Modern technology plays a pivotal role in almost every aspect of our lives. Computers assist with work and play; robots replace manual labor; DNA testing can save innocent people on death row from execution.
China's control over rare earth elements threatens global supply chains. Previous administrations' efforts to challenge China on REE markets and build domestic industries were ultimately in vain.
The 17 rare earth elements, located near the bottom of the periodic table in Lanthanide group, quickly gained scientific and geopolitical importance when scientists developed methods of extracting them from their ores. Although called rare earths, these metals can actually be found worldwide and far from scarce; their name comes from when they were initially discovered at turn of 18th century as components of complex oxides that were considered unique at that time.
Once rare earths were isolated, their unique combination of atomic and magnetic properties enabled a host of innovations. Of particular note is neodymium and praseodymium's capacity to create strong magnets used across everything from wind turbines to car motors; each magnet alone can generate several megawatts of power from just one unit!
Bell Labs pioneered several advancements during the 1990s that greatly reduced cost and made possible long distance data transmission, such as producing erbium-doped fiber amplifiers that allow longer transmission distances via internet data transmission. Other advances included energy-efficient displays on smartphones utilizing vibrant colors created with energy-saving phosphors like yttrium or erbium phosphors.
Rare earths may seem abundantly available around the world, yet they remain an invaluable but finite resource. When one country monopolizes production and restricts exports, prices quickly skyrocket causing manufacturers to seek alternative sources, create products requiring less of them or abandon investing altogether in rare earth elements.
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China's efforts to monopolize rare earth elements has caused other countries to seek alternative sources for these metals; however, mining these metals involves environmental concerns, including radioactive elements that may leach into water supplies as well as toxic byproducts that might occur as by-products of production.
Due to this trend, some companies are exploring alternatives to mining in favor of recycling instead. Although still in its infancy, recycling could potentially recover and recycle rare-earth permanent magnets from hybrid car motors, fluorescent light bulbs, and rechargeable batteries; thus reducing demand for raw materials.
United States lawmakers and government agencies are taking steps to lessen their dependence on Chinese rare-earth exports, with President Biden signing an executive order last February to identify any gaps in U.S. supply chains for medical devices, chips and other critical resources. Furthermore, Lynas Corporation of Australia operates a separation plant in Malaysia; Lynas received $30 million from the Pentagon to build an advanced processing facility in Texas.
China's firm grip on the rare-earth market won't be entirely offset by these efforts; rare-earth minerals have increasingly become bargaining chips in international trade negotiations; an example is China's 2010 ban of rare-earth exports to Japan; this policy was only lifted after being resolved through negotiations with the World Trade Organization and after finding massive deposits of yttrium, europium, and terbium on the ocean floor, further complicating Chinese efforts at controlling this sector of trade.
Rare earths may seem scarce at first glance, but their relative abundance in Earth's crust makes their extraction difficult and time consuming. Finding them all mixed up together as ore can take years of processing; typically containing complex minerals such as apatite, cheralite, eudialyte loparite secondary monazite yttrium sulfide and xenotimes can all contain rare earth elements in various amounts.
Metals have become indispensable components of modern technology, making it hard to imagine life without them. From neodymium-iron-boron magnets that power electric motors in cars to light bulbs and TV screens - rare earths are present everywhere we turn in our daily lives. And as our world transitions towards more sustainable economies, the demand for rare earths is expected to increase accordingly.
At present, investing in rare earths is challenging for individual investors due to the large mining companies' control of most physical markets and no exchange-traded funds (ETFs) offering exposure. If you want exposure to this sector though, investing in companies which mine and process these materials might be an option.
Australian Securities Exchange (ASX) companies involved with rare earths exploration, mining, production, refining or distribution are considered ASX rare earths stocks. Some robo-advisors offer environmental, social and governance (ESG) portfolios which contain exposure to rare earths companies.
Rare earth elements form key components in many of today's vital technologies - from smartphones in your pocket to magnets that power electric vehicles. But Beijing's control of rare earth production has left much of the rest of the world scrambling for supplies, as countries around the globe seek ways to diversify and secure their supplies independently.
Chinese dominance may have reached its zenith in 2010, when prices surged and mining companies in the US, Australia, and Canada began reassessing old rare earth projects as well as exploring new ones. Manufacturers were then forced to engineer products requiring less rare earth elements or substituting for them with cheaper ones (Tesla models now use permanent magnets made with yttrium instead of more costly neodymium), oil refiners discontinued using lanthanum in oil refining efficiency improvements, and glassmakers stopped using cerium polishing services - making Chinese control over rare earth resources impossible to maintain.
The Biden administration is taking steps to reclaim America's role in an essential supply chain used for battery manufacturing, clean energy technology and national security applications - rare earth minerals. But attempts to compete with China for these resources and rebuild domestic industries have been hindered by political battles, trade tensions and geopolitics - now with renewed urgency, America is making efforts to become an international leader in these technologies; investing in them now could reap dividends for years.