Rare Earth Metals have become the Predominant Commodities in the Current Technology Revolution
As the developed world hurdles deeper into the tech revolution, few realize the weight of the underlying commodities market struggle, and its implications for the future.
“Rare earth metals”, as ambiguous a name one can imagine. They are, however, neither rare nor ambiguous. This group of about 17 metals is actually quite abundant. So why does China control the vast majority of this market (97%)? Why is the US in a scramble to catch up?
We’ve all been spoiled as of late. Flat screen monitors, touch screen smart phones, plasma and led TV’s, LCD displays above urinals in our favorite night club, and a surge of new, video and graphically intensive technology that has a replacement life cycle of less than a year. The marketplace is absolutely burgeoning, and that’s just the consumer market. Industrial level application of the aforementioned technologies, hybrid car technology, and things like fuel and solar cells, leave the supply and demand dynamics of the rare earths market tilted heavily towards the supply side of the scale.
The reason for China’s seemingly insurmountable lead in the market is the difficulty involved in cultivation of these “rare earths”. They are both capital and pollution intensive because most of the materials are by-products of already established mining and processing industries. In the 1990’s, the US had a flourishing rare earths mining industry, but due to environmental protection regulation, and a not-so burgeoning market back then, a good portion of these mines were closed.
China, being notoriously apathetic towards issues regarding environmental protection, went ahead with development of these mines, then these new consumer markets were created, and the world became heavily dependent on these metals. In recent memory, China has also slowed exports of these rare earths down to a trickle, citing a higher domestic demand as justification for slower exports. So what can the U.S. do to catch up? What can the U.S. do to compete?
The United States has a few options. First and foremost, the rare earths industry has to be propped up again by both the private sector, and the government. Subsidies and other economic facilitators need to be spread across this industry to meet the demand of American’s domestic population. Research into new procurement and processing technology needs to be spurred, and the government has to play a big role in making sure it all happens smoothly. Listen to the scientists!
Second, in order to directly compete with China in the international marketplace, theU.S. can develop the vast reserves of these rare earths that have been found in Afghanistan. Military imperialism is a means to an economic end, and since we have US Army soldiers guarding poppy fields, we might as well develop and put into operation a mining industry in Afghanistan.
Either way, it is imperative for the U.S. to act, and act now. The marketplace continues to grow at almost an exponential rate, and having the underlying commodities which make up the vast majority of that market be heavily controlled by China is not a good strategy.
Yes, we have all been spoiled by technology in recent years, and in all honesty, we all want to continue to be spoiled, and China is the LAST country to spoil America, in the positive sense of the word that is.