Rare earth metals: scarce but not rare

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The US, the EU and Japan have filed a joint complaint against their giant economic rival China before the World Trade Organisation (WTO). The feud goes deep – it’s about rare earth metals and China’s decision to keep its rich supply for the domestic market.

US President Barack Obama has accused China of violating trading agreements by choking the export of raw materials used in mobile phones, laptops and other electronic equipment. The rest of the world now has to pay more for its gadgets.

The feud about rare earth metals started simmering some years ago when China imposed restrictions on the rare metal exports. In 2011, it cut its export quotas by 35 percent, leading to a global shortage in minerals needed for smart phones, televisions, hybrid cars and guided missiles.

Ironically, rare metal earth deposits can be found in several other locations around the globe, but countries are not willing to invest in mining the deposits.

Monopoly
China controls about 95 percent of the world’s production of rare metal elements. But it wants to keep supplies for its ever-expanding home market. Chinese authorities say they also want to ensure that deposits are not exhausted too fast.

With the current quota system, China does not distinguish between the individual rare earth elements, but limits the total tonnage of rare earths. This has led to Chinese companies exporting the same amount of high-value heavy rare earths like dysprosium as much as possible, while keeping on to low-value light ones, like cerium. And there are no restrictions on finished end products.

Greenwashing the restriction policy
In 2011, Beijing claimed the restriction on export quotas was based on environmental grounds. It said its restriction policy was justified under the WTO’s General Agreement on Tariffs and Trade general exception clause Article XX, for the purpose of natural resource conservation and the protection of public health.

Indeed, it was precisely lax environmental standards which enabled Chinese miners and refineries to turn out the metals at extremely low prices. There are many instances of drinking water and crops being poisoned by acid.

The Western world is spouting fire, but the fact remains that two thirds of the world’s deposits of rare earth metals are outside China and market dominance has been abdicated to China by Western nations to some extent.

In the early 1990s, the US was one of the largest suppliers of rare earth metals but allowed its mining industry to decay because of environmental concerns and market changes. It shut down the Mountain Pass rare earth mine, the largest known deposit outside China, in 1992 and turned to imports to uphold its supply.

Independence

Ton Bastein, who works at the Dutch research organisation TNO, says companies have become too dependent on one supplier.

With the gap in demand and supply expected to reach between 30,000 and 40,000 tonnes this year, there are calls to open up old mines in California, Canada, Australia and Russia. It would take several years to have them up and running. India, Malaysia and Brazil have starting mining earth metals on a small scale.

Turbines

Researchers are also trying to look for alternatives. At Leiden University, Dutch researchers are investigating ways of replacing the hundreds of kilograms of rare earth metals in the turbines of windmills. Ton Bastein is developing a heat-resistant steel without the use of these rare elements.

Recyling rare metal elements wouldn’t pay off, as, unlike wind turbines, most other applications only contain a couple of grams of earth metal.

Risky investment
The rare earth metals market is an obscure one, says Bastein. With that and China’s monopoly position, it's unattractive for investors. But the TNO scientist is hopeful that China won’t let the dispute escalate too much and that the supply and demand balance will be restored to some extent when other countries start mining their deposits.

What are rare earth metals?
There are 17 different sorts of rare earth metals – the 15 ‘lanthanides’, as well as scandium and yttrium. The 17 elements are known for their resistance to heat and their strong magnetic properties.

Through the use of rare earth metals in production of electronics, technology (like mobile phones) has become more compact and smaller in size.

The metals are often found together in ore and can be difficult to separate. The properties of some of the rare earth metals are so similar, that they can be used interchangeably. So, use of a specific rare earth metal is often determined by current market prices.

The use of the term ‘rare’ earth metals is somewhat misleading. At the beginning of the 19th century, they were difficult to come by. But nowadays, deposits are not scarce, compared to ‘precious’ metals like gold, silver, platinum, iridium, rhodium and palladium.

The current scarcity can be more attributed to the fact that countries outside China have not actively developed their resources.

(jn/hs/jn)