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Main Content
The Next Oil: Rare Earth Elements
Former Chinese President Deng Xiaoping recognised their important strategic value way back in 1992. Rare Earth Elements would be the new oil. Great power would be wielded by their keeper. Today, China has almost a monopoly.
The applications of Rare Earth Elements (REEs) are endless - mobile phones, iPads, colour TVs, X-ray and MRI machines, defence equipment, petroleum refining catalysts and even green technology. What oil is to the Middle East, REEs will be to China, Deng prophesied in 1992. Almost two decades on, it appears he was right on the money. And it’s money that China is now raking in as the near monopoly producer of REEs. Our addiction to high-tech gadgets in the past decade has seen a remarkable spike in their mining and extraction.
The name Rare Earth Elements is a misnomer. The elements are far more abundant than many precious minerals. Yet their dispersion means they are rarely found in economically viable quantities. There are 17 REEs - 15 lanthanides, scandium and yttrium. The 15 lanthanide elements occupy atomic numbers 57-71 on the periodic table. The similarity of their chemical properties makes them very difficult to separate, their extraction is therefore capital- and skill-intensive.
Earlier this year the US Geological Survey (USGS) updated its global reserve-estimate data of Rare Earth Elements as it narrowed its definition of recoverable minerals. The result saw estimates in China rise from 36 mega tonnes (Mt) to 55Mt almost half of the worlds reserves. US estimates remain at 15Mt while Australia’s estimated reserves declined from 5.4 to 1.6Mt.
According to the USGS China produces 95% of rare earth elements. The global demand for REEs is increasing 10% annually. Demand is similarly increasing in China as the country’s consumption of the resource has quadrupled since 2000. The growing domestic demand has seen sharp declines in export quotas, cut by 37% in 2010 and a predicted 35% cut in 2011. China’s near monopoly on production has seen prices of REEs soar, according to one Reuters report prices have risen nine fold since last year to over USD$100,000 per tonne. More worrying is China’s predatory pricing which has run other REE companies and mines out of business, or at least into the red. The curbing of exports has similarly forced high-tech manufactures to relocate to China to ensure adequate supply, thereby harming the growth of high-tech industry in many other countries such as Japan, Korea and Europe.
It is this haste to increase extraction of local reserves that saw the US propose the 2010 RESTART (Rare Earths Supply-Chain Technology and Resources Transformation) Act. The measure would promote greater research and innovation within the REE sector. Included in the Act is the proposal to start a national stockpile of REEs within the US Department of Defense to supply the defense and technology industry in the event of future shortages.
The environmental impact of the mining and extraction of REEs can be devastating. The extraction processes often release radioactive material into water tables. Some of the elements are found in radioactive deposits of uranium and thorium, their separation from which can reap deadly consequences.
The not so clean green energy…
Environmental consequences of the extraction of REEs can be devastating. Yet they are an essential part of most green technology. In one hybrid car there is approximately 30kg of REEs, hydro power, solar and wind energy all use similarly astonishing amounts in batteries, light weight magnets and other technology.
Each large wind turbine generating 3.5megawatts of power requires a magnet composed of elements such as dysprosium, praseodymium, terbium and neodymium, all REEs. In the light-weight, heavy-duty magnets used in a large wind turbine between 200 and 1,000kg of REEs are required. This puts the environmentally friendly policies of recent times in serious question.
While substitutes are available for most applications of REEs, they are usually less efficient. In our modern day race for lighter or more efficient high-tech devices and greater spending in high-tech weaponry, rare earth elements are set to become ‘the new oil’. It will be increasingly important to secure national reserves of such resources to support local industries and prevent future conflicts over resources. Meanwhile further research should be directed into substitutes for REEs that could prevent any unhealthy dependence. Lessons can be learnt from our dependence on oil, and decades of oil-driven conflicts. Governments should ensure that markets forces are not the sole manipulating hand in the future. If they don’t, REEs will truly become the next oil and conflicts will be fought in their name.