It’s rare to see rare earth minerals in the news and maybe even rarer to see them reported on twice in one week. But 17 essential rare earth elements attracted attention this week like a neodymium magnet — the world’s strongest rare earth magnet.
On Monday, US-based rare earth producer Molycorp made a bid to take over Canada-based rare earth processor Neo Material Technologies for about $1.3 billion (see Hoover’s First Research editor Patrice Sarath’s post from earlier this week). Today, President Barack Obama announced plans for the US to file a complaint at the World Trade Organization (WTO) and join with Japan and the European Union in pressing China to hold talks on its caps on rare earth exports.
China produces up to 95% of the world’s supply of rare earths, which are used in making a wide range of high-tech products, including smartphones, hybrid vehicles, and defense equipment. As mentioned in this Bloomberg article, rare earths can be found in such products as Boeing helicopter blades, Toyota Motor hybrid cars, and complex weapon systems used by the Pentagon.
China set quotas on its exports of rare earth minerals in 2010 on the grounds that its caps are to support environmental protection, which is one defense the WTO usually permits. Critics of the policy, however, maintain that China has violated WTO’s rules because it has not curtailed its own production at home to protect natural resources.
Meanwhile, China’s stranglehold on the supply of rare earths has forced the prices of other international producers to increase. It has also made the users of rare earths scramble for other sources. The Pentagon, for example, warned in a report to Congress last fall of the need to find alternatives to rare earths. Canada-based Quantum Rare Earth Developments applauded the report and urged the US government to take steps to produce domestic sources of rare earths. And among the clean energy technologies the US Department of Energy has been funding are projects to research rare earth alternatives.
Molycorp is the largest producer of rare earth deposits outside of China. But its bid to acquire Neo Material Technologies, which buys concentrates from China, means that Molycorp may also have to deal with Chinese export quotas — unless it can find ways to make the materials at its own facilities.
Now didn’t someone once say that necessity is the mother of invention?