This article first appeared in the St. Louis Beacon, Dec. 1, 2010 - If you are concerned about global warming or advocate strict adherence to free market principles, you should examine the circumstances surrounding Chinese restrictions on the export of rare earth elements.
The 17 rare earths are mined metals with unique properties that make them essential ingredients of innumerable modern technologies. In most cases, there is no substitute for these key components of computers, mobile phones, military and civilian electronics, radar systems, electric motors, gas turbines and multiple alternative energy options.
For example, the rare earth neodymium is ubiquitous in batteries for electric and hybrid cars. Terbium can reduce the electricity demand of electric lights by 80 percent. And state-of-the-art wind turbines use rare earth magnets that can be as strong as comparable magnets but are 10 times lighter and smaller. Each such magnet requires more than a ton of rare earths.
Because of their many applications, rare earths have been called -- aside from water, food, oil and steel -- the most important non-human resource of a modern economy.
Rare earths have entered our lexicon because China, which produces 95 percent of the world's supply, has taken aggressive advantage of geopolitical benefits implied by its near monopoly. On Sept. 21, it halted rare earth exports to Japan in response to Japan's detention of the crew of a Chinese fishing boat. The Chinese subsequently expanded the export interruption to global markets. These disruptions have been largely resolved, but the longer-term concern is that China has reduced its rare earth export quotas more than 50 percent since 2005 while simultaneously implementing steep export taxes.
Although some Chinese actions have a clear muscle flexing flavor, the reality is far more nuanced because China's exploding economy will double its domestic rare earth requirements in only five years. Thus, geopolitical intrigue aside, production limitations and domestic demand make it impossible for China to continue as the world's monopoly supplier.
The upside of these circumstances is that rare earths are not at all rare.
Despite its production monopoly, China contains only 50 perent of known recoverable rare earths. As recently as the early 1990s, the United States was the global production leader. The downside is that although the U.S. Geological Survey estimates that there are 13 million tons of extractable rare earths in the United States, nearly 20 percent of the world total, we stopped production completely by 2009. Ramping up to anything close to self-sufficiency will be a long and expensive process.
We stopped producing rare earths because extracting and processing them poses expensive technical challenges, because of severe environmental impacts and because government support waned. But mostly, we stopped because of less costly Chinese production and because free markets care little about mundane concerns like national security, energy independence or global warming if there is no profit in caring.
The result is that, just as we are at the mercy of Middle Eastern oil sheiks, our technological infrastructure and green future depend upon Chinese rare earths. In response, we should eschew blame games and focus on the sustainable development of our own resources.
The House of Representatives made a good start through the recent bipartisan passage by a 325 to 98 vote of the Rare Earths and Critical Materials Revitalization Act. The act provides loan guarantees and creates a Research and Development Information Center.
Unfortunately, the bill's $15 million annual budget is grossly inadequate given challenges that include jump starting a moribund industry, developing technologies for recycling rare earths and for their clean extraction and processing, and trying to find materials that can substitute for rare earths.
But the biggest challenge may be eschewing ideology as environmentalists become educated on the importance of these issues and as Republican senators evaluate their response to the affirmative votes of their House brethren.
Environmentalists must assimilate the conundrum that a green revolution not held hostage to domestic Chinese exigencies is impossible without what are today highly polluting rare earth extraction and processing technologies. The pending legislation should be modified to emphasize a cleaner product. ut the clean-up will be imperfect, and compromise will be essential.
And politicians must recognize that efficient as they can be, free markets are amoral profit-oriented entities. They will not mine rare earths or develop recycling and clean processing technologies through eleemosynary impulses. The House bill is a tacit acknowledgment by most Republicans that the renaissance of this vital industry cannot be subservient to unencumbered market forces. But the bill is a half measure at best.
It must have a larger budget and include wide ranging federally financed peer reviewed research grants. It should include tax incentives and carefully crafted direct subsidies that facilitate profits when clean rare earth technologies are implemented. Without such efforts, a timely path to adequate domestic production and recycling and to independence from the Chinese stranglehold is unlikely.
Ken Schechtman is a freelance writer and a professor at the Washington University School of Medicine.