The devil is in the details. We’ve all heard the saying, and we know what it means. It’s great to have a big picture and a bold plan, but getting the details and execution right ensures our success.
As the U.S. and other Western countries pursue a future in which clean technologies and renewable energy will play integral roles in economic growth, industrial strategy, environmental sustainability, and societal wellbeing, the details will be increasingly important.
Here’s a detail that’s been overlooked until recently: China produces more than 95 percent of the global supply of rare-earth metals. Some reports suggest that China controls, through ownership of foreign sources as well as those on its own territory, nearly 100 percent of the global market. That’s an important detail, because rare-earth metals are essential ingredients in a wide range of technology products.
Rare earths are integral to the development and manufacture of a wide range of technologies and products used in medicine, consumer electronics, mobile phones, computer networking, data storage, and — last but not least — cleantech (wind turbines, photovoltaics, HVEC batteries and engines, among others).
Without an adequate supply of rare-earth metals, or suitable substitutes for them, the future of cleantech (and many other kinds of technology, too) is compromised.
All of which explains why the U.S. Department of Energy (DOE) yesterday issued a request for information (RFI) pursuant to development of “its first-ever strategic plan for addressing the role of rare earth and other materials in energy technologies and processes.” The purpose of the RFI is stated clearly:
The purpose of this RFI is to solicit feedback from industry, academia, research laboratories, government agencies, and other stakeholders on issues related to the demand, supply, use, and costs of rare earth metals and other materials used in the energy sector. DOE is specifically interested in information on rare earth elements (e.g., lanthanum, cerium, neodymium, terbium, europium, samarium, dysprosium and ytterbium), gallium, lithium, cobalt, indium, tellurium and platinum group metals, as well as other materials of interest identified by the respondents to this request.
During the Cold War, the U.S. pursued a strategic interest in rare-earth metals, ensuring their exploration, mining, separation, refinement, alloying, and manufacture domestically and in countries such as Brazil, South Africa, Canada, and elsewhere. Then, the Cold War ended, and the focus shifted, primarily because rare-earth metals had been strategic defense considerations in the showdown with the U.S.S.R, which no longer existed. With no need to worry about the U.S.S.R., and cleantech not yet considered strategically important, rare-earth metals were deemphasized.
In the interim, however, cleantech — and especially renewable energy — has become a top-of-mind strategic concern. During the same period, China — emerging as the global manufacturing foundry for a panoply of technology products — seized control of the market for rare-earth metals. China realizes that demand for those key ingredients outstrips supply, and it has been increasingly taking measures to restrict their export. China’s goal, it seems, is not only to control the market for rare-earth metals, but also to control the downstream markets for the products and technologies made from them.
That is why the DOE has issued an RFI and why it feels the urgent need to draft a strategic plan. In a keynote address at the Technology and Rare Earth Metals Conference 2010, David Sandalow, the DOE’s assistant secretary for policy and International affairs, said that it was imperative to globalize supply chains, to develop substitutes for rare-earth metals, and “to promote recycling, re-use and more efficient use of strategic materials.”
Fortunately, rare-earth materials aren’t especially rare. They’re widely found in the earth’s crust. The problem isn’t so much that they can’t be found, but that they’re not being mined, refined, processed, and manufactured outside China. With crisis comes opportunity, of course, and several mining companies in the U.S.A. have plans to reopen abandoned or disused mines.
It’s worth noting that rare-earth materials differ in their commercial applicability and market value. Although not openly traded — not yet, anyway — recent valuations in China suggest “heavy” rare-earth metals are worth more than their “light” rare-earth counterparts. As mentioned in an article in The Australian, covering the recent Toronto convention of the Prospectors & Developers Association of Canada:
Among the “heavy” rare earths, europium (which gives you red on your TV or computer screen) was bringing over $US475/kg; terbium (used in magnets) was worth at least $US340/kg; and dysprosium (magnets and lasers) could bring upwards of $US107/kg.
By contrast, the “light” rare earths are in a different price bracket. Lanthanum (used in re-chargeable batteries) brought under $US6/kg, cerium (used in glass) under $US4/kg, with neodymium (magnets, lasers, glass) fetching around $US14/kg.
If the concerns of the DOE are well founded, market prices for all of the above will rise. If you’re in cleantech or information-technology hardware vendor, you’ll probably want to track these developments closely.
It’s interesting to note that China has used its rare-earth advantage as a lever to draw companies and projects onto its soil. Facing the threat of supply bottlenecks and export controls, some U.S. and European technology vendors have relocated some initiatives to China.
Twilight in the Valley of the Nerds 