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China's lock on market for rare earth elements: Why it matters

China said Wednesday it will 'continue to provide rare earths to the world,' but it also plans to cut exports. Here's a Q&A on what all the fuss is about.

By Staff writer / October 20, 2010

So-called 'rare earth' elements (they're actually as abundant as nickel or tin) are used in such elements as aluminum baseball bats. These elements are also used in electronics and green technologies.



From Capitol Hill and the Pent­agon to high-tech labs and assembly plants, seldom have such obscure names been such a hot topic of discussion. Names such as dysprosium, gadolinium, and praseodymium.

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They are mined from Earth's crust, and they are among a unique group of chemical elements vital to making many high- and low-tech products – from iPhones, hybrid cars, and jet-fighter engines to aluminum baseball bats. Such elements also are deemed essential to fielding a new generation of green-energy technologies.

The concern: The US imports almost all of these rare earth elements from China, which currently produces about 97 percent of the world supply. If China were to cut exports for geopolitical leverage, or reduce and tax exports in anticipation of meeting burgeoning internal demand, prices for these elements - and the products they appear in - could jump.

Indeed, over the past 24 hours reports from China have indicated the country could reduce its export quotas by 30 percent next year, following a 72 percent reduction during the second half of this year. Others suggest China might ease up a bit on export limits. And Japan has felt China's rare earth wrath for the past several weeks after China stopped exports of rare earth elements to the island nation over a boundary dispute.

If sustained, such moves could turn some of the most desirable rare earth elements into "unobtainium," at least for several years while mining in other countries ramps up, some experts warn.

What are rare earth elements?

They are a group of 17 elements buried in the middle of the periodic table of elements. The first was discovered in 1787.

Through the early 1940s, they were largely a chemist's curiosity. But then US chemist Frank Spedding figured out how to separate and purify rare earth elements. Twenty years later, researchers began discovering their usefulness.

Despite the name, a throwback to their initial discovery, these elements are as abundant as tin or nickel. But they are tough to mine and extract.

Deposits appear worldwide. The US Geological Survey (USGS) puts total global reserves at 99 million metric tons. China hosts some 36 million metric tons. US reserves are estimated at 13 million metric tons.

What makes these elements special?

They have some handy electrical, optical, and thermal properties, giving them a Midas-like touch when combined with more-common materials.

Europium, for instance, helped drive the shift from black-and-white to color TV by turning the dull reds in early TV screens to reds that popped. Erbium placed at intervals along fiber-optic lines amplifies the light carrying data, allowing it to travel long distances.

Several rare earth elements are used to make smaller, more powerful magnets for cars, computer disc drives, motors, generators – and missile guidance systems. Other materials are used to improve heat resistance in jet-engine turbine blades and provide brighter views in night-vision goggles.