Rare earth metals have special properties that make them important for technologies like electronics and clean energy. They are mined primarily in China, which controls over 95% of global supply. This gives China power over price and allows it to leverage its monopoly for political gains. While important for technology, rare earth mining has negative consequences like human rights issues and environmental damage. Many countries are concerned about relying so heavily on China as the main supplier.

2. • What are Rare Earth Metals?
• Where are they Mined and Produced?
• Why are they Important?
• Rare earth metals supply chain
• VRIO Analysis
• China’s Monopoly
• Global and Policy Implications
– Trade disputes
– National defense
– Human rights atrocities & black markets
– Clean energy technologies
• Q & A
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Agenda

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What are Rare Earth Metals?
Rare Earth Metals (REMs) are a group of elements with special
magnetic, electronic, and catalytic properties that are widely used
in the production of complex engineered systems.
– Enabling devices that weigh less, are smaller, and more powerful
– Technically, not “rare” however, it is hard to find them in concentrations
that are commercially viable to exploit
* There are 17 rare earth elements – 15 within the chemical group called the lanthanides plus yttrium and
scandium

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Where are they Mined and Produced?
Source: European Commission http://ec.europa.eu/commission_2010-2014/tajani/hot-topics/raw-materials/
Production concentration of critical raw mineral materials

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Why are they Important?
Source: peak resources limited http://www.peakresources.com.au/rare-earths/uses/clean-energy

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Oh yeah…
• also used in the production of; batteries, cell phones, iPods, computers,
bicycles, cars, night-vision goggles, cameras, dental appliances,
fluorescent lamps, wind turbines, x-ray, aircraft parts & jet engines,
fiber optic cable…even toothpaste & hairbrushes!
Why are they Important?

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Developing a new mine, including prospecting, siting, permitting and construction, can take a decade or more!
Supply Chain

8. • Value
– Extremely valuable, as main ingredients in highly profitable industries,
such as petroleum and technology.
• Rare
– Only found in a few countries in commercially viable quantities for mining.
Cannot be synthetically produced.
• Imitability
– No inorganic substitutes, and there are many factors that limit the
development and production of REMs.
• Organization
– Mining is mainly performed in poor countries, which have limited
regulations and environmental protections. Exploitation and other
negative externalities are present.
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VRIO analysis

9. • Supplies 95-97% of Global Demand
• Largest REM Consumer
• Manufacturing is Growing in China
• Consolidating
• Establishing Stockpiles (reduce volatility)
• Power to Control Price
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China’s Monopoly

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Trade Disputes

11. • Senkaku Islands
– The islands are located near rich fishing grounds and potentially huge oil
and gas reserves
– In 2010, china cut off exports of REMs to Japan for 2 months, crippling
Japan’s high-tech manufacturing
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Trade Disputes

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National Defense
• National Security
– REMs are critical in the production of weapons & aircraft
• Foreign Dependency
– There is both economic and national security concerns over
dependence on foreign sources
• Home Industry Argument
– The united states was once self-reliant in domestically produced
REMs, but over past 15 years has become 100% reliant on imports,
primarily from china, because of lower-cost operations
• EPA & lawsuits have also hindered domestic production

13. • Poor countries and their citizens are exploited by the mining of
REMs
– No reinvestment in local communities
– Poor health, living conditions, wages
– Safely concerns over mining practices
– Destruction of environment – strip mining employed to extract
oxides
– Contamination of ground water supplies
– Black market operations that funnel money to militant groups
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Human Rights Atrocities & Black Markets

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Human Rights Atrocities & Black Markets

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Children Soldiers
• Democratic republic of Congo (Zaire)
– Mines the majority of the world’s coltan, which when processed is
the main ingredient in electronics equipment
– Substantial value and easily mined by hand. Also exploited by
Rwandan and Ugandan militia groups.
– UN estimates 15-30% of armed forces are children

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Clean Energy Technology

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REMs used in Clean Energy Technology

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But, how clean?
• Significant environmental damage caused by mining and
production of REMs used in production of alternative energy
sources
– Open pit mining
– Toxic ponds (tailings)
– Byproducts pollution – air, water & ground
– Very limited recycling of REMs in products
• Many applications of REMs result in very low concentrations in
scrap, making recycling difficult & expensive
• The truth is, clean technologies are not necessary clean and
come at a huge expense

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Recycling of REMs

20. • REMs directly affect the competitiveness and national security
interests of the united states
– The slightest shift in exportation can cause severe economic and
security concerns
• Prices will remain controlled by china’s monopoly
– Not only do they control price and distribution, but they have
exercised this power for political gains
• REMs are the next crucial resource
– REMs are a critical element in the refining process of crude oil, as
well as, critical in electronics & military industries
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The bottom line

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Questions?