China's Rare Earth Policy Creates Void and Opportunity

By Joel ScanlonNov 10 2010

China's decision to cut its Rare Earth Elements (REE) exports by 70% in the second quarter of 2010 has brought home the world's dependence on the nation for its REE supply. These rare minerals are a group of 17 elements which are collectively called rare earths.

They are vital in the production of electronics and high technology gadgets. The global dependency on China for these elements stems from the fact that so far the nation has been mining and supplying these elements cheaper than other countries where the labour and mining technology drives up the costs.

The void in supply of these materials has created an opportunity for many companies to earn handsome profits. Companies are now reopening abandoned mines, thinking of mining for manganese nodules on the sea’s bed and even on the moon for potential supply of the REEs.

However it is only current Chinese policy which has driven up the rates of the REEs and the rates could come crashing down if China reverses its export limits. The result would be catastrophic losses for such enterprising companies that are trying to make a quick profit by selling REEs.