The strategic place of rare earth elements in military and consumer high tech hardware

“Rare earth” elements (17 elements (found in the periodic table in the second to the last row plus two others in the 3rd column) are not rare as they exist fairly abundantly everywhere on the earth’s surface but in concentrations that make them difficult to extract economically. Their chemical properties lead them to be:

“critical to hundreds of high tech applications, many of
which define our modern way of life. Without rare earth elements, much of the
world’s modern technology would be vastly different and many applications would
not be possible. For one thing, we would not have the advantage of smaller sized
technology, such as the cell phone and laptop computer, without the use of rare
earth elements. Rare earth elements are also essential for the defense industry
and are found in cruise missiles, precision guided munitions, radar systems and
reactive armor. They are also key to the emergence of green technology such as
the new generation of wind powered turbines and plug-in hybrid vehicles, as well
as to oil refineries, where they act as a catalyst.”

according to a report by Cindy Hurst.

Everything from cell phones to highly sophisticated military equipment, and green technologies such as electric cars and windmills need these elements. And their extraction and production are controlled by the Chinese. To the tune of 97% of production.

That is a situation which has arisen through a combination of long-range planning by the Chinese, who early saw rare earth elements to be as important as oil and a capitalistic short term-thinking. The Chinese were able to see the rare earth elements cheap and thereby drive away the competition who could not compete. The Chinese have had the field fairly well to themselves for the last twenty years.

The Chinese has restricted the amount of these elements that they release to the world’s markets. This is party done to drive up the cost of the product and partly done to achieve full control over not only the excavation and production of the product but also to develop industries for the use of rare earth in finished products.

This is not a strategy which comes from a central leadership but is a result of a market for these materials which is expanding so fast that the Chinese must use much of its own production in its own industrial efforts.

An illustrative story:

Between 1965 and 1985 the U.S. had control over half of the production chain around these elements. The Mountain Pass mine in California supplied for example Magnequench in Indiana, a General Motors daughter company that made magnets of neodym for use in cars. As the Chinese took over control of the market through its pricing structures, the Mountain Pass mine faced reduced profitability. Two Chinese companies, together with an U.S. investor, bid for Magnequench. The U.S. approved the sale upon the condition that the company remained in the U.S. for five years.

Once the five years were up, the Chinese took apart everything, fired the workers and shipped it all to Tianjin in China. Today there is almost nothing left of the sector in the U.S. Other countries have moved their rare earth operations to Tianjin as well.

The U.S. military has made efforts to awaken Congressional members and other governmental officials to the importance of these elements, without which the availability of such things as navigation systems, radar systems, lasers and satellites would hardly be available. Already the Dept. of Defense has uncovered delays in military projects due to a lack of certain rare earth elements. And the demand will increase as new products are developed both militarily and commercially.

This post is based on an article in Le Monde Diplomatique which LSW read in Norwegian and could not find in English. The author, Olivier Zajec, saw in the rare earth story an example of the results of the difference between long rang planning and short term capitalistic profitability.

1 comment to The strategic place of rare earth elements in military and consumer high tech hardware

  • Roxy Osburne

    Immediately after being inadvertently hit with an opposing player’s elbow in the lip while playing basketball with family and friends, our President received TWELVE stitches currently administered by White House Medical Team. They were done in the doctor’s office positioned on the ground floor in the White House.I wish he will take his offense to Congress. He’s been enjoying defense from the Republicans for two years. I voted for him because I believed he had game.

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