Rare Earth Elements and China’s Dominance of the Global Market

Term Paper , 2012 , 27 Pages

Business economics - Economic Policy

Almost twenty years after Deng Xiaoping stated: ‘There is oil in the Middle East, but there is rare earth in China,’ the country controls the REE global supply almost solely. Recent Chinese policies of raising taxes and cutting export quotas combined with its temporary ban on REE exports led not only to steadily increasing prices. Most notably it created uncertainty among companies producing outside Chine whether they will be able to get sufficient amounts of REE in the future and how much this is going to cost. Because it will take several years until Western mining capacities meet Western companies’ demand, some manufacturers in need of REE have already started to relocate their factories to China.

Beijing claims that their policies are dedicated to tackle environmental problems which have been caused by mining REE. However, taken into account that Beijing policies also require Chinese partners for foreign companies that operate within China, Western companies that relocate their facilities may risk handing over knowledge to future competitors. Aware of the consequences that Beijing’s new fondness for environmental issues brings, governments and companies especially in Japan, the U.S. and Europe try to find ways to decrease their dependencies.

This report examines factors that led to China’s dominance on the REE market today and presents some counteractions which governments and companies in Japan, the U.S. and Europe have introduced to mitigate this situation. The two principal findings of this report are: first, because Western mining companies will need time to meet their companies’ demand, the current situation is going to sustain for at least a few more years to come; and second, although China runs the risk of selling off its REE resources abroad which it needs for its own economy at home, it may benefit from the technology transfer in the long run.

Inhaltsverzeichnis (Table of Contents)

• 1. Background Rare Earth Elements (REE)
  • 1.1 Basic Information
  • 1.2 Supply Side
  • 1.3 Demand Side
  • 1.4 Market
• 2. China
  • 2.1 Policies
  • 2.2 Motivation
  • 2.3 Consequences
• 3. Japan
  • 3.1 An Incident over a Fisherman
  • 3.2 Japan's Response
• 4. The United States
  • 4.1 From Self-Sufficiency to Near Complete Dependence
  • 4.2 Public and Private Efforts to Manage the Situation
• 5. Europe
  • 5.1 From One Dependency to Another
  • 5.2 Thinking of Solutions
• 6. Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This report examines the factors that have led to China's dominance in the rare earth elements (REE) market and presents counteractions that governments and companies in Japan, the United States, and Europe have implemented to mitigate the situation. It delves into the supply and demand dynamics of REE, highlighting the unique properties of these elements and their crucial role in various industries. The report also explores the environmental impact of REE mining and processing, shedding light on the challenges of balancing economic growth with sustainable practices.

• China's dominance in the global REE market
• The critical role of REE in advanced technologies and green industries
• The environmental impact of REE mining and processing
• Counteractions by Japan, the United States, and Europe to reduce their dependence on China
• The future outlook of the REE market

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1: "Background Rare Earth Elements (REE)" introduces the concept of rare earth elements, highlighting their unique properties and crucial role in modern technology. It discusses the global supply and demand of REE, with a particular focus on China's dominance in the market.
• Chapter 2: "China" delves into China's policies, motivations, and consequences regarding its control over the REE market. It explores the country's long-term investments in research and development, its advanced processing capabilities, and the environmental challenges associated with its REE industry.
• Chapter 3: "Japan" examines Japan's response to China's dominance in the REE market, including the "incident over a fisherman" that further intensified the geopolitical tensions. It discusses Japan's efforts to diversify its REE supply and reduce its reliance on China.
• Chapter 4: "The United States" analyzes the U.S. situation regarding REE, tracing its shift from self-sufficiency to near complete dependence on China. It explores public and private initiatives undertaken to address this dependency and secure a stable REE supply.
• Chapter 5: "Europe" investigates Europe's challenges in the context of China's REE dominance, outlining the region's efforts to find alternative sources and develop sustainable solutions for REE extraction and processing.

Schlüsselwörter (Keywords)

The central themes and concepts of this report encompass rare earth elements (REE), China's dominance, global supply chain, technological dependence, environmental impact, resource scarcity, geopolitical implications, policy responses, diversification strategies, and sustainable development.

• Author: Anonym (Author)
• Publication Year: 2012
• Pages: 27
• Catalog Number: V184577
• ISBN (eBook): 9783656094326
• ISBN (Book): 9783656094050
• Language: English
• Tags: China, USA, Europe, Japan, REE, Rare Earth Elements, Technology, Science