14 March 2012

Rare earth metals—the plot thickens

In my post of March 12th about peak everything, I mentioned that China, which produces 97 per cent of the rare earth metals, elements critical to the production of many hi-tech products, is becoming increasingly skittish about exporting these valuable commodities. Yesterday the CBC reported that the United States, the European Union and Japan have filed complaints with the World Trade Organization about China's limiting of these exports, charging it with unfair trade practices. The U.S. claims the export restrictions give Chinese companies a competitive advantage by providing access at a cheaper price while forcing American companies to manage with a smaller, more costly supply.

The Chinese defend their quota system on the basis of conserving scarce resources and limiting environmental damage. Mining, refining, and recycling of rare earths have serious environmental consequences if not properly managed and have caused major environmental damage in parts of China.

The rare earths occur in many parts of the world (China only has 30 per cent of the known deposits) but are often too dispersed to justify economic mining. Nonetheless, we can expect to see a scramble to discover new deposits and open old mines elsewhere. As is the case with new oil sources, such as the tar sands, these new rare earth sources will quite likely be more expensive to exploit and more environmentally destructive. Such is the race to the bottom of resource supply.

In this case, the battle for scarce resources may be resolved peacefully through the World Trade Organization, but ultimately, as resources deplete ever further and nations become ever more desperate, we may begin to see less civilized ways of settling such disputes.

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