Challenging China in Rare Earth Mining first attracted my attention because I did not know what rare earth mining is. The story begins with a description of a mine in the US that Molycorp Minerals wants to reopen.
Rare earth elements include neodymium, europium, and cerium and are important for the production of many high-tech applications for military hardware, wind turbines, color televisions, and hybrid cars. Demand has risen for these elements over the last few years, and China–with their low-cost labor and low concern over environmental damage–has absorbed most of the market, but–
China raised concerns by reducing its export quotas for raw rare earth elements from 2005 through 2009, forcing foreign companies to buy more Chinese-made products containing or manufactured from rare earth elements. A year ago, the Chinese government caused further alarm for Western corporations and governments by proposing a ban on the export of 5 of the 17 rare earth elements, although no ban has actually been imposed.
This has driven prices higher and governments are promising subsidies for new mines. China’s strategy may backfire eventually, but I believe they have gained market share in some of this high-tech production, like the high-speed trains and wind turbines that we have written about before.
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