Rare Earth Metals have been launched onto the international political stage in recent months, bringing global supply chain management into the red carpet spotlight as well. But like many a Hollywood starlet, they might be considerably less sexy than their names might imply, when one gets up close and personal.
Rare Earth Metals (REMs) are not, it seems, particularly rare. Some are present in the earth’s crust in quantities roughly comparable to copper. Less common than iron. perhaps, they fail to engage the human imagination in quite the same way as might gold, platinum, silver, or diamonds.
Not withstanding their relatively common status relative to the elemental elite, REMs are having an enormous impact on global supply chains, economies, and world politics. They are, coincidentally, a key ingredient in the manufacture of Apple’s iPads, among many other high-tech products. And China currently mines and refines between 90 and 95% of the world’s supply of REMs.
This very helpful short video that can be found on GoldStockBull.com helps explain this “mouse that roars”:
In April 2012, Ashleigh Allsop reported for PC World that China’s emerging monopoly on REMs has drawn Barack Obama into the related discussion currently underway at the World Trade Organization (WTO):
The reason Apple makes its iPad in China is not just because of cheap labor, but also because rare earth elements used in the tablet can only be found there, according to reports.
The New York Times reports that China currently controls 95 to 97 percent of the world’s supply of the rare earth materials that Apple uses to make the iPad, and China’s decision to cut export quotas has caused prices of the materials to rapidly increase.
Companies can only be exempt from China’s rare earth export quotas by manufacturing within China, which is why Apple chooses to have its iPads made there, says iFixit.
Although it is not clear exactly what rare earths are used in the iPad due to Apple’s secretive nature, Cambridge, U.K. engineering professor, Dr. Tim Coombs, believes that there may be lanthanum in the iPad’s battery, as well as “a range of rare earths to produce the different colors” in the display. Neodymium alloy might be the material found in the magnets in the iPad and the Smart Cover, and the glass is probably polished with cerium oxide, iFixit reports. (Read more…)
Rare earth metals, known by variety of acronyms, including REM, REE (“elements”), REO (“oxides”) and simply RE (“rare earth”), are in fact a group of seventeen elements on the periodic table that included fifteen “lanthanides” plus the elements “scandium” and “yttrium.” They are used in the production of a wide variety of parts and components in the aerospace industry, as well as in the production of certain computer tablets, lasers, magnets (including those used in modern wind turbines), colored glass, ceramics, ceramic capacitors, mercury-vapour lamps, portable X-ray machines, and camera lenses, among many other applications.
But REE’s are typically dispersed and not often found in concentrated and economically exploitable forms. The few economically exploitable deposits are known as rare earth minerals. It was the very scarcity of these minerals (previously called “earths”) that led to the term “rare earth”. The first such minerals discovered included gadolinite, which is a compound of cerium, yttrium, iron, silicon and other elements. This mineral was extracted from a mine in the village of Ytterby in Sweden; many of the rare earth elements bear names derived from this location.
Changes in the supply chains for rare earth minerals have been dramatic over the past 25 years. According to a 2011 report issued by the U.S. Geological Survey and U.S. Department of the Interior, “China’s Rare-Earth Industry,” in 1990, China accounted for only 27% of the world supply of such minerals. By 2009, world production of RE minerals was 132,000 metric tons and China produced 129,000 of those tons. Now, China’s national policies may guide the future of the country’s production.
According to the report, recent patterns suggest that China will slow the export of such materials to the world: “Owing to the increase in domestic demand, the Government has gradually reduced the export quota during the past several years.” In 2006, China allowed 47 domestic rare-earth producers and traders and 12 Sino-foreign rare-earth producers to export. Controls have since tightened annually; by 2011, only 22 domestic rare-earth producers and traders and 9 Sino-foreign rare-earth producers were authorized. The government’s future policies will likely keep in place strict controls: “According to China’s draft rare-earth development plan, annual rare-earth production may be limited to between 130,000 and 140,000 [metric tons] during the period from 2009 to 2015. The export quota for rare-earth products may be about 35,000 [metric tons] and the Government may allow 20 domestic rare-earth producers and traders to export rare earths.
In a September 17, 2010 article, The Economist commented, “Slashing their exports of rare-earth metals…is all about moving Chinese manufacturers up the supply chain, so they can sell valuable finished goods to the world rather than lowly raw materials.”
An April 2012 commentary in Ceramic Tech Today argues that it is the supply chain that is driving rare earth economics:
In March the US, Japan and European Union filed a complaint with the World Trade Organization against China contending that its export rules violate international trade rules. At present, China controls about 95 percent of the global supply of rare earth metals. According to a Voice of America article, President Obama “is pursuing the trade complaint so American companies can compete fairly against foreign business in the production of goods that require the use of the rare earths.”
The interesting thing is that the US does not have a rare earth industry, strictly speaking, according Jeffrey Green in an interview last week with The Gold Report. Green is founder of J.A. Green & Company, a consulting and strategic planning serving the US industrial base. Green explained, “The US imports components and end products containing rare earths rather than the metals themselves in most industries. … The reality is that US demand appears low only because we’re importing the products that already contain them.”
He cautions that discussions of rare earth shortages can be misleading because the supply and demand of the individual rare earth metals are not the same. The so-called light rare earths, lanthanum and cerium, for example, are plentiful, while heavy rare earths like dysprosium and yttrium are less abundant, and supplies are more likely to fall short. Also, at the federal level, a broad view of the problem is missing because of what Green calls “stovepipes of activity,” where each agency evaluates its vulnerability only in terms of its own interests. (Read more…)
It is clear that China is pursuing a vertically integrated monopoly, driving prices and securing stable markets in the process. Is this an unfair trade practice? Is it a sustainable practice?
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