China, Japan tussle over rare earth minerals; hybrid cars, solar panels, wind turbines at stake
Mr. McGuire: I want to say three words to you. Just three words.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Rare earth minerals.
Benjamin: Just how do you mean that, sir?
Mr. McGuire: There's a great future in rare earth minerals.
Japan and China have been rivals since the 1919 Paris Peace Conference left both resenting each other's gains, but a new trade dispute has each nation's cleantech future hanging precariously in the balance -- as well as that of the United States.
The background: a Chinese fishing trawler captain collided with not one, but two Japanese coast guard vessels as he tried to fish in controlled-by-Japan but claimed-by-China waters. (See? Told you it all comes back to the first World War.)
So Japan detained him. China requested his release. Japan refused.
So with a swing of its big economic stick, China has decided to block exports of rare earth minerals, which are used in as diverse applications as computers, solar panels, hybrid cars, wind turbines and guided missiles.
It's hard to quantify just how far the ripples of that decision reverberate around the world, but consider this: China mines 93 percent of the world's rare earth minerals. It's thought that the nation has more than 99 percent of the world's supply.
While China and Japan muck through their communication breakdown, the consequences are felt elsewhere: world supply dwindles, and governments must digest the fact that they're entirely reliant -- yes, as in 100 percent -- on China for key ingredients to some of their most dynamic industries.
Moreover, if the embargo is official, it's a violation of free trade rules under the World Trade Organization.
This isn't China's first time using rare earth minerals as a way to get what it wants, either: last November, the U.S., European Union and Mexico filed complaints with the WTO after it limited the export of yellow phosphorus and other industrial materials.
It should come as no surprise, then, that China already has tight quotas on its rare earth exports.
The natural resource of choice of the 21st century is quickly becoming a political scramble. Already, the House Committee on Science and Technology is reviewing a bill to subsidize the reopening of an American rare earths mine in Mountain Pass, Calif., and with it, an industry.
Further, the House Armed Services Committee has scheduled a hearing on Oct. 5 to review U.S. military dependence on Chinese rare earth elements.
As a densely populated nation of islands, Japan's situation is even more grave -- it relies heavily on imports.
Forget oil and OPEC -- the future is rare earth minerals. (See a modified dialogue from "The Graduate" above.)
Afghanistan knows it. Bolivia does, too. And making matters worse, China's dependability over the years as a global supplier has left other nations without reason to build their own mines -- flat-footed and unable to handle the use of rare earths as a geopolitical pawn.
Industry analyst Jack Lifton sums it up nicely, as quoted by Alexis Madrigal in The Atlantic:
We really are foolish in America. We've shut down an industry that's strategic and critical, and all in the name of low cost. Now we're surprised that the consequences that are obvious in doing this have now come back to bite us. I'm not surprised, and neither is anybody else in China.
Illustration: Fisker Automotive
Related on SmartPlanet:
- The U.S. is sitting on a rare earth stockpile. Can it help against growing tech demand and a looming shortage?
- Lithium batteries will dominate short-term smart grid storage, report says
- Afghanistan: the 'Saudi Arabia' of lithium?
- Bolivia exports lithium?
- Lithium, the new oil
This post was originally published on Smartplanet.com