China’s Rare Earth Metals – Environmental Protection or Protectionism?

China’s share of the discovered Rare Earth Metals (REMs) in the world is staggering.

img courtesy NYTimes (click to view article)

Unlike other resource rich countries, China’s REMs mining are nearly completely controlled by State Owned Enterprises and private Chinese corporations.  China has near total control of the world’s REMs supplies, so when they change their policies, sparks fly.

The NYTimes recently covered China’s new plan for building Electric Vehicle infrastructure which cites numbers that, if you’re not used to talking about china, are simply staggering.

Few details of the plan were released. But Beijing said that over the next three years, 500,000 energy-efficient vehicles would reach the market each year and that more-efficient vehicles would soon account for 5 percent of passenger car sales in China. This year, analysts expect vehicle sales in China to reach about 17 million.

That’s a lot of batteries.  That’s a lot of Lithium, amongst other rare earth metals. The EV plan is in addition to the NDRC’s newest 10 year renewable energy plan, which charts a course even more aggressive than the announced EV plan.  Nearly every popular type of renewable energy requires REMs in significan amounts in order to produce power, amongst other vital technologies.  This is not an old, dying industry problem — this is electric cars, wind turbines, solar panels and scientific devices.  This is Fluorescent Lightbulbs and the batteries in nearly every digital device.

Paul Denlinger pointed me (and the rest of his twitter followers) to Jack Lifton’s analysis ofChina’s Renewable Energy 10 year plan and the above mentioned EV plan.  Lifton is clearly a stately REMs expert, but doesn’t produce much more than simple calculations of how much (and how many) REMs the NDRC 10 year plan & the new EV plan will need in order to meet its goals.

speakers at the Chinese Society for Rare Earths 6th Annual Rare Earths’ Summit, stated that a goal of the next two five-year plans, to be completed in 2020, was to have 330 GW of wind-turbine-generated electricity installed by that time. The speaker pointed out that this would take 59,000 metric tonnes of neodymium, calculated as 28% of the rare earth permanent magnet alloy, neodymium-iron-boron, since each 1.5 MW wind turbine generator will require one tonne of rare earth permanent magnet alloy.

In short: there isn’t enough to go around.  Nations, especially Japan, are already angry with China about cuts to export levels.  China’s domestic demand is high and rising, Beijing is claiming they need to reduce REMs exports by 72% to protect the environment.  Surely this is not the whole story, but the environment sure could use some protecting.

The potential consequences of a REMs supply squeeze are wide and various, however the cynic in me can already hear the shouts from WTO member nations as Chinese firms corner every REMs-dependent market as their supplies are subsidized and non-Chinese firms are forced to fight over the dregs on the open market.  The non-economic costs to the renewable energy community may be vast as well, when those who were unaware of the sector’s dependence on REMs come to terms with the fact that the very things we need to run the world on the Sun and the Wind still need to be extracted from the Earth, and are in finite supply.