Rare Earth in BlackBerry to Prius Underscores Alarm Over...

Rare Earth in BlackBerry to Prius Underscores Alarm Over Supply


Rare-earth elements help give BlackBerrys their buzz, Toyota Priuses their battery power, and computer hard drives their spin.

The rare earths, a group of 17 metals including neodymium, lanthanum, cerium and europium, also have industrial and national-security uses, such as in petroleum refining, fiber- optics transmission, and military radar and missile-guidance systems.

The range of uses explains why U.S. lawmakers, officials in Japan and Germany and manufacturers of components that need these materials say they are alarmed by steps taken by China, which provides 97 percent of the world?s supply, to reduce exports by about three-quarters.

Components made with rare earths are so ubiquitous that they aren?t easily replaced, according to Jack Lifton, founder of Technology Metals Research LLC in Detroit, which advises investors in specialty metals. ?Without anyone noticing, the rare-earth magnets have become overwhelmingly essential,? he said yesterday.

Rare-earth magnets account for 80 percent of the market for ?permanent? magnets that retain their charge, up from zero in 1980, he said. They are in electric motors, small earphones and mobile phones. When a BlackBerry vibrates, a high-powered magnet made with neodymium is at work converting electrical power into mechanical energy.

?They are pervasive in our technology, especially in miniaturization of electronics,? Lifton said.

Automakers relying on neodymium-iron-boron magnets, used in power-steering equipment, ?are concerned about long-term access to under-the-hood magnets because they import them from China and Japan,? Lifton said in a phone interview.

Ford ?Monitoring? Situation

Todd Nissen, a spokesman for Ford Motor Co., said in an e- mailed statement that ?we?re monitoring the situation and do not expect any impact on our production.? He declined to comment on how any shortage of the minerals would affect commodity prices or on Ford?s sources of rare-earth metals.

While the elements aren?t as rare in nature as the name implies, they are difficult to find in profitable concentrations, expensive for Western producers to extract and often laced with radioactive elements. China has come to dominate the market because it has been able to produce the elements more cheaply and with fewer environmental restrictions than its competitors.

Japan, the largest importer of Chinese rare-earth materials, has said China halted shipments to Japanese users last month after a collision in disputed waters between a Chinese trawler and the Japanese Coast Guard led to the fishing- boat captain?s detention. Chief Cabinet Secretary Yoshito Sengoku said Oct. 20 that the import situation ?hadn?t changed? weeks after the captain?s release.

Chinese Delays

China said this week that it hasn?t suspended shipments to the U.S. and Europe, as reported on Oct. 20 by the New York Times. Chinese customs officials are delaying shipments by various means, such as imposing extra inspections, according to industry participants who spoke on condition of anonymity because of concern about Chinese reaction.

China?s 72 percent reduction in export quotas for the second half of this year, which it announced in July, and the customs delays since then are driving up prices. U.S. Representative Edward Markey, chairman of the House Select Committee on Energy Independence and Global Warming, asked the Obama administration on Oct. 21 to report on China?s export restrictions and ramifications for the military and U.S. clean- energy producers.

?Potential Threat?

China?s ?apparent willingness? to use its supply for leverage in wider international affairs ?poses a potential threat to American economic and national security interests,? the Massachusetts Democrat said in a letter to four Cabinet members.

China said in July that it cut export quotas to allow it to close polluting and inefficient mines while continuing to meet domestic needs. The nation will ?continue to supply rare earth to the world? while maintaining restrictions ?to protect exhaustible resources and ensure sustainable development,? the Commerce Ministry said in a statement Oct. 20.

Prices have climbed sevenfold in the last six months for cerium oxide, which is used for polishing semiconductors, and other elements have more than doubled, according to Metal-Pages Ltd. in London, which tracks rare-earth prices.

China accounts for about 36 percent of global rare-earth reserves, the largest share, and the U.S. is second, with 13 percent, according to the U.S. Geological Survey.

Molycorp?s Mine

The uncertainty over Chinese supplies and rising prices are encouraging efforts to produce new supplies. Molycorp Inc. is seeking $280 million in U.S. government loan guarantees to help finance restarting an open-pit mine in Mountain Pass, California, in the Mojave Desert. The mine once met almost all the world?s demand for rare-earth metals before closing down in 2002 due to competition from cheaper Chinese supplies. Molycorp plans to resume production by the end of 2012.

Makers of catalysts for the oil-refining industry are among the major users of rare earths in the U.S., Lifton said. Albemarle Corp. of Baton Rouge, Louisiana, W.R. Grace & Co. of Columbia, Maryland, and BASF SE?s catalysts unit in Iselin, New Jersey, are three of the largest importers of lanthanum, used to break down heavy crude into light crude, Lifton said.

Lanthanum also is used for nickel-metal hydride batteries that power hybrid cars, such as Toyota Motor Corp.?s Prius.

Toyota said last month it created a special unit to ensure its supply isn?t disrupted and recently announced a contract to obtain rare-earth metals from India. The carmaker, the world?s largest producer of gasoline-electric vehicles, also uses the materials in electric motors.

Lanthanum, Samarium

With the exception of lanthanum and samarium imported by Electron Energy Corp. of Landisville, Pennsylvania, the U.S. ?mostly imports finished products? made with rare-earth materials, Lifton said.

Electron Energy uses the samarium to make samarium-cobalt magnets that are used mostly in military applications, including missile guidance systems, radar, and electronic warfare systems.

Commercial and military airplanes also use samarium-cobalt magnets for power generation, Peter Dent, vice president for business development at Electron Energy, said in a phone interview.

?If you want to move an electron you need to have a magnetic field to do it,? Dent said. Magnets made from rare- earth materials do the job efficiently by ?either converting mechanical power to electrical energy or vice-versa,? he said.

Wind Turbines

Neodymium-based magnets also are used in wind turbines ?where they want as high a magnetic power as they can get,? Dent said.

Sarah Howell, spokeswoman for the American Wind Energy Association in Washington, said in a statement Oct. 21 that few utility-scale wind turbines in the U.S. currently use rare-earth metals.

?While their use in wind turbine technology is attractive, the rate at which they will be adopted in the future will depend in part on the cost, availability and reliability of supply,? she said. ?It?s also important to realize that the U.S. has domestic rare-earth resources that it can develop with capital- intensive investment, and that there is ongoing R&D on substitutes.?

http://www.bloomberg.com/news/2010-10-22/rare-earth-in-blackberry-to-prius-underscores-alarm-over-supply.html