China’s Rare Earths Aren’t as Rare as You Think

When the country tried to choke off supply of the metals before, the world found ways to adapt

By Marian L. Tupy of Cato. Excerpts:

"China produces about 61% of rare-earth minerals, and it processes 92%."

"Fifteen years ago, following a dispute with Tokyo over contested waters, China imposed a rare-earth embargo on Japan, while cutting its rare-earth export quotas to the rest of the world by 40%."

"Prices of the rare-earth metals spiked, with cerium soaring from $4.15 a kilogram in January 2010 to $150.55 in July 2011."

"Market mechanisms undermined China’s attempt at resource leverage. In the early 2010s, supply growth outside China accelerated. Projects already in development by Molycorp in California and Lynas in Australia ramped up, adding tens of thousands of metric tons of production capacity. By 2014 China’s market share of rare earths had fallen from more than 90% to about 70%.

China’s export quotas also proved surprisingly porous. Producers exploited loopholes by shipping minimally processed alloys exempt from restrictions, while an estimated 15% to 30% of production was smuggled through neighboring countries. Beijing’s inability to police thousands of small miners fatally undercut its embargo."

"Refineries temporarily substituted alternative catalysts, and magnet producers optimized alloys to use less rare-earth material, some even switching entirely to new technologies. This “demand destruction” blunted the crisis’ effect even before new supplies could fully come online. Prices that had spiked in 2011 quickly retreated to pre-crisis levels."

"the U.S. defense industry has reduced its reliance on rare earths to a minimum (the equivalent of less than 0.1% of global demand), and weapons programs maintain inventories to buffer temporary supply disruptions."

"rare earths are quite abundant. Cerium is the 25th most common element on Earth. At 68 parts per million of Earth’s crust by weight, it is more abundant than copper. Rare earths are “rare” because of geochemical dispersion. They tend to remain evenly mixed rather than found in their pure form."