth deposit at Mountain Pass in California. Together, these two deposits, located in relative proximity to each other and on U.S. soil, have the potential of liberating the U.S. from non domestic rare earth dependencies in the near term.”
Thank you for all your efforts and the shared knowledge Mr. Lifton, it is very much appreciated.
” Additionally, the Act calls for a Temporary Program for Rare Earth Materials Revitalization, authorizing the Secretary of Energy to make loan guarantees for projects including the separation and recovery of rare earth materials from ore or other sources and further downstream processing, including the preparation of oxides, metals, alloys or other forms of the materials needed for national security, economic well-being or industrial production purposes. The Act contemplates cooperation between public and private sector participants to achieve a complete rare earth materials production capability in the United States within 5 years of enactment of the Act. “
Comments on this entry are closed.