While prices of REMs have dropped since their earlier peak, a bullish outlook remains. KPMG believes that 75 percent of companies will close in the next 24 months due to current low prices. If such a major collapse of the industry in fact occurs, the industry will consolidate into the hands of a few. Government-owned Indian Rare Earths Ltd will no doubt be propped up by New Delhi. Similarly, China’s new fund to “restructure” its rare earth industry, as announced in a November press release, will likely centralize and consolidate the industry making it smaller and more manageable for Beijing.
Despite countries such as the U.S. and Australia pushing investments forward in REM production, their viability as profit-making enterprises is dubious given the high costs of labor and the difficulties in meeting environmentally-friendly regulations. Jack Lifton, founder of Technology Metals Research, told Reuters in 2011 that he believes only 4 percent of ventures will prove profitable. With estimates like this, India’s expensive entry into production and exploration of REMs, when prices have bottomed out, demonstrates the strategic importance of the resource for New Delhi. Low labor cost countries with REMs, such as Myanmar, Mongolia and possibly North Korea, will be courted by developed countries, and, of course, India. Regardless of increased production from countries other than China, Beijing will remain the largest producer and likely the cheapest.
The fact remains that the commercial viability and spillover politico-environmental costs make production of REMs too expensive in developed countries. China has more leeway in such issues and the lion’s share of current production. Prices will remain largely controlled by Beijing’s propensity to export. India has similarly cheap labor costs and, while actual reserves are low, boosting production is more viable there than in the U.S. or Australia. New Delhi wants to balance China’s influence in the region in order to expand its own. Japan and South Korea are among the countries more than willing to begin importing Indian REMs, while India’s growing domestic demand leaves little choice but to secure more domestic reserves. The geopolitical battle for REMs is well underway between China and India, and across the world. Indeed, rare earths look likely to become the next crucial strategic resource, the next oil.
Elliot Brennan is editor and project coordinator of research in resource security at the Institute for Security and Development Policy, Stockholm, Sweden.
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tony
I agree feed production and water management are the next big thing, as stated by wildforestlad, we cannot eat rare metals,
Beano
Be Way
Either you don't visit Beijing or you breathe something other than air. China's coal fired power stations consume more coal than Australia produces and they are buliding more. Very costly investment in air scrubbers is needed if China is not to send its urban populations to early graves - and no they do not use rare-earths so far.
Wildforestlad
pfffft….we have plenty of rare earth dirt in Australia…. the real reality is you cant eat rare earth metals or dirt…the time frames given above and real politik arguements about who is or wants to be number one, will pale into insignifigance… the strategic 'asset' of the future is 'food'… will be an amusing future of people starving in the streets by the billions with their 'high tech' rare earth gadgets in their hands frantically phoning and texting for the location of edible food….
I feel quite comfortable and secure in Northern Australia with a high rainfall from the tropical moonsoon and so much spare land…
What does it matter to us? we have no mobile phone towers in our remote areas… but plenty of beef. Sure at the moment the road trains and normal trains are hauling out loads of 'dirt' to meet peoples demands for 'gadgets'…
Deng may have been prescient to see Rare Earths as an 'economic' asset for the future.
A true leader with strategic vision would realise clean food and clean water is the one asset you MUST secure.
Ah…thank god I am an Australian in the Northern Tropics….turn off the power… I'll be living like my ancestors of 100 years ago…. plenty of wild mangoes… bananas a plenty, and the Great Barrier Reef full of fish…. may as well convert our sugar cane fields to methanol production for a laugh as well.
We who live where I live also live in the cyclone/typhoon zone…. and actually look forward to our regular 'pre-tests' of reverting to pre-industrialisation life when all the power lines and communication links are knocked down… our Southern Cities are very generous in giving us lots of 'free' money to re construct each cyclone season…
Control the food and you control the people…. If I was a leader in China or India….I wouldn't be worrrying about rare earths to provide the next upgrade of whatever…. I would be losing sleep about securing the strategic food supplies
Even though I am a Westernised Australian, whose father fought in the Vietnam War, whose grandfather fought the Japanese in New Guinea, and grandfather fought in France in World War One… as a person 'of the land' I always had a soft spot for the old Maoist power to the agricultural peasant world view as opposed to the Russian/Soviet urban workers raping the the agricultural workers model.
My father and I actually had quite a few dinner table arguements in which he would call me a Maoist… … …
All I can say is China needs to re examine its 'revolutionary roots' and think again of the securing food for its people instead of the exodus of rural workers to cities….I dont need any of the modern crap of industrialisation… decent tractors, ag bikes that last, ag pumps for water etc…. for entertainment I still have a library or can go hunt feral pigs.
You cant eat or drink 'rare earths' and go take a look and projected population demographics in the next 20-50 years.