Well the rare earth metals are extremely important in both green technology and electronic technology. Realising this, and with large deposits of rare earth metals, in the mid-nineties the Chinese Government embarked on a policy of making rare earth metals to China as oil is to the Middle East.
They had succeeded as there was a general belief that they had gained a total worldwide monopoly of rare earth metals. China implemented a policy of buying up companies that owned non-Chinese rare earth metal sites until they owned more that 95% of the market. They also started exporting 6% less per annum creating potential short-falls in a market that was growing in demand by 10% per annum.
There were also allegations that if a rare earth site was close to coming on stream the price for rare earth metals would suddenly drop making the site uneconomical and when the site closed the price would surprisingly rise again.
This Chinese Monopoly was causing panic in Japan as they needed rare earth materials to maintain their position as the major manufacturer of ‘green’ as there are now a lot of technologies that can’t work without rare earth metals. Therefore someone having a monopoly on such a key component of our future in helping attenuate climate change is worrying. Currently, China is in effective control of the global supply and it has positioned itself to retain control.
This would render the plans of many Government plans to build a green society meaningless with access to rare earth metals. With China significantly cutting export quotas there would be insufficient supply of rare earth metals for the rest of the world, driving prices up and limiting ‘green’ aspirations unless purchased from China.
There was a wide scale belief that because China dramatically cutting its annual rare earth export quotas it would soon become impossible for any company to produce a wind turbine or hybrid electric car outside China. This would give China an enormous commercial advantage in manufacturing ‘green’ technology.
Consequently, many believe that perceived China’s monopolistic strategy is as follows:
• Give its own high-tech industries a chance to flourish and gain a huge competitive edge over rivals in the rest of the world,
• Force foreign companies to move their high-tech jobs to China to circumvent quotas.
Quite frankly you cannot help but admire how the Chinese have adapted to capitalism and have created this monopoly from under the noses of the rest of the world.
However, this new site in Greenland will redress the balance. It is the world’s largest known reserve of rare earth metals and has the potential to meet at least 25 per cent of global rare earth demand for the next half century and is expected to be able to produce about 50,000 tonnes per year of rare earth-bearing ore by 2014.
Consequently, this Greenland site has the potential to significantly reduce China’s power in the global supply of rare earth metals.
This is obviously very good news for us all – unless of course China purchases the company that plans to develop the site!
