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China inside

The ICT industry's critical dependence on rare earths

Milon_Gupta

Milon Gupta
Eurescom
gupta@eurescom.eu

Mobile phones consist of numerous materials. Typically, 80 percent of a mobile phone are plastic, copper, and glass or ceramics. The remaining 20 percent consist of more than a dozen elements. Ironically, the smallest and least-known ingredients of a mobile phone may soon become a serious risk in the supply chains of major ICT manufacturers in the Western world: rare earths. This is a group of chemical elements with unique properties that have enabled the miniaturisation of electronic components including capacitors, lasers and powerful magnets. 

Rare earth minerals are not only used in the production of mobile phones, but also for many other ICT devices, like PC hard drives, cameras, communication satellites, and electric car batteries. There are 17 rare earth elements in the periodic system: 15 within the chemical group called lanthanides as well as yttrium and scandium.  

Not so rare
In fact, most rare earth elements are widely distributed in the Earth's crust. The so-called “light” rare earth elements, like cerium, an ingredient in enamels and glasses, are abundantly available. Only the “heavy” rare earth elements, such as europium, used to produce colour in TVs and other screens, are actually hard to get. 

Not so rare: ultrapure neodymium under argon. 

So, in general, rare earth minerals are not so rare. There is just one catch: digging out rare earth minerals involves a significant labour effort and is potentially hazardous, due to radioactive emissions in the mining process. 

Chinese domination
In contrast to Western countries, the hazards of rare earth mining have not kept China from systematically expanding its rare earth mining since the mid-1980s. On the contrary, Deng Xiaoping, China’s leader from 1978 to the early 1990s, had made the exploitation of China’s own rare earth sources (about 60 percent of the world’s sources) and the control of the global rare earth market a strategic priority. “The Middle East has oil, and China has rare earths,” he said.

At the same time as China expanded its rare earth extraction, the US and other Western countries have practically stopped their rare earth mining. Today, China is controlling 97 percent of the global rare earth production – currently 124,000 tons per year.  

The Chinese domination of rare earth supplies has not been a problem until July 2010, when the Chinese ministry of commerce announced to cut China’s export quota of rare earth minerals by 72 percent. The background for this measure is the rising domestic consumption in China. It is estimated that by 2012, domestic consumption will exceed domestic production of rare earth minerals in China. Driven by Chinese growth, world demand is expected to rise to 180,000 tons annually. 

Gobal response
Not surprisingly, the Chinese export restrictions have created serious concerns in the US, Europe, Japan, and South Korea, who heavily depend on rare earth supplies for a wide range of industries, including ICT and consumer electronics, car manufacturing, energy and defence. 

In Japan, Toshiba and Sumitomo have each launched rare earth joint ventures in Kazakhstan over the past year. Australia's Lynas had signed a deal in 2010 to supply a major Japanese company with rare earths from its Mount Weld project in Western Australia. South Korea plans to spend 17 billion won (about 11 million euro) by 2016 as part of a long-term plan that seeks to secure 1,200 metric tons in rare earths reserves. 

The European Union has also become aware of the issue. In July 2010, a European Commission task force released a report, which lists 41 critical minerals and metals that could soon be in short supply. Rare earths are at the top of the supply-risk scale. The task force recommended trade and policy measures for the European Union to ensure steady imports and the promotion of exploration and recycling in the EU. 

The US government has also woken up to the challenge. A report by the US Accountability Office published in April 2010 warned of the vulnerabilities and did not give much hope of reducing the supply risk anytime soon. Developing a domestic rare earth supply would take 7 to 15 year, according to the report. Despite that, the US Congress is discussing measures, like for example loan guarantees, in order to facilitate rare earth mining. 

In Europe, there is no major rare earth site. Only in Greenland, an autonomous country under the administration of Denmark, there are rich rare earth deposits. 


Rare earth mining in Kvanefjeld, Greenland

Apart from increasing their own rare earth mining, the main alternatives for Western countries in order to lower their dependency on rare earth supplies from China is to improve the recycling of rare earth supplies and to explore substitutes for rare earths. 

Whatever Western countries will do, the critical dependency on China’s rare earth supplies will remain a strategic vulnerability for the next decade. This can severely affect not only the ICT industry, but also the automotive industry and national defence.

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