By Rob Spiegel & Suzanne Defree – EDN – Published: December 2, 2010
China has started to severely restrict the exports of rare-earth materials, which often find use in “green”-technology designs, including hybrid vehicles and energy-efficient lighting, as well as in the medical, defense, and consumer markets. The country delivers nearly 100% of the world’s rare-earth materials: 17 metals that are somewhat hard to refine and that tend to occur in the same ore deposits. The cutbacks have resulted in shock waves through the electronics industry and could force design changes in the near future.
China set out on a moderate restriction path this year and then announced in July that it would cut exports by 72% for the remainder of 2010. It plans an overall export reduction of 30% for next year.
These cutbacks have increased the price of rare-earth materials an average of 700%, prompting legislation, which is currently stalled, to restart US rare-earth-materials production. The Western Hemisphere’s one rare-earth-materials producer, Colorado-based Molycorp Minerals, issued an initial public offering of stock in July, raising $390 million to restart its California mine and ramp up processing to counter world shortages.
Part of China’s motivation for reducing rare-earth-materials exports is its desire to emphasize its industrial status. China’s leaders want to move away from raw-materials exports and evolve toward exporting more finished goods.
Production of rare-earth materials fell off worldwide beginning in the 1980s when low prices in China made production unfeasible elsewhere in the world. Tom Valiere, senior vice president and co-founder of Design Chain Associates, says this cutback is a wake-up call for US industry. “We used to lead the world in the export of rare-earth materials,” he says. “In the last 20 years, we’ve become dependent. The whole thing flew under the radar until green technology placed demand on rare-earth materials and we realized they were sole-sourced to China.”
China’s restrictions this year have been part of a multiyear plan to save most of its supply for its own industry. “Each year, China has brought down its exports by X% and never exceeded its quotas,” says Gareth Hatch, co-founder of Technology Metals Research. “The reduction the country made in July was a huge reduction over the first half of the year.”
Worldwide shortages are now occurring. “The world outside China uses a collective 50,000 tons annually,” says Jim Simms, director of public affairs at Molycorp Minerals. “[China] reduced its exporting in 2010 to about 30,000 tons. Since China supplies about 97% of rare-earth materials, the world has to depend on what China exports.”
Simms believes that the demand for the materials will just increase over the coming years. The company expects to produce 20,000 tons by the end of 2012. “My BlackBerry only has about 3/10g of rare-earth materials,” he says, but “a single wind turbine requires about one ton. A car can use about 25 kg.”
Lynas Corp, a rare-earth-materials supply company in Australia, expects to increase rare earths delivery in 2011 to 11,000 tons per year.
Rare-earth materials facts
Rare-earth materials include terbium, which finds use in flat-panel TVs and high-efficiency fluorescent lamps, and neodymium, key to the permanent magnets in high-efficiency electric motors. Rare-earth materials are not indeed rare. The series of nonferrous metals is common in the environment. According to Design Chain Associates, most rare-earth materials are as common as copper, and even the rarest is more common than gold.
Part of the market pressure on rare-earth materials comes from new demand that green technologies has prompted. The market, including electric- and hybrid-vehicle motors and wind turbines, requires magnets.
Over the summer, the House of Representatives passed HR 6160, RESTART (Rare Earths and Critical Materials Revitalization Act of 2010). The bill authorizes development of a domestic rare-earth-materials program aiming at addressing short-term shortages. Industry organizations continue to push for legislation such as RESTART to speed the output of rare-earth materials. “We discussed the rare-earth situation with government committees, and they’re concerned about it,” says Fern Abrams, director of government relations and environmental policy at IPC (formerly, Interconnecting and Packaging Electronic Circuits).
IPC has taken a stand encouraging legislation to rekindle the rare-materials production in the United States. “We’re asking our members to write to their representatives asking that they assist US efforts to re-establish mining in the United States,” says Ron Chamrin, manager of government relations at IPC. “There are bills in Congress, as well as activity in the Department of Energy. It’s not a panic, but the government should be concerned and take action.”
A US Government Accountability Office report claims that China’s dominance in rare-earth materials’ mining and refining has implications for global availability and pricing and could also jeopardize US defense readiness.
Meanwhile, China’s export restriction of rare-earth materials has hit Japan the hardest, especially for its production of high-efficiency electric motors in electric and hybrid vehicles. China placed further export restrictions on Japan last month over Japan’s detention of a Chinese fishing-trawler captain. In anticipation of rare-earth-materials shortages, Nidec Corp, a maker of electric cars, has developed a process to build switched-reluctance motors without rare-earth materials. The company will begin making the motors without the materials in 2012.