Abstract: This paper analyzes and evaluates the emerging issue of rare earth elements (REEs) as a critical component of U.S. foreign policy and a potential source for international conflict. REEs are essential in the production of many high-tech and valuable products, from computers and telecommunications to military equipment and hybrid cars. REEs are in relative short supply for most countries in the world, and China holds a virtual monopoly, producing 97% of REEs. The situation is becoming increasingly sensitive to the U.S. and world as China rises up and becomes more competitive and a potential hostile power in the future. The U.S. government and corporations are declaring very publicly that there must be a major policy effort to obtain and secure large quantities of REEs for the long term. This paper examines the latest efforts by the U.S. to identify, extract, and protect REEs. It reviews briefly the history and basic characteristics of REEs and then brings everything up to date. It highlights the new public relations attempts at informing/warning the public about REEs. And, it analyzes the current trends and future expectations regarding REEs. The paper concludes with a number of policy recommendations and suggestions for future research.
Rare earth elements (REEs) are a new political phenomena. They have emerged unexpectedly on the scene in dramatic fashion. REEs are the essential ingredients for advanced and future technologies, prosperity, and weaponry. Political scientists and other scholars have yet to analyze and evaluate this issue in any theoretical or empirical sense. The media and think tanks are increasing their coverage and prominence of the REE issue. More experts are delving into the new equation. Butmost of the reports and approaches are just initial assessments and basic information on the topic, although very technical. No strategic vision or game plan has been laid down in any comprehensive manner. No models, statistical equations, or theoretical applications have been developed. This paper addresses a number of these issues. It first examines the REE issue from its most basic elements and then proceeds to identify the various REE deposits and locations. It then evaluates the economic impact of current REE production and future trends, primarily from a U.S. perspective. It applies a number of theoretical approaches to the REE issue, including Realism and Liberalism. It offers both comprehensive national and international endgames, as well as methods to achieve these goals. It stresses the need to develop a strong REE policy as soon as possible, especially with the rise of China and its virtual monopoly of REEs. The paper concludes with a number of policy recommendations and suggestions for further scholarly research.
The Basics: Natural Elements, Deposits and Locations
Rare earth elements are the seventeen (17) elements in the periodic chart (21), (39, (57-71) that have become increasingly important to today's advanced economy and society (see appendix for the complete list and descriptions). REEs are used in computers, touch-screen cell phones and other electronics, satellites, lasers, regular and hybrid cars, aircraft, medical devices, televisions, nuclear facilities, military weapons, including stealth technology and precision guided missiles, petroleum refining, fiber optic cables, miniaturization of many technologies, optics, fuel cells and batteries, energy efficient fluorescent lamps and carbon arc lighting for the motion picture industry, and many other current and future products being made. REEs, clearly, are essential components for modern living and a wide variety of high-tech products. They are a billion dollar industry. Trillions of dollars worth of products require REEs. There are no alternatives or artificial substitutes for REEs, although scientists are making every effort to find them. (1) REEs are concentrated in the earth's crust in substantial quantities, but they are widely dispersed and in smaller quantities near the earth's surface. The first REEs were discovered in Europe around the early 19th century and then more were found sporadically throughout the rest of the century into the 20th century. Scientists identified the unique minerals and they tested them in a variety of ways. REEs were not found to be useful in most cases until around the mid-20th century and the large-scale emergence of the advance industrialized period in many countries. REEs, then, became the quintessential component for many new products, especially high-tech products that have been developed from the 1980s to the present. Many products like the iPhone and iPad require REEs. Green products like solar panels, wind turbines, and electric cars need REEs. The 21st century economy is becoming an economy that runs on REEs. (2)
The primary suppliers of REEs have changed over the decades, based upon the discovery, demand, and pricing of REEs. Until 1950, Brazil and India were key suppliers, although the supply and demand were relatively low in quantity, and the minerals were very close to the surface and, thus, easily accessible. South Africaemerged as a major supplier in the 1950s as new REE deposits were found. South Africa's mining industry certainly benefited from this unexpected development, as much of its industry was geared originally towards diamonds and other precious minerals and raw materials. The United States, thereafter, discovered its own major source of REEs in a Mountain Pass, California mine (in the upper Mojave Desert) during the 1960s and became the world's leading supplier into the 1980s. At the present time, all of these mines remain in existence and new ones have been developed in these countries and others, including Australia, Canada, Russia, Vietnam, and even Greenland (Denmark). Notwithstanding the many REE deposits throughout the world, China has been the undisputed primary source of REEssince the 1990s, supplying more than all the world's REE mines combined. (3)
China discovered extremely large and accessible REE mines throughout its territory, especially in Inner Mongolia (the Bayan Obo deposit, mostly), during the 1980s and 1990s. The great growth and potential of the computer industry among other new technological products encouraged the search and expansion of REE mining in China. Furthermore, China's movement towards a more capitalist market and opening up to foreign companies and investors, paved the way for the quick and massive development of REEs. In 1992 Chinese leader Deng Xiaoping declared "There is oil in the Middle East; there is rare earth in China." (4) The Chinese government made every effort to apply REEs to manufactured products, especially made in China. Moreover, China undercut significantly REE prices on the world market in order to drive out of business or reduce substantially foreign companies and mines dealing in REEs (which, nevertheless, was good for consumers but very bad for non-Chinese competitors). Within the last 20 years, China has become the largest supplier of REEs in the world, providing 97% of the global market. China, however, is estimated to have only around 30% of the world's proven REE reserves. Thus, old and new REE mines beyond China can still replace a large percentage of the China's current monopoly, but the low REE costs, intense competition and locations of high-tech manufacturing firms have been key factors up to now in discouraging an international and corporate market challenge to China.(5)
The Economic Impact
The U.S. Geological Survey (USGS) estimates that there are 110 million tons of REE proven reserves throughout the world. China has approximately 36 million tons of estimated reserves, Russia 19 million, the U.S. 13 million, Australia 5 million, and India 3 million, for a total of 76 million tons. The rest of the REE reserves, around 34 million, are locatedin many other areasthroughout the world. Interestingly, it was reported recently that Japan just discovered the largest REE deposit imaginable at around 80-100 billion tons, which would be nearly a thousand times larger than all the pre-existing REE reservescombined. (6) Scientists and others are in the process of verifying this discovery, which just happens to be the first major find under the ocean floor. If confirmed, then this would alter greatly the REE equation and enable Japan to become a major supplier of REEs. Until now, REEs were found around mountain ranges and other typical mining sites. The new Japanese find indicates that large quantities of REEs can exist in the seabed and, possibly, under any major body of water, such as the Great Lakes, which means a whole new realm of search and discovery. In fact, there are a large number of Canadian REE sites around the Great Lakes region, which suggests that there could be potential REE sites on the American side of the Great Lakes and maybe even underneath the Great Lakes. (7)
In 2010 there were 133,000 tons of REEs consumed by international industries, up from 120,000 tons in 2009. In 2008, there were 74,000 tons of REEs consumed. Thus, there has been a significant increase in REE consumption in the last few years. It is estimated that there will be approximately 170,000 tons needed in 2015. (8) China sells 97% of the world's REEs, and its domestic industries use about 60% of them (domestic being Chinese and non-Chinese multinational corporations). This means that approximately 37% of China's REEs are exported. But this may change drastically in the next couple of years. The Chinese government has attempted to "encourage," oressentially coerce, foreign manufacturers to relocate to China by imposing very high export tariffs up to 25% as well as value added taxes (VAT) up to 17% on REEs (this is one of the reasons why fluorescent light bulbs with REEs, for example, have risen significantly in price in the last year). China claims to be protecting its supply and the environment...