RARE EARTH MATERIALS

July 2, 2012


 Since the early 1990s, the Chinese have virtually cornered the market relative to acquisition of rare earth materials.   For the past two decades, they have dominated production and processing of rare earths, driving U.S. producers out of business and costs through the roof.   It is estimated that they have 97% of the existing market. 

OK, what are rare earth materials?  There are seventeen (17) receiving this classification.  These are as follows:

Lanthanum

Cerium

Praseodymium

Neodymium

Promethium

Samarium

Europium

Gadolinium

Terbium

Dysprosium

Holmium

Erbium

Thulium

Ytterbium

Lutetium

Scandium

Yttrium

These materials are extremely important to products such as: wind turbines, electric vehicles, photovoltaic thin films, and energy-efficient lighting.    In recent years, demand for almost all materials examined has grown more rapidly than the demand for commodity metals such as steel.  For example, the magnets used in many of today’s proliferating wind turbines and electric vehicles use rare earth praseodymium, neodymium, and dysprosium.   Rare earths are also widely used in telecommunications and defense industries as well as some consumer products.    One rare earth, dysprosium, cost about $250.00 per kilogram in 2004.  In the first seven months of 2011, the price shot up to $2500.00 per kilogram.  Even now, this material still costs about $1400.00 per Kg.    In 2009, the average price for lanthanum oxide was $13.00 per kilogram.  In June of 2013, it was $208.00 per kilogram.   You can see the impact “hoarding” has on the marketplace.  There also seems to be refusal by the Chinese to resale these materials on the open market—even at a fair price.  

On March 13, President Obama raised the profile of the rare earth dispute when he announced the United States would be joining the EU and Japan to bring complaints to the World Trade Organization (WTO).  “Being able to manufacturer advanced batteries and hybrid cars in America is too important for us to stand by and do nothing”, Mr. Obama says.   I don’t really know what affect the WTO will have on eventual resale of these materials but at least this has been brought to light by concerned individuals and possible solutions may surface.   One of the things that really “bugs” me is why the Chinese had such foresight and we did not?  In some respects, I think we are looking at the “finders-keepers—losers—weepers” scenario.  Do you ever wonder whose minding the store?  Who’s watching out for us?   You cannot tell me that no one saw this coming.   We really need a public sector that is continuously engaged and in a timely manner.

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