October 20th, 2010
06:37 AM GMT
(CNN) – In the race for higher technology, companies in North America, Japan and Europe are leaps ahead of China.But those companies –- and the countries that depend upon them –- are waking up to the fact that China has a lock on rare earth metals required to make advanced technologies, such as lasers and hybrid car batteries.
Japan found that out in September when China announced plans to reduce the amount of rare earth metals exported to Tokyo during the height of tensions between the Asian powerhouses over sovereignty of islands in the East China Sea. China said the decision was due to environmental reasons.
Now a story in The New York Times suggests that China is also reducing the amount being exported to the U.S. and Europe. China has denied the report.
Regardless, the incidents reveal a strange symbiosis in the global market –- makers of the defense products for the U.S. military rely upon raw materials from China.
“The Americans in their wisdom have strengthened the battle tanks with armor that requires rare earths from China –- nowhere else in the world can it be found,” Chris Hinde, editorial director of Mining Journal, said last week at a conference in Hong Kong.
“All the major metals face long-term problems because there are less discoveries being made. You can expect metal prices to keep going right up. But right now, the real excitement is with rare earths,” he said.
If you recall from high school chemistry, the rare earth metals are the second last line shown on the Periodic Table of Elements that hung on the classroom wall, ranging from Lanthanum to Luteium –- 17 in all.
“A lot of rare earths and other ‘exotics’, as they’re called, display peculiar properties and are used in specialist applications like mobile phones and laser technology,” Hinde said.
Ninety-five percent of all rare earths currently come from China.
“And the non-Chinese deposits of rare earths the Chinese have tended to try to buy up as well,” Hinde said. “China controls the rare earth market.”
That promises interesting days ahead for companies that depend upon rare earth metals, and it gives China a rare bargaining chip.
Will China’s unique position to restrict these minerals constitute unfair trade practices with the World Trade Organization? On the other hand, what nation has the right to dictate what China does with its own natural resources?
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