Rare Earth Elements are a group of minerals that have been in the news thanks to their sudden scarcity in the international market. These minerals are precious because they have unique properties that make them extremely crucial in the manufacturing of some electronic items such batteries, wind turbines, hybrid cars, laptops and energy saving bulbs to name a few.
China has been producing 95% of the Rare Earth Elements for the global markets. That export of the Rare Earth Elements or REEs as they are known has been slated for a cut. In fact Beijing announced a 35% cut in its REE export quotas last month. The logic is that its internal needs for the REEs will shoot up with its major wind based energy power plants needing them for domestic use.
This is causing nations worldwide to go into panic as there is no alternative source of REEs ready to tap. REEs have been not too profitable to mine in the past thanks to China’s low prices for them. And their mining also has considerable environmental costs which other nations have been unable to get away with.
Illegal mining of REEs in China helped lower the costs, but with government coming down strong on these operations the taxes will raise their cost as well. Taxes are not being raised on manufactured goods that use REEs in China. So China may hope to set up more multinational factories.
However not all companies are that keen on producing goods in China thanks to the near absence of intellectual property rights. One of the worst affected nations would be Japan who is currently the largest importer of REEs consuming about 80% of the global supply.
Both the U.S. and Australia have been searching for alternative sources for the REEs. A deposit of REEs in Western Australia will see it becoming a major player in the emerging market. As per industry experts the current demand of 125,000 tonnes is grow thrice as fast as other commodities. Dudley Kingsnorth said that by the time we get to 2015 demand will be about 180-190,000 tonnes, and by the time we go forward to 2020, demand will be about 250 - 300,000 tonnes a year.