China’s Rare Earth Metals Monopoly: Does It Undermine U.S. Security?

China’s Rare Earth Metals Monopoly: Does It Undermine U.S. Security?

Rare earth metals are chemical elements which are widely unknown to the general public but nevertheless can be found in everyday life. They are critical components of digital cameras, rechargeable batteries and magnets, of surgical lasers, polishing powders and military tanks. Even though their name suggests differently, they are not specifically rare but they often only exist in small deposits scattered over the globe which makes mining often fairly unprofitable. From 1986 onwards China established itself as the biggest producer of rare earth metals with by 2010 supplying 97% of world demand (Humphries, 2011, p. 13). In the past five years prices have been seen to increase tremendously and during the Senkaku boat collision incident, China imposed a trade embargo for rare earth metals against its opponent Japan. The question is to what extent China is going to use its dominant position in the future, specifically in regard to one of the biggest rare earth metal consumer, the United States. In the following the question whether China’s monopoly is indeed a serious threat to U.S. security will be answered. Therefore, first a detailed definition of rare earth metals and their applications and a historical overview will be given. Thereupon, it will be shown that China’s monopoly is indeed a security issue by a review of the relevant body of security literature, specifically the Copenhagen school approach. Afterwards the possible solutions will be examined.

The term rare earth metals (REM)^[1] designates a family of 17 elements with chemical similarities consisting of the so-called lanthanoids (atomatic numbers 57-71) and the two elements yttrium (39) and scandium (21) (Britannica, 2012). A difference can be made between light and heavy rare earth metals: Heavy rare earth metals are all the elements from the lanthanoids with the atomic numbers 63 to 71 and are generally more valuable and less abundant (Love).

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Figure 1 : Periodic table with light and heavy rare earth metals^[2](Avalon Rare Metals Inc.)

Apart from promethium which is not detected in nature, all REMs can be found in the earth crust virtually everywhere, but they are also in meteorites, on the moon and the sun and they are often bounded as a mixture in various minerals and rock formations. As far as it is known, the largest reserves can be found in China, over 50%. Other reserves are listed in the following pie chart from the U.S. Geological Survey from 2011: Abbildung in dieser Leseprobe nicht enthalten

Figure 2 : Estimate of Global Rare-Earth-Oxide Reserves Worldwide (U.S. Geological Survey)

Apart from cerium and lanthanum which were already used earlier for gas lamps (“Cerium (Ce)”; “Lightning”) it was not before the second half of the 20th century that rare earth elements were actually discovered for industrial purposes. Today, their application is completely varied and they found applications as catalysts, in the glasses and metallurgical industry and in the television industry (Britannica, 2012). Furthermore, they are not only important for businesses but also for the military which needs them for example for tanks, guidance systems and radiation detection equipment (Grasso, 2012, p. 5-6). In 2010, the world demand for all rare earth elements was around 136,000 tons as estimated by the Congressional Research Service (Humphries, 2011, p. 3).

In the last ten years, REMs became in particular important for two industries: the information and green technologies. REMs are for example applied in the production of iPods and mobile phones. Furthermore, wind turbines, rechargeable batteries and energy-efficient light bulbs make use of various REMs (Humphries, 2011, p. 6). However the extraction process is far from green: The mining requires a lot of caution because the usage of harmful chemicals during the extraction process and radioactive by-products can cause vast environmental damage. If the wastewater is not safely disposed surrounding farmlands and water sources can be polluted (Levkowitz and Beauchamp-Mustafaga, 2010, 6). The following table shall give an overview of the abundance of all naturally occurring rare earth metals (Scandium belongs to neither group), separated by light and heavy plus their industrial and military use. Italic indicates that the supply of the element is seen as critical in the short as well as in the medium term.

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Figure 3 : Abundance of naturally occurring rare-earth elements and their commercial applications (Britannica, 2012; Kingsdale, 2009; “Ex China reserves“, 2009)

It can be seen that the four most demanded elements are also the ones for ewhich the supply is seen to be critical. For the United States, REMs are especially important for the production of catalysts (60% of demand in 2010). Other applications are wide-spread (Humphries, 2011, 5), it has however to be noted that the U.S. Department of Defense accounts for less than 5% of the U.S. overall consumption of REMs (Ratnam, 2010) which would imply that a shortage of rare earth metals would rather affect industry instead of causing a direct problem for national defence.

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^[1] Rare earth metals are also called rare earth elements, rare earths or rare metals; the names will be used interchangeably in this paper. Rare metals is a common term as well but will not be used to avoid confusion with other rare metals like caesium and lithium which will not be discussed in this paper.

^[2] Scandium has been omitted as not all researchers consider it to be a rare earth element.

* highest demand