As China Adjusts for “True Cost” of Rare Earths, What Does It Mean for Decarbonization? – by Hongqiao Liu (New Security – March 21, 2017)

Known as the “vitamins of industry,” rare earths refer to a cluster of minerals widely used in green technologies such as wind turbines, rechargeable batteries, and electric vehicles. Rare earth elements embedded in these products keep them light, efficient, and affordable. They’re essential to the decarbonization of the global economy envisioned in the Paris Climate Agreement, agreed to by 192 countries in 2015. And we may soon face a significant shortage, due in no small part to changes in China.

The U.S. Department of Energy and European Union have both issued warnings of impending rare earths shortages. Medium and heavy rare earths, mined almost exclusively in China at the moment, top the list with the highest risk of shortage.

Years of pollution suffered as the world’s dominant supplier of rare earths have taken their toll on China’s soil, water, and people. In some cases, ponds of untreated tailing slurry have led to severe radioactive contamination. As the government begins cracking down on illegal mining and black markets and increasing environmental regulations, operation and compliance costs are going up.

In the years ahead, China may struggle to meet domestic demand for rare earth minerals, much less global, even as momentum for “green” technologies increases, according to a report from China Water Risk.

High Costs

From 2001 to 2011 China supplied 90 to 98 percent of rare earths in the global market. The cost of such market dominance, however, has also been large.

In 2012, the Ministry of Industry and Information estimated that the clean-up and rehabilitation costs from small-scale rare earth mining in Ganzhou City over the last two decades were a whopping $5.5 billion (RMB38 billion), a bill currently being covered by China’s central finance and local governments.

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