Rare Earths, Scarce Metals, and the Struggle for Supply Chain Security

June Teufel Dreyer

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Alerted to their vulnerability on rare earths (REEs) when China threatened to withhold supplies to Japan in September 2010, industrialized countries began to be concerned with developing alternate sources. For Japan in particular, REEs are indispensable to the production of the catalytic converters of the automobile industry that is a mainstay of the Japanese economy. They are also components of high technology devices that include permanent magnets, rechargeable batteries, smart phones, digital cameras, light emitting-diode lights, clean energy, and fighter planes.

Although found in many places in the world outside of China—several African and Latin American countries, Canada, the western United States and Vietnam, among others—and not actually rare, the mining and refining processes of the seventeen entities that are classified as REEs had gradually been ceded to the People’s Republic of China (PRC). The process is highly labor intensive and generates significant pollution, especially since REEs are often found in conjunction with radioactive substances. China with its lower wages and more lax environmental laws proved an attractive alternative that companies there were eager to take advantage of.