SCDigest Editorial Staff

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Beyond the potential immediate impact on industry and the military in developed economies from a rare earth metal shortage, the larger concern is the potential that China would use its rare earth monopoly as a political and economic weapon over tim. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

A somewhat obscure but potentially significant battle has been on-going for some time over so-called rare earthmetals coming out of China. This week, China denied reports that it was for now blocking exports of some of the metals - critical to the manufacture of many products - to Japan, US and Europe in retaliation for political spats, and that it planned to limit overall exports to developed economies in 2011.

China is said to have blocked exports to Japan last month relative to the some disputed islands in the China Sea, though the official explanation was that the exports of the rare earth metals were delayed for "tighter inspections."

Now, the New York Times is reporting that China is blocking some shipments of rare earth metals to the US and Europe now as well, perhaps spurred by perceived heavy-handed pressure on China to raise the value of its currency and reduce its trade balance with the US and Europe.

The Times also cited an internal Chinese report that said export quotas for the metals overall would decrease in 2010 by 30%.

China disputes both reports, however, saying the news was groundless and that no such measures would be implemented.

Rare earth metals are a collection of some 17 generally obscure elements such as scandium, yttrium, and the fifteen lanthanides. However, some also include uranium in the list of rare earth elements. Although only very small quantities of the metals are used in production processes, they can add special heat resistance capabilities for the finished products, and are said to be very important for many "clean energy" technologies. They are also extensively used in military systems, and so the issue has a national security as well as commercial aspect.

China has nearly a monopoly now in rare earth metal production, producing 90-95% of the world's current output, not because it is the only area of the globe that has those elements, but due to some historical and labor cost trends that left the country as the only one with a broad capability to mine and process those metals. Some in the US government have called for rapid action to rebuild the country's rare earth metals capabilities, but the effort would likely take many years. Other countries, such as Canada, are also looking at developing rare earth metals production, either to meet their own needs or to develop an export market.

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