Rare earths give China immense (and worrisome) influence (3/3): Rare earths demand

In this particular context of Chinese quasi-monopoly, the risk of an economic disaster is likely if this supply was to be put to the test. And this is precisely what has been happening for several years, and more explicitly since 2010.

Indeed, China has the will to move its workforce skills from upstream to downstream of many industrial sectors, and consequently has moved its rare earths production from simple mineral concentrates to industrial components such the magnets and phosphors to today finished products (computers, electric motors, mobile phones). Also, since 2007 it has protected its lanthanides domestic supply.

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Rare earths give China immense (and worrisome) influence (2/3): Rare earths production

To understand the stakes related to rare earths, we must address the myth of their rarity. Indeed, they are all more abundant than gold or silver in the earth’s crust, and their name actually reflects a relative rarity in minerals in which they are present (that is to say in low concentrations).

For example, lanthanides can be found in over 200 minerals, but only five of them have sufficient concentrations to be economically viable.

The U.S. Geological Survey (USGS) estimates world reserves to be around 114 million tonnes, i.e. more than 800 years of consumption if the level of current demand is maintained. These reserves are spread between China (48%), CIS (17%), the U.S. (11%), India (3%) and Australia (1.4%). The remaining 19% are divided between Canada, Greenland, Malaysia, Brazil, South Africa, Malawi, Vietnam, Thailand, Indonesia and a handful of other countries.

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Rare earths give China immense (and worrisome) influence (1/3): Rare earths usage

The stakes are significant: the rare earth elements have become key industries in developed countries, actors essentials of a multitude of industrial products, including applications designed to have their claims explode over the coming years, such as electric cars and wind turbines.

The supply of these precious minerals is highly constrained due to an incredible concentration in China, there will be no longer enough to satisfy everyone. And as China’s high-tech industries grow, supply issues will likely get only worse.

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