Finding Sources of Rare Earths beyond China

May 16, 2012

The United States can create jobs, reduce reliance on foreign imports and improve national security by encouraging the domestic exploration and production of rare earth elements currently imported from other countries, says H. Sterling Burnett, a senior fellow at the National Center for Policy Analysis.

Despite the name, rare earths -- which are key components of most modern electronics, green energy technologies and defense systems -- are relatively abundant in Earth's crust.  Unfortunately, these elements are seldom found in economically exploitable concentrations, except in the People's Republic of China.  However, the Asian superpower has exercised strategic controls over their mining, use and export.  Thus, China currently holds about 97 percent of the global market, a de facto monopoly on trade in rare earths.

In 2008, factories outside of China used nearly 60,000 tons of rare earths.  In the past two years, however, the Chinese government has limited exports to 30,000 tons per year, driving up global prices.

  • For instance, in 2009, cerium oxide, used as a catalyst and in glass manufacturing, cost $3,100 a ton.
  • It now costs as much as $110,000 per ton outside of China -- four times its domestic price.
  • In addition, China has begun to consolidate rare earth production into a single state-owned company that currently controls 60 percent of Chinese production.
  • This firm sells primarily to domestic companies recommended by the Chinese government.

Due to rising prices and the unreliability of China as a supplier, many countries and international companies have begun to seek alternative supplies, including new mines.

How and where will supply increase?  Though reliable data for rare earth operations outside of China are lacking, the most likely sources are five mines, one of which is California's Mountain Pass, the only mine in America dedicated to rare earths.  Molycorp, the owner, will mine only a handful of rare earth minerals, but it hopes to produce 20,000 tons per year by 2012. By contrast, China produced 124,000 tons of rare earths in 2009.

The United States can create jobs, reduce dependence on foreign resources, and improve national security by encouraging the domestic exploration and production of rare earths.  The first step is to improve access to potential sources.

Source: H. Sterling Burnett, "Finding Sources of Rare Earths beyond China," National Center for Policy Analysis, May 16, 2012.

For text:

http://www.ncpa.org/pub/ib108

 

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