The Next Oil?: Rare Earth Metals
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The Next Oil?: Rare Earth Metals

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Rare earth metals (REM) are increasingly becoming a critical strategic resource. The 17 elements can be found in most high-tech gadgets, from advanced military technology to mobile phones. China currently holds claim to over 90 percent of the world’s production. As global demand increases, Beijing’s export reductions in recent years have forced high-tech firms to relocate to China and forced other governments to pour money into their exploration and production. An emergent India is among those concerned about China’s control of rare earths. In the past 12 months, the geopolitics of rare earths has become evident. REMs are becoming a strategic resource over which the two emerging giants are competing in Asia. Indeed, one might say rare earths are fast becoming “the next oil.”

The name, rare earth metal, is a misnomer. The metals are, in fact, far more abundant than many precious minerals. Yet their dispersion means they are rarely found in economically viable quantities. The similarity of chemical properties of the 17 REMs, demonstrated by their close proximity on the periodic table, makes them very difficult to separate. Their extraction is capital- and skill- intensive. End uses for REMs are varied but recent figures cited by the U.S. Geological Survey noted that in the U.S. the end use was predominantly for battery alloys, ceramics and magnets, sectors that are continuing to grow to cater for high-tech industry. The extent to which REM’s are used in defense technology is such that without their production modern warfare—fighter jets, drones, and most computer-controlled equipment—would have to undertake a lengthy process of redevelopment. A sovereign monopoly of such a resource is therefore a serious concern for any nation. 

Two decades ago, Deng Xiaoping, the former leader of the Communist Party of China, noted the importance of REMs, “The Middle East has oil and China has rare earth,” he said in 1992. His foresight was impressive. China holds half of the world’s deposits of REMs, 55 megatons (Mt), according to the U.S. Geological Survey. Not counting countries comprising the Commonwealth of Independent States (CIS), the U.S. holds the next largest national reserves with approximately 13Mt. India, on the other hand, has a mere 3.1Mt of estimated reserves. Continued cuts in China’s exports have led to a scramble for production, as other countries realize their reliance on China’s resources. Propelled by increasing demand and a need for self-sufficiency to provide for growing industry demands, India plans to triple its output by 2017.

In 2010, China halted shipments of REMs to Japan for two months following a diplomatic crisis, crippling high-tech manufacturing in the country. A trade official announced that Japan would try to reduce its dependency on Chinese REMs by cutting consumption by 10,000 tons annually over the coming years, noting that almost half a billion U.S. dollars would be paid in subsidies to support the initiative. Tokyo, the largest REM importer in the world, has also moved to diversify its REM suppliers, inking deals with Lynas Corp from Australia and Molycorp in the U.S, among others. Most recently, in November 2012, India and Japan signed a Memorandum of Understanding in which Japan, the world’s largest REMs importer, pledged to purchase as much as 20 percent of its REM imports from India.

Comments
34
bb
June 14, 2013 at 16:49

Well said. Protein and potable water are the most important things a government that cares about a future for its civilization must secure. While one may be Able to eat a smartphone, I’m quite sure it would serve no purpose

[...] The Next Oil?: Rare Earth Metals (The Diplomat) [...]

tony
May 5, 2013 at 17:16

I agree feed production and water management are the next big thing, as stated by wildforestlad, we cannot eat rare metals, 

[...] And without heavy rare earths, fighter jets, drones, and most computer-controlled equipment would have to undertake a lengthy proce…. [...]

Beano
February 18, 2013 at 23:19

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
February 16, 2013 at 11:31

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.

Praveen Jain
February 15, 2013 at 05:26

REM's indeed a good source for india to boost its export bills,but sideways india have to keep in mind its domestic demands.In other words it will have to manage in such a way that domestic demands are not hurt and sideways exports also boosts.

john m mahlangu
January 31, 2013 at 00:24

Exciting news,i would just like to know where from now on.
Yours faithful .
john

January 29, 2013 at 19:43

[...] tack vare avtal om utvinning med Grönland där det finns mest tillgängligt i hela världen.. Metallerna används för högteknologiska produkter och bl a batterier till elbilar, till vindturbiner, datorer, TV. [...]

Jugular
January 28, 2013 at 21:16

Yeah you forgot to mention you pay off rebels in Congo to mine Gold in their area of control those rebels you pay kill maime their own bretheren .  Typical evil merchant no such thing as embargo to you right money for innocent lives.  Typical commie, look human if you want to get the respect you want from the world such acts of your own kind should be controlled.

Jugular
January 28, 2013 at 21:12

Huh get used it CCP pays them state money to blog they even interviewed one before and he sounded that they just control views on a large number of well known political forums to influence and to deceive and to change perception.  Its no different from them controlling you via your favourite PSP controller or their version of TRON.

Jugular
January 28, 2013 at 21:03

Yeah then what's next Nuke Dukem….more nuke's more peace? Hahaa…pathetic analogy….next thing you know your the next soviet union.  Man has better things to do than create weapons of Mass destruction unless your country loves supporting rouge countries like Syria, North Korea, and Islamists by selling AK's hahaha not minding the cost of selling such weapons to di%ktators and pacifists and terrorist.     These days all the 2 countries got to say is VETO a UN resolution, "let them solve their own problems" typical commie yeah after 60,000 dead Syrians.  Same regime you sold Ak's to..

[...] Read Full Article Share this:TwitterFacebookLike this:LikeBe the first to like this. This entry was posted in Uncategorized. Bookmark the permalink. ← BBC News: Japan launches survey of Pacific for rare earth metals [...]

[...] http://thediplomat.com/2013/01/10/the-new-prize-china-and-indias-rare-earth-scramble/ [...]

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