China’s influence over the global rare earth metals (REM) markets has come under increased international scrutiny following recent measures by the Chinese Government aimed at strengthening control over its fragmented REM industry.
China currently accounts for 36 percent of REM reserves and 97 percent of worldwide production. These metals, comprised of 17 rare elements, each possess unique chemical and physical properties. They are considered critical to a host of high-tech applications from consumer electronics to missiles and other military applications.
Clean technology applications are also heavily reliant on REMs with elements like neodymium, lanthanum, and dysprosium fundamental to the production of hybrid and full-electric vehicles in addition to the critical components utilized in wind and tidal turbines.
Beijing has articulated several reasons for this sudden push. Illegal mining and smuggling has been a dominant feature of the Chinese REM industry in recent years, accounting for 20,000 tonnes or one-third of China’s total REM exports in 2008. According to Beijing, unregulated and excessive REM production above given quotas have contributed to an undervalued global REM market which has failed to reflect the true commercial value of these metals. Chinese officials have additionally invoked concerns surrounding China’s burgeoning domestic REM demand in addition to the history of environmental damage resulting from unregulated industry practices.
China’s Ministry of Industry and Information Technology (MIIT) has subsequently sought to consolidate the industry by reducing export quotas and imposing strict new standards and regulations upon domestic refineries. In July Beijing announced that it would cut REM export quotas by 72 percent for the second half of 2010 while shipments will be capped at 7,976 tonnes, down from 28,417 tons for the same period in 2009.
At the same time, Beijing also plans to stockpile 300,000 tonnes of REM concentrates by 2013 as a means of further ensuring its own future supplies. China’s attempts to acquire greater control over REM are likely to present clear consequences for a wide range of these prominent global clean tech applications.
According to Reuters, global sales of hybrid electric cars are forecast to reach 3 million units in 2015 with a total REM requirement of 33,000 tonnes.
Similarly, the Global Wind Energy Council (GWEC) forecasts that the global installed wind capacity this year will climb to 409 GW, up from 158.5 GW at the end of 2009. The additional 250.5 GW will require 167,000 tonnes of REMs.
Not surprisingly, these measures have raised real concerns outside of China regarding the future availability of the refined products created from REMs.
Earlier this month, David Sandalow, U.S. Assistant Energy Secretary for Policy and International Affairs, told Congress that the United States wants more countries to boost production of REM metals used in clean energy technology products to break China’s monopoly on supplies.
Japan and the United States have agreed to address the problem of relying too much on a single country for production and supply of REMs. In a joint statement signed earlier this month, U.S. Secretary of Energy Steven Chu and Japanese Trade Minister Akihiro Ohata reaffirmed the two nations’ intention to strengthen cooperation on the development of technology to create clean energy and alternatives to rare earth metals.
To this extent, on Wednesday, two of Japan’s largest trading houses announced critical supply deals designed to reduce China’s monopoly over REM supplies. Under the terms of the deal, Sumitomo and Mitsubishi will import a combined 4000 tonnes of cerium, lanthanum, neodymium and other elements produced at the Mountain Pass mine in California.
Similarly, Toyota has recently secured a lithium supply deal in Argentina while Toshiba Corp. also plans to set up a REM joint venture with Kazakhstan state-owned firm Kazatomprom.
There’s plenty more to talk about here in terms of consequences for the clean technology industry. We’ll continue to monitor these developments in weeks and months ahead.
Article by Euan Sadden