RARE -- CHAPTER 3 -- PLAYING THE LONG GAME

CHAPTER 3 – PLAYING THE LONG GAME

In this chapter, the author provides a very brief synopsis of and offers his opinion on the reasons for the emergence of China as the single dominant country controlling up to 97% of rare earth metals production.  In his view, China took advantage of economy of scale and its willingness to offer rare earth metals at low prices to gain an upper hand in the market and snuff out competition from other places.  On its won, China also needed to feed its technology needs as the country experienced a rapid growth in its economy and personal wealth.  The author warns against US complacency in this arena as this world dominance in rare earth metals can be used by China to protect its own political and economic interests through threats of export cessation.  He further points out that if the US does decide to exploit its own reserves, it would take a lot of time to develop the infrastructure and set up an operational business that is in compliance with many of the existing regulations.  Toward the end, he also points out that the future of sustainability measures and goals as far as weaning ourselves from combustible fuel and increasingly relying more on alternative sources of energy in the form of electrical cars and wind turbines depends heavily on access to rare earth metals.  A single Toyota Prius rechargeable battery requires about 30 pounds of rare earth metals while a single energy-generating wind turbine requires about 500 pounds.

·         At the end of the previous chapter, the author refers to China as owning an “overwhelming abundance” of rare earth elements.  China has since surpassed the United States in terms of the amount of rare earth elements it produces.  For a half a century, beginning in the 1930’s, the US maintained the largest reserve of rare earth minerals.

·         In the 1990’s, the US again saw a surge in mining rare earth’s as the Internet age gained momentum but lower prices from China flooding the global market with high-quality rare earths caused all operations to cease by 2,000. “China began its ascent to the top of the world rare-earth production in 1987 and surpassed the United States in production every year since 1992.” 

·         The author discussed briefly how China gained economic dominance in the rare earth market – by selling them at much lower prices that other producers cannot compete.  China was able to gain dominance because they are able to sell rare earths for lower prices due to economies of scale and also the willingness to sell at a low price.  Much of the impetus for this is China’s own needs for these rare earths as its economic advance creates the need for parallel technological needs.

·         The author offers the admonition that if the US does not do anything to restart its mining of existing reserves, it will take a long time for it to catch up to produce its own if China starts to use the threat of export cessation to protect its own economic and political interests.  As the author points out, “every that passes places an additional delay on the time it would take to ready an existing stateside mine for excavation.  Initiating the start-up process at an existing but inoperable mine is not merely a matter of flying equipment and technicians in before management flips a switch – it is an excruciating process compounded in difficulty through the necessity of meeting new environmental legislation and clearing environmental hazards…”.

·         Further, he emphasized the critical importance of these rare earths if the green revolution and sustainability movement is to progress:  “The rare earth metals dysprosium, neodymium, terbium, and lanthanum are the four-pronged linchpin of efforts to create an environmentally friendly transportation sector, with each metal needed in massive quantities if the electric car revolution succeeds in removing combustible engines from our roads and highways”:

o   Each Toyota Prius contains about 30 pounds of rare earths used in the motor and the rechargeable battery.  Lanthanum makes up about 10-15 pounds used as the metal component in nickel metal hydride batteries. A single energy-generating wind turbine requires about 500 pounds of rare earth metals for use in its motor and other interior components.