China's Rare Earth Hoard
Liu, Melinda, Newsweek International
Byline: Melinda Liu
China has a near stranglehold on the so-called rare earths, metals like yttrium and lanthanum that are essential for everything from hybrid cars to iPods to precision-guided weaponry. The country currently produces 95 percent of the world's supply and claims about 60 percent of known reserves within its borders. These metallic elements happen to be essential to many emerging green technologies--they go into electric vehicles, carbon-monoxide reduction, and the high-performance metallurgy behind wind gearboxes. They're also a key component in Toyota's famous green car, the Prius. Jack Lifton, a freelance analyst who works on rare earths, estimates that global trade in these metals is roughly $2 billion annually, but the total market for the products that depend on them is up to $100 billion per year.
But just as these elements are becoming more essential, China is undertaking a new round of resource nationalism. In early September, officials declared plans to streamline the domestic industry, impose export controls, and establish a national reserve. The country has already moved to dramatically curb export quotas for rare earths to 35,000 tons annually--woefully insufficient to fill global needs. World demand this year is an estimated 124,000 tons, and is expected to double by 2015. …