China produces some 95% of the world’s rare metals, mostly mined in Mongolia. With its virtual monopoly over the world’s rare earth elements (REE) supply, China is considering banning the export of some and drastically reducing the export of others to ensure sufficient supply for its internal demand. So why do we care?
REEs are essential ingredients in a variety of technologies that we rely on: low energy light bulbs, solar panels, wind turbines, semiconductors, smart phones (yes, the iPhone is included in this list), TVs, hybrid cars, smart bombs, lasers, Stinger missiles to name a few. Many industries will be impacted if such a ban is enforced and that will directly reflect on availability and prices in the short to medium term. The existing smuggling trade will flourish.
The Japanese government already has a “Strategy for Ensuring Stable Supplies of Rare Metals” and Japanese companies are trying to create agreements with countries like Kazakhstan and Indonesia to ensure a steady REE supply for themselves.
In the longer term, the supply of REEs will stabilize once again as private companies that were previously driven out of the market by China will reinvest in their mines to meet the gap.
So China is going to cut supplies and Japan is already hoarding- what are other countries planning on doing?
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