A Lesson from the Rare Earth Metals Embargo

In the aftermath of China’s rare earth metals embargo on Japan, Europe and America, it is time to re-think how we get these crucial materials, reports the NY Times in a piece titled, “After China’s Rare Earth Embargo, a New Calculus.” Currently, 95% of the world’s rare earth metal mining occurs in China. These metals are necessary for many high tech industries such as batteries and wind turbines - a constrained supply of them could have a disastrous effect on the American economy as whole but more specifically on its clean energy industries.

At one point America was the leader in mining rare earth metals. The Mountain Pass mine in California was once the world's largest rare earth metals mine, but a combination of aggressive Chinese pricing and a costly toxic spill forced the site to close in 2002. Since that time China has dominated the industry without anyone much caring.

Although the recent embargo brought the international dependence on China for these metals to light, the tension has been slowly building. China has made it policy to cut rare earth metal exports 6% a year over last 5 years. Some incorrectly view this as simply a flexing of China’s economic might. In fact, the country’s efforts to limit exports can be traced to its own increasing demand, “Meanwhile, China’s own fast-growing manufacturing industries now consume more rare earths than the rest of the world combined. And Beijing has done nothing to curb that domestic demand.”

China’s rapidly growing domestic hi-tech industries - which produce compact florescent light bulbs, wind turbines, electric cars, computers, and cell phones - increasingly demand these metals. The constraining of these resources, thus, is not just an international power play on China’s behalf, but an inevitable outcome of international resource production imbalances combined with growing domestic and international demand. China’s willingness to accept the negative environmental effects of mining such metals, to them, justifies their unchecked increases in demand for these materials,

“China feels entitled to call the shots because of a brutally simple environmental reckoning: It currently controls most of the globe’s rare earths supply not just because of geologic good fortune, although there is some of that, but because the country has been willing to do dirty, toxic and often radioactive work that the rest of the world has long shunned.”

America has been slow to deal with these realities. A proposed piece of legislation, the Rare Earth Supply-Chain Technology And Resources Transformation [RESTART] Act, would provide $1.2 billion to help make America’s rare earth metal miners competitive. Finding a steady supply of these rare earth metals will be crucial to emerging American clean energy industries. Recent analysis by Saqib Rahim at ClimateWire, has shown that the combination of rising Chinese labor costs and the large size of electric car and wind turbine components make these two technologies cost competitive to produce in the America. Both technologies necessitate large amounts of rare earth metals for production and are arenas in which China will be competing heavily in. The unfolding rare earth metals dispute and resulting American actions should be followed closely by anyone who wants to see such crucial clean energy technologies produced in America.