Lentis/Rare Earth Metals

What are Rare Earth Elements and Why Do We Care?
Rare Earth Elements, or REEs, form the "largest chemically coherent group in the Periodic table," and "are essential for many hundreds of applications." Used both in smaller technological devices such as cell phones, laptops and headphones, as well as in more largely-scaled innovations such as LCD screen televisions, hybrid cars, and electricity generating wind turbines, rare earth elements have become an integral component in the modern technological world.

Despite what the name may imply, "rare earth elements are neither rare, nor earth" states Steven Castor, a recently retired research geologist with the Nevada Bureau of Mines and Geology. However, they occur in low concentrations and are extremely difficult to process because significant water, acid, and electricity reserves are required, and production produces radioactive and chemical waste as a by product.

Unfortunately, hybrid cars such as the Toyota Prius would not exist without the use of REEs because approximately 20 to 30 pounds of these elements are used within various components of these vehicles, including the battery, motor, and generator. Additionally, there is no known substitute for Europium which is used as the red phosphor in many computer monitors and televisions, so this element must be used regardless of its difficulty in mining and processing.

=Social Impacts and Relations=

America's Dependency on China for REEs
American trade with China is extremely complex, and is arguably one of the most important trade relations in the 21st century. Currently, China is producing approximately 97% of the world's REEs and has almost half of the entire globe's reserves of these metals. Therefore, America's current technological standard of living is extremely dependent on China's exports of rare earth metals for not only commercial use, but also for American military superiority since radar, smart bombs, and other high end developed technologies are all dependent on these elements. But since China is the leading producer of REEs, they are in the favorable position to dictate distribution to not only America, but the rest of the world as well.

Following the Cold War, Deng Xiaoping​, China's then Communist Party leader, observed that while the Middle east had oil, China had Rare Earth Metals—something of equal importance for the technological future. It is for this reason that Deng Xiaoping is attributed as the starting point for what America calls "China's economic war of control."

America's Perception
American analysts often tend to view China as an economic piranha as opposed to a free market. Chinese dominance, however, occurred because America's consideration of market force failed to take into account the economic power strategy behind the manufacturing of resources.

During the Arms Embargo of the 1990s, China began to gain a foothold in the REE industry by lowering prices. Then in the 2000s they began to take more aggressive measures towards controlling supply. Over the past several years China has imposed tariffs and quotas on their REE exports, and has recently closed its largest state linked mining enterprise, Batou Steel Rare Earth. Both acts have served the purpose of creating artificial shortages to drive up prices to what the Chinese Government deems realistic for the mining requirements, and to further centralize the mining in China to address administrative and environmental concerns. This has sparked alarm to the U.S. and further intensified the trade and currency dispute between the two nations. By restricting the amount produced to be exported and increasing the cost, China controls the market. Their monopoly has allowed them to create a political bargaining chip for issues of power and dominance. Chinese political maneuverings have upset the west by removing them from the position of control, and from the American perspective have endangered the global economy. Chinese actions, and western reactions have reestablished mistrust and paved the way for technological and social changes to meet demand of rare earth metals.

America is quick to point fingers at China for the sole blame for the situation. However, America was content to let China provide the raw materials for them, and ignore the environmental ramifications of their mining if raw materials could be obtained for cheaper by Chinese state run mining operations not held to the same stringent environmental guidelines. Arguably, American short-term perspective for development as a result of being the predominant world power after two world wars and the cold war played a role in this decision to allow China to make decisions based on its current socialist philosophy regarding the environment: "China's leaders used to believe that humans can and should conquer Nature, that environmental damage was a problem affecting only capitalist societies, and that socialist societies were immune to it. Now, facing overwhelming signs of China's own severe environmental problems, they know better". These actions have provided long-term negatives for both America and China.

American opinion toward actions in light of increased world demand, expected to nearly double in the next 5 years, is part of the justification against China's financial gain and desire to stockpile raw material for their own industry. In fact, accusations have prompted the World Trade Organization to investigate this an illegal maneuver to force more production businesses to Chinese shores so that they are doing more than just producing raw goods and financing other nations. China's response is that the closure of production facilities is to gain more control over the nation's manufacture industry to fix corruption and pollution. Despite any reasoning applied toward the actions taken, this analysis will not acquire a solution. They will if anything only continue to put a strain on an international relation key to world stability, and America's financial status as a result of prior decisions.Instead of armies, China is vying for power through resources control.

China's Perception
While it is easy to blame China for the shortage of REEs, China feels entitled to call the shots and dictate how much is globally exported because it fells it is taking risks that no one else wants to take. It is important to note that China's production dominance of REEs is not a result of exclusive access to more minerals than other countries—REE deposits exist all over the world. Instead, it is a result of environmental standards and lower wages in China. Mining and refining these metal ores is not environmentally friendly primarily because it is its dirty, toxic and often radioactive. As illegal mining is alluring due to the high market value of REEs, non-state influenced mines cause additional pollution problems across China. Therefore, "as part of the [Chinese] government's measures to tighten its grip on the industry and steer it to a sustainable and healthy development track," the Chinese government has forced to crack down on illegal mining by introducing specialized invoices for designated rare earths producers that will make it harder for illegal miners to sell their products. As a result, reduction in production was necessary to gain control for safer production for workers and the environment.

China also feels justified to restrict its REE exports because it believes that its resources have been exploited by other countries over the past two decades and fears its resources may be depleted in 20 or 30 years if exports continue unrestricted. In the early 1990s, China had 85% of the world reserves of these metals; it now only controls about a third of reserves. Thus these new restrictions are not simply "all about moving Chinese manufacturers up the supply chain to sell valuable finished goods to the world rather than lowly raw materials" as The Economist claims, but more so to ensure domestic technological stability via stable access to key resources. This move also allows China a chance to boost its economy by enacting policies which make it more economically favorable for companies to move their factories to China, but in no way forces it for survival of those companies. Chinese economic and environmental survival is paramount in these decisions.

Make no mistake: it has been a series of choices, not geophysical or economic constraints, that led to Chinese dominance of REE supply. Many other countries, including the U.S. have deposits of REE they could mine themselves. However, it has simply been easier for these other countries to allow China to do all the "dirty work." Until now. Leaving China's ability to dictate market availability of REE resources should not be mistaken as Chinese declaration of an "economic" war;" China is willing to have a cooperation with America as an equal. But in order for this to happen, China desires the American respect of Chinese socialist culture, unification, and financial assistance in lieu of continued creditor behavior.

=Impacts on Future=

China has increasingly frustrated America by undervaluing currency and trade operations, so much so that President Barack Obama publicly declared "Enough's enough," at the Asia-Pacific Economic Cooperation summit. Regarding the current perceived economical warfare between America and it's Chinese competitors, the most feasible solution is world independence from Chinese rare earth metal exports. This may be reached through diplomacy, reopening and establishing mines, and redesigning technology to be less dependent. However, the current American-Sino relationship is tense and a diplomatic solution of mutual benefit is unlikely. America wants to maintain it's power and control while China simultaneously desires more influence and reparations for sustained environmental damage through its actions. Therefore, referring to ethology, this case is an example of the power struggle to become and maintain the status of "alpha male."

Western mining also presents a unique obstacle in that the restrictions that allowed American dependence on Chinese exports will need to be weakened, and American Corporations will need aid from the government to be able to produce results in a timely manner along with stockpiling of resources to counteract China. Permanent magnets made from neodymium are at the forefront of the American Government's concern. Unlike most rare earth metals, Neodymium is rare and mainly controlled by China. Referencing past technology, American inventors are making use of Nicolai Tesla's induction motor patent to redesign technologies to not depend on rare earth metals. Future technology can continue to proceed in this direction to minimize and eventually remove dependence.

In conclusion, Chinese and American conflicts of interest over rare earth metals have caused global tension, a shift in policy, and a potential shift in technological exploration. By controlling exports, China is consolidating their industry and working to correct environmental problems. America is struggling to approach a solution by attempting to removing their need for rare earth metals by revisiting policy and development. Future movements will consist of a technological shift reminiscent of moving from fossil fuels to alternative energy, and policy changes. Diplomatic solutions and repercussions from the continued disagreements on the world stage are uncertain at this time.

Therefore, the underlying moral is that market dominance and power do not come about by pure good luck or fortune, but rather by strategy, policy, and decision making.

=References=