Intelligent Energy

America's rare earth independence

Posting in Energy

As July 4th approaches, a report shows why Americans should push for freedom from China's rare earth grip: Beijing has driven up the price five- to tenfold.

China’s export limits on the rare earth elements vital to so many renewable energy technologies and gadgets have recently driven up the price 5-to-10-fold, a new report claims.

“For most of the 21st century, the size of the rare earth market was about $1 to $2 billion. With the recent and rapid price increases originating from Chinese export restrictions the value of this marketis now about $10 billion, and is expected to keep rising,” says the report from SBI Energy, Rockville, Md.

SBI notes that China began restricting rare earth exports in 2005, and that through the first half of this year, they have curtailed them by 35% from 2010.

SBI also blames the price increase on an “absence of other RE (rare earth) resources” – in other words, on the lack of suppliers other than China.

China controls about 95% of the market. Production began shifting there some 20 years ago amid tougher environmental policies governing how to mine them in other countries.

Americans can ponder their reliance on the Chinese minerals over the Independence Day weekend.

Despite the name, rare earth minerals are abundant. Extracting them in useable form is the hard part. The world demands them for a long list of items - wind turbines, hybrid cars, LED light bulbs, LCD panels, fuel cells and iPods, just to name a few.

While the U.S. is getting back in the game – former world leader Molycorp is re-opening a mine in Mountain Pass., California - China will retain its hold for a long time, the report says. For among other reasons, rare earth mining is expensive.

Molycorp “needed $533 million in new funding in July 2010 to bring Mountain Pass back into active production -- and that is for a mine that used to supply most of the world's needs for rare earth elements," says Bernie Galing, SBI Energy analyst and author of “Rare Earth Elements Markets Worldwide.”

SBI notes that over 150 rare earth projects are now percolating outside China. But it can take 15 years to develop a new mine, the research group notes.

“As a result, only a relatively few new REE mining operations will enter production before 2016,” says Galing.

Photo: CBS Moneywatch

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Mark Halper

Contributing Editor

Mark Halper has written for TIME, Fortune, Financial Times, the UK's Independent on Sunday, Forbes, New York Times, Wired, Variety and The Guardian. He is based in Bristol, U.K. Follow him on Twitter. Disclosure