At the cutting edge of science, physicists at the Tokyo Institute of Technology announced last year they had discovered a new class of superconducting materials containing iron and rare earth metals. These materials break many of the supposed rules of superconductivity and could lead to a new generation of motors, generators, and power transmission lines through which electric current would move with frictionless ease, yielding massive energy savings.
Economically viable concentrations of rare earths are known to exist in only a handful of places -- mainly in China, Australia, and North America, with smaller deposits in India, Brazil, Malaysia, and South Africa. China's reserves, which are located mainly in Inner Mongolia and in soft clay ores in southern China, are, by a wide margin, the world's largest.
Realizing their strategic significance, Chinese leader Deng Xiaoping said in 1992, "There is oil in the Middle East; there is rare earth in China." He clearly understood the West's growing dependence on rare metals for high-tech industries and put China on course to become the world's dominant supplier.
By flooding the rare earth market in the 1980s and 1990s, China caused world prices to drop by half, putting other producers -- most prominently, the Mountain Pass mine -- out of business. Today, China covers more than 95% of the global demand for rare earths, and the US relies on imports for 100% of its supply.
Having shrewdly positioned itself as the OPEC of rare earths, China is now putting the squeeze on foreign consumers, clamping down on exports by raising tariffs, lowering export quotas, and imposing production limits.
Worldwide demand for rare earths is expected to grow by 10% a year, yet production has leveled off in recent years. Most of China's annual supply is now staying in the country as consumers there buy more cars and electronic devices. "Sometime in 2011 to 2012, Chinese domestic demand will surpass Chinese domestic production," says Jack Lifton, an analyst and consultant who specializes in what he calls the "technology metals" and advises mining industry clients developing rare earth projects in North America. "This means no more Chinese exports of rare earths, other than in finished goods made in China that they allow to be exported."
While other countries have promising deposits, it will take several years for any of them to ramp up production. The Mountain Pass mine was purchased from Chevron Mining in September 2008 by a Denver-based group of private-equity investors. The new owners have resumed processing old, stockpiled ore to remove the rare earth metals from it, and they hope to resume excavating and processing new ore from the mine in 2011.
A large rare earths mining project at Mount Weld in Western Australia was put on hold in February when financing for a processing plant in Malaysia fell through. The owner of another financially strapped Australian project, at Nolans Bore, confirmed in March that it had raised some much-needed cash by selling 25% of itself. The successful suitor? A Chinese mining company.
A single 3 MW wind turbine (modest, as utility-scale wind turbines go) contains more than a ton of super magnets, more than 700 pounds of which is neodymium. A typical hybrid car, such as a Toyota Prius, contains around 25 pounds of rare earth metals -- mostly lanthanum in its rechargeable battery and neodymium in its drive motor.
"The global annual production of neodymium, essentially all of which is mined in China, is today at an all-time high," Lifton says. "There is no surplus -- the existing demand uses up all that's produced each year. So to build more wind turbines and hybrid cars, you'll need more neodymium. Where are you going to get it?"
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Craig Canine is a Contributing editor for On Earth, published by NRDC. He was surprised to find that his bicycle frame and his iPod both contain rare earth metals.
Copyright 2009 by Craig Canine. First published in NRDC's excellent magazine, On Earth, Summer 2009. Reprinted with permission.
