US Toll Free: +1-855 854 4679
Panama: +507 398 4173
As seen on:
CBS moneywatch ~ The Miami Herald
Upcoming shows:
October 9-13th, 2013 Total Wealth Symposium
  1. A Basket
  2. B Basket
  3. C Basket
  4. D Basket
  5. Silver

Running out of rare earth minerals

Rare Earth Elements

Rare earth minerals (REEs) news does not generally capture headline news of major newspapers or broadcast media. That is not to say that the 17 or so extremely rare minerals are not important. In fact, they are critical to many products, both industrial and consumer. The use of REE varies from commercial to military applications and hence the overwhelming concentration (97 per cent) of these minerals in the People’s Republic of China has prompted American policymakers to treat the subject as a matter of national security.

In many respects, the matter of REE hit world headlines when The Independent of the UK revealed in late 2010 that China could be cutting back on supply of two metals in 2012, primarily to meet its domestic demand. This has precipitated a mad rush by some of the world’s largest economies in Western Europe to look for alternative sources as far and wide as South Africa to Greenland. What makes REEs so precious is that they are used to produce many components and products we have come to take for granted. These include: Dysprosium – helps make electric motor magnets 90 per cent lighter; Terbium – makes electric lights 80 per cent more efficient; Praseodymium – used to make lasers and ceramic materials; Gadolinium – used to manufacture computer memory (RAM). Industrial minerals such as Ytterbium (used to make infrared lasers) and Erbium (essential to the manufacture of vanadium steel), whilst other metals help produce wind turbines, solar panels, hybrid car batteries and fibre-optics, all play a vital role in churning out products that are crucial to one industry or another.

According to a United States (US) Congressional report on REE published in late 2011, the global demand for REEs stood at 136,100 tons in 2010 with annual global production standing at 133,600 tons. It was estimated that by 2015, global demand could reach 210,000 tons per annum. While the Industrial Minerals Company of Australia (IMCOA) puts that demand at a more conservative 185,000 tons in the year 2015, the fact remains that China’s output is estimated at no more than 140,000 tons. What is evident from the data presented above is that the balance of 45,000 – 70,000 metric tons of REEs will have to be sourced from elsewhere to feed the world’s voracious demand. At this juncture, it remains unclear as to where such material can be found, in sufficient quantities to feed demand, especially in light of the fact that mining rare metals have proved ecologically disastrous for China. Hence, whilst it may be ‘politically’ and ‘economically’ acceptable for China to go ahead and extract these metals at whatever cost to the environment, it may be a whole different issue for countries like South Africa which have significant untapped deposits.

The adverse effects of overdependence on a single source for such vital resources are already evident in the global geopolitical scene. When the Obama administration announced in early 2010 of arms sales to Taiwan worth US$6.4 billion, an article in Shanghai Dongfang Zaobao, a pro-Chinese Communist Party paper, proposed the banning the sale of REEs to American companies as retribution. Although the threat did not ultimately materialise, it did help wake up Western capitals to the dire prospects of a potential clampdown on exports by China. Although China controls about 97 per cent of the world’s current output of REEs, it certainly does not have all the deposits. According to the United States Geological Survey (USGS), China’s share of reserves stands at 55 million metric tons out of 110 million metric tons. The US has around 13 per cent followed by South Africa and Canada. Other potential players include Australia, India, Russia, South Africa, Brazil, Malaysia, and Malawi.

Unlike China, the US has not sufficiently developed this industry. The supply chain for REEs includes mining, separation, refining, alloying and manufacturing (devices and component parts). The Achilles heel for the US is its lack of refining, alloying, and fabricating capacity to handle any type of rare earth production. The end result of this lack of investment and interest in such a crucial sector translates into the US (and indeed almost all other nations) is that it must source practically its entire need for REEs from China. This gloomy scenario has forced the Congress into action. A number of legislations have been brought forth in the 112th Congress that range from ‘H.R. 1388, the Rare Earths Supply Chain Technology and Resources Transformation Act of 2011′ which hopes to re-establish a competitive domestic rare earths supply chain with the Department of Defence’s Logistics Agency, to the ‘H.R. 1314, the Resource Assessment of Rare Earths (RARE) Act of 2011′ that directs the USGS to “examine the need for future geological research on rare earth elements and other minerals and determine the criticality and impact of a potential supply restriction or vulnerability”.

Indeed, capitals across the industrialised world have now been sufficiently alarmed and the search for new sources of REEs is on in full swing. As stated above, sources of known deposits are already known. The tricky question of extracting the rare metals under acceptable terms to the environment remains, till date, a major challenge. One can only hope that alternative sources of supply can be found so that we can move away from mono-sourcing of such metals. For a disruption in the supply chain of REEs could spell disaster for the global economy, already reeling under sustained recession that is looking more and more like the ‘great depression’ of the 21st century.

By: Syed Mansur Hashim
Source: http://www.thefinancialexpress-bd.com/more.php?news_id=121779&date=2012-03-01

Be Sociable, Share!