Concern over global warming and skyrocketing energy costs has inspired a flurry of domestic investment in wind turbines, electric vehicles and energy-efficient motors-and rightly so. However, in our attempt to free ourselves from dependence on Middle Eastern oil, we may very well have become just as dependent on Chinese mineral deposits.
It turns out that what the Middle East is to oil, China is to rare earth elements. China produces 97 percent of the world’s supply of neodymium, dysprosium, terbium and other rare earth elements.
These metals are indispensable to a variety of clean energy technologies. Rare earths are used in the nickel-metal hydride batteries that power most hybrid-electric vehicles. Powerful rare earth magnets are used in wind turbines, energy-efficient industrial motors, and motors for electric vehicles. Rare earth phosphors illuminate compact fluorescent lightbulbs.
That’s not all. Rare earths are also critical for computer hard drives, lasers, radar, satellites, avionics and missile-guidance systems. Indeed, these minerals are so vital to certain military applications that the U.S. Navy once considered buying and operating a rare earth mine and processing facility in California.
Just as the Organization of Petroleum Exporting Countries has controlled the supply of oil, China is now controlling the supply of rare earths. Over the past few years, China has gradually reduced the amount of rare earths that can be exported-partly to fuel rising domestic consumption and partly to force the world’s manufacturers to base their production in China. In fact, by some estimates, Chinese domestic consumption of rare earths could outpace its domestic supply as early as 2015.
In April, the Government Accountability Office issued a report that warns of an impending crisis in the supply of rare earths. The report states that, while rare earth deposits are geographically diverse, the United States relies almost exclusively on Chinese sources for finished rare earth materials. Although the United States once dominated all stages of the rare earth supply chain, most processing is currently performed in China, giving it dominance in worldwide supply and pricing.
The report further warns that rebuilding a competitive domestic supply chain could take 15 years, requiring significant capital investment and technology development.
We urge Congress and the U.S. Department of Energy (DOE) to re-establish a competitive domestic supply chain for rare earths. We further call on Congress and the DOE to support research into alternatives to rare earths. Having already invested so much in green energy technology and manufacturing, we cannot afford to encounter a speed bump just when the industry is gaining momentum.
The Editorial: A Speed Bump on the Road to Green
April 29, 2010