In wake of the international attention on rare earth minerals, the U.S. Geological Survey (USGS) has completed its first review of China's rare-earth industry.

According to the report compiled by U.S. Geological Survey, it gives information about the production, consumption, and reserves of China's rare earth elements (REEs) and China's policies and regulations regarding the production and trade of rare earths, including export quotas recently announced by the Chinese government.

China produces 95 percent of the world output of REEs and is also an increasing consumer of REEs owing to the emergence of new clean-energy and defense-related technologies. China's reserves currently total 55 million metric tons.

During the past 20 years, China's REE output has increased dramatically. Since 1990, China's share of global REE production has increased from 27 percent to its current level of 95 percent.

China's consumption of REEs has only recently begun to increase. Since 2000, China's consumption of REEs has nearly quadrupled, from 19,000 metric tons in 2000 to 73,000 metric tons in 2009. China's primary use for REEs is in the magnet industry, which accounted for 30 percent of total Chinese rare earth usage in 2009.

In 1990, China declared REEs protected and strategic minerals. As such, China maintains production and export quotas. The export quota has been declining in recent years due to increased domestic demand. In 2010, the REE export quota was 37 percent lower than that of 2009, and a further reduction of 35 percent has been designated for 2011.

The REEs are the lanthanide elements, scandium, and yttrium. Although industrial demand for these elements is relatively small in tonnage terms, they are essential for a diverse and expanding array of high-technology applications, including the magnets, metal alloys, and batteries for key defense systems, as well as many current and emerging alternative energy technologies.

Reserves of rare earth minerals across world

Other countries which hold substantial reserves are Australia, India, the Commonwealth of Independent States, and Brazil. Over the years the supply patterns of rare earths have undergone fundamental changes.

According to the US Geological Survey's Mineral Commodities Summary, till 1995 USA and China produced equal quantities of rare earths, whereas today China produces approximately 97 per cent of the world's rare earth. Of the 124,000 tonnes of ore mined in the year 2009, China produced 120,000 tonnes.

Recommendations

Reduce Reliance: With shortages likely sometime in the next two to three years, the U.S. needs to act quickly to reduce its reliance on Chinese rare earth metals.

Stockpile Rare Earths: While stockpiling rare earths is not a long-term solution (eventually stockpiles will run out), it is a good stop-gap measure until new technologies or mines are available. A few countries, such as Japan and South Korea, already have strategic stockpiles of rare earth metals.12 China will begin stockpiling rare earths this year.

Develop new mines: Experts estimate that it would take anywhere from 10-15 years to have a new mine up and running efficiently, assuming everything goes according to plan and there are no unforeseen setbacks.16 There are several places where mining would be a worthwhile venture, including Thor Lake in Canada, which possibly contains one of the world's largest deposits of rare earth metals.17 The U.S. is currently working on reopening the mine at Mountain Pass, California, and expects it to be fully operational by the end of 2012.18 Experts believe that North American mines alone could produce as much as 40,000 metric tons of rare earth metals per year, or double what the U.S. currently uses.

Increase International Cooperation: Increased international cooperation and dialogue should go a long way towards alleviating the shortage of rare earth metals. Countries can work together by jointly investing in new mines, signing a formal rare earth treaty, or even making informal agreements to reduce dependence on China.

Develop Substitutes: Rare earth metals substitutes should also be developed by the U.S. although current research is being hampered by the lack of resources being invested in R&D. Meanwhile the Chinese government has spent millions on rare earth metal research and development.

Developing new technologies that increase the efficiency of rare earth metals and that allow for better recycling of rare earths is another way for the U.S. to decrease its dependence on China, the American Security Project Research Assistant, Emily Coppel advised last month.

American Security Project noted the U.S. Department of Energy is currently working on new recycling techniques for rare earths, which could significantly lower world demand for newly extracted materials.