@Risk

Granted, most of us don’t realize it, but we’ve all come to depend on a handful of rare earth elements (REEs ) –all of which are vital to a variety of today’s innovative technologies.  For example, lanthanum is a major component of hybrid car batteries. Neodymium is used to manufacture wind turbines. Today’s low-energy light bulbs need terbium. ..

All in all, there are about 20 REEs that are critically important for a wide range of new technologies, and guess where most of these ores are mined? China.

In fact, Chinese mines account for the vast majority (up to 97 percent, by some estimates) of the global supply of REEs.

Sound like a recipe for supply chain trouble to you? It does to me –and even more so now that China may be trying to significantly limit exports of these valuable compounds, as reported over the weekend in The Independent.

Already, China has gone from exporting 75 per cent of the raw ore it produces to shipping just 25 percent, and industry sources told The Independent that China could halt shipments of at least two REEs (terbium and dysprosium) as early as next year. By 2012, these sources believe it is likely that China will be producing only enough REE ore to satisfy its own growing domestic demand.

Of course, that means Western countries are facing a potential crisis, and many are now scrambling to find alternative sources of REEs. For instance, according to the article:

“Both Western countries and China are already dashing to secure new sources of rare earths. Last year, Australian regulators imposed restrictions on the purchase of one of the country’s richest rare earth mines, causing a Chinese company to walk away from a £400m deal to buy its operator.

European and North American companies are meanwhile racing to open or re-open mines in Canada, South Africa and Greenland amid calls in the US for government-backed loans to secure supplies of some REEs which are used in the guidance systems of missiles and laser-guided munitions. Toyota has effectively bought its own rare earth mine in Vietnam by signing an exclusive supply deal.”

Beijing has denied that it plans to reduce trade in valuable rare earths. But, stay tuned. This is a developing story that is certainly worth keeping on your radar screen.