Here's How Some Companies Are Taking Precautions Against China's Rare Earth Monopoly

Chinese Factory

Photo: ttstam via Flickr

China’s stranglehold on rare earth production is so severe that the U.S. House Committee on Foreign Affairs is having a hearing today addressing the issue.China’s control of rare earths has been compared to the Middle East’s control of oil. The WTO has ruled against their export restrictions, but China appealed

Now rare earths have become a major supply chain risk to the automobile, electronics, camera, medical equipment, and defence industries. They are crucial components in almost all “smart” technology and are essential for making batteries and magnets.

Then, what is the next step for businesses? There are three big options for most organisations that depend on rare earths:

  1. Be like Toyota, and begin investing in innovations that do not rely on rare earths; new ideas take time to perfect so the earlier a business gets started, the better
  2. Develop recycling technologies like Hitachi to extract and reuse the tons of rare earths that are being thrown away everyday in the form of used or out-dated products; or
  3. Move to mainland China like Boston-Power Inc. to duck under a possible embargo. But be prepared for other interruptions as you take orders from Beijing.

Toyota has joined Tesla to reinvent their electric vehicle engine and battery to not use rare earths.  Hitachi spent $1.5 million on research project slashing open old compressors for reusable magnets and rare earths.  Boston-Power Inc., which manufactures batteries companies like Saab, has had to move all of their manufacturing operations to China, leaving only R&D and customer service stateside.  They may be the first, but soon Apple, GE, and even the U.S. Department of defence as well as many others all need to reconsider their dependence on rare earths.

As our supply chain risk increases, it’s about time we think about reinventing the wheel, or the battery in this case.  Otherwise, it may be time to go to the mattresses and prepare for the coming “Mineral War.”

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