01 September 2009

China Restricts the Export of Rare-Earth Metals

China has the largest known deposits of rare-earth metals, particularly in Mongolia and Himalayas, and as such, is in the enviable position of controlling the world market for minerals that are used in high-end technology applications. These applications include green energy production (solar panels, hybrid cars, etc.), guidance systems for 'smart' missile systems, and superconductors. While China has typically maintained tight controls over the market, and in fact, deliberately set out to create a monopoly on the market in the 1990s, the Chinese government is now looking at banning or restricting export of certain of these metals all together.

The Telegraph reports:
'A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs.'
These restrictions could prove devastating to the high-technology industries that are dependent on these specialized minerals.
'New technologies have since increased the value and strategic importance of these metals, but it will take years for fresh supply to come on stream from deposits in Australia, North America, and South Africa. The rare earth family are hard to find, and harder to extract.

Mr Stephens said Arafura’s project in Western Australia produces terbium, which sells for $800,000 a tonne. It is a key ingredient in low-energy light-bulbs. China needs all the terbium it produces as the country switches wholesale from tungsten bulbs to the latest low-wattage bulbs that cut power costs by 40pc.

No replacement has been found for neodymium that enhances the power of magnets at high heat and is crucial for hard-disk drives, wind turbines, and the electric motors of hybrid cars. Each Toyota Prius uses 25 pounds of rare earth elements. Cerium and lanthanum are used in catalytic converters for diesel engines. Europium is used in lasers.

Blackberries, iPods, mobile phones, plams TVs, navigation systems, and air defence missiles all use a sprinkling of rare earth metals. They are used to filter viruses and bacteria from water, and cleaning up Sarin gas and VX nerve agents.'

Countries with known or possible deposits are in the middle of drawing up emergency plans to respond to a sudden halt to exports from China, including Australia, the USA and Japan. Commercial users (such as Toyota) and developers of technologies reliant on the rare minerals are striking their own agreements with suppliers, and mining and resource corporations are ramping-up to take up the slack in supply in the USA, Australia, Kazakhstan, and elsewhere.

There is a possible silver lining in all of this. With China both hoarding for its own use, and trying to simultaneously beat out competitors, resource companies that were shut out in the 1990s and early 2000s, will have a chance to move back into supplying rare metals.

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