Tuesday, March 02, 2010

Rare Earth

Rare Earth Metals, that is. Today there is an article from the Times Online (UK) discussing the current and future status of rare earth metals. The report comes from an investment forum that just closed in Tokyo.

Jack Lifton, an expert in rare earth metals, said that many of the green ambitions of governments around the world — particularly ones involving wind farms and other high-tech responses to climate change — would be thwarted by upstream supply issues.

Particularly troubling, he said, is an impending inflection point that may arrive within the next couple of years when China becomes a net importer of rare earth ores.

At the moment, China dominates the global supply of rare earth metals, a group of 15 consecutive lanthanide elements whose properties make them critical to dozens of technologies on which the modern Western consumer is heavily dependent.

Basically, the Chinese outsmarted themselves by undercutting other global refiners. They will pay the price for that in the very near (2 years estimate) future.

Beijing has reduced export quotas for rare earth metals every year for nearly a decade, and has become a ravenous consumer in its own right.

Big state-backed wind farm projects are expected to bring Chinese domestic demand to 100 per cent of supply.

Apparently the metals are out there all over the place, it's the refineries that are at issue, and there just aren't enough out there. And they cost a fortune to establish. Private industry just isn't up to the job.

Although sources of rare earth metals around the world are reasonably abundant, the refinery process is expensive to establish and the returns would take an unacceptably long time to arrive for most investors.

The government would have to step in, and what would trigger that intervention?

"But the level of ignorance about the upstream of metal supply is just out of this world. When you talk to governments about how they are going to secure the supplies of the rare metals their voters are using more of every day, they say that they could only justify the cost of financing a new mine at a time of war. Well, we are at economic war already.

The article is worth reading in full in order to understand the magnitude of the problem and the lack of planning for the future. This will have an impact on our ability to move forward with green technology, not to mention the electronics we have become so dependent upon. Check your wallet, you may find yourself paying more for the stuff you take for granted today.

No comments: