by Robert F. Service - Science - Published: September 23, 2010
Action is heating up in the world of rare earth minerals. China has blocked exports of rare earths to Japan over a fishing dispute between the two countries. Earlier this month, Japan arrested the captain of a Chinese fishing trawler for fishing in waters near uninhabited islands claimed by both countries. China demanded the captain's return to little effect. Now it appears to be turning up the pressure. Japan, like the United States, is heavily dependent on imports of rare earths from China for their widespread use in manufacturing of hybrid cars, electronics, and wind turbines. But China currently dominates the market for producing rare earths, accounting for approximately 95% of the worldwide supply. (A spokesperson with China's Ministry of Trade and Economics Co-operation yesterday denied that the country put in place an official trade embargo.)
The shutoff of rare earth exports to Japan isn't expected to have a significant short-term effect, because Japanese companies have been stockpiling rare earths for years to reduce their vulnerability to possible supply shortages, says Gareth Hatch, co-founder of Technology Metals Research, a rare earths market-analysis company in Carpentersville, Illinois. In that sense, China's move may be not be felt as anything more than a shot across the bow, Hatch says. "But the symbolism goes way beyond the actual impact," he says.
"It is precisely this type of vulnerability in the overall rare earths supply chain [for geopolitical reasons and others] that makes it important for Japan and other countries to diversify their supply chains for rare earths," adds Hatch.
That diversification may soon get a jump start. Today, the House of Representatives Science and Technology Committee approved legislation to authorize funding by the U.S. Department of Energy (DOE) for a $70 million research and development center to study new ways to mine and process rare earths. The bill also contains authorization for DOE to fund a loan-guarantee program designed to restart U.S. rare earth-mining operations.
The last U.S. rare earths mine was shuttered in 2002 because of a combination of environmental concerns and the fact that they could not compete with the cheaper prices for rare earth minerals being offered by China. In recent years, China has tightened its grip over its own rare earths in order to supply domestic manufacturers, as well as to lure manufacturers abroad to China. That's produced price spikes of three- to eightfold, says Jeffrey Green, president of J.A. Green and Company in Washington, D.C., a public policy firm specializing in rare earths. But between the price hikes and the threats of rare earths shortages, mining operations in the United States and other countries could soon be on the rise.