Copyright (c) 2012 Alison Withers
Those watching the market and supply situation for Rare Earth Metals have identified a possible further tightening of supply as a result of the ongoing disagreement between China and Japan over the ownership of islands in the East China Sea.
This collection of eight tiny islands has been the subject of ongoing diplomatic rows for many years and last flared up in 2010. They are considered important by both countries, and by Taiwan, because they are close to strategically important shipping lanes, offer rich fishing grounds and may also have oil deposits
The dispute over the islands, which the Japanese call the Senkaku Islands and the Chinese call the Diaoyu Islands, has been resurrected again in the last couple of months after Japan announced that it had bought three of the islands from their private, Japanese owner, and towards the end of September 2012 announced they would be nationalised.
Demonstrations and anti-Japanese expressions of outrage have ensued in China and there is now speculation that China’s next move will be to cut off all supplies of Rare Earth Metals to Japan.
While Japan has been involved in both exploration off its coast and in initiatives to increase recycling of Rare Earth Metals from hybrid vehicles and other consumer technology it manufactures the dispute and its possible consequences has raised concerns about a shortage of the elements, particularly the Heavy Rare Earth Metals, such as terbium oxide and dysprosium oxide.
Currently China supplies all of the world’s requirement of these two, which are used in the manufacture of wind turbines.
A discussion piece published on the website phys.org debates whether there will be adequate supply over the longer term to meet the growing demand for the sophisticated consumer products as well as increasing global energy supply via renewable and clean energy technology, for both of which they are essential.
It quotes a US Congressional report that estimates world demand for rare earth metals is currently 136,000 tons per year, which is projected to rise to at least 185,000 tons annually by 2015. To be able to switch to providing a majority of power via renewables the mining and supply would have to increase dramatically, by several hundred times, according to Thomas Graedel, who is Clifton R. professor of geology and geophysics at the Yale School of Forestry & Environmental Studies and Musser Professor of Industrial Ecology.
This is before even considering their use in the manufacture of mobile phones, PCs and other gadgets for which the demand is also expected to grow.
This will all be good news for investors in these elements as it is likely to sustain if not increase their prices.
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