Original Articles, World

China and the ‘Rare Earths’ phenomenon

The first colour television owes it to them, so does the I-phone. Just like currency notes, mobile phones, flat screen televisions, energy-efficient lights, electric cars, alternative technologies and a host of other machines and electronics. They all share one common ingredient – Rare Earth Metals. Scientific gobbledygook identifies ‘Rare Earths’ as a set of fifteen unique elements that occur consecutively at the bottom of the periodic table. The highly similar chemical properties that rare earths exhibit, makes them an indispensable component for new age technologies and industries. And with half of the world reserves, one nation holds the keys to the future of technology in the world: China.

The billion plus nation that has metamorphosed into an export giant over the past decade, has clawed its way to the top spot as the biggest supplier of rare earths to the world. The Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. Ltd, a government of China enterprise with other smaller Chinese mining companies, satiates almost 95% of the world demand for rare earths. China’s unchallenged monopoly in the world arena is credited to its iron-fisted state controlled production and porous environmental laws. For, although rare earths are a critical component of new age green technologies, mining these metals generate gargantuan quantities of toxic wastes. Western nations with their stringent environment laws, complex permission procedures, and constant litigation sceptre make rare earth mining an unfeasible option for mining companies.

As its domestic demand surges, China has begun imposing strict restrictions on the export of rare earths. Moreover, it is also working on proposals for a blanket ban on the export of select rare earth metals. The rationale behind the scheme lies in China’s desire to establish itself as the world centre of future technological breakthroughs. The Chinese are arm-twisting companies to set up manufacturing and research units in China in return of regular supply of rare earths. This has forced electronics giants; technological institutes, automobile businesses and military equipment manufacturing companies to set shop in China.

Even as the world cries hoarse over China’s unfair trade practices, the acute uncertainty over the availability of rare earths has compelled countries around the world to build stockpiles and to work on the creation of new supply chains that are entirely independent of Chinese control. However, as the Western nations wake up to the extent of China’s financial and military clout in the rare earth producing Africa and Australia continents, it will realize that a supply chain without Chinese control is a definite impossibility. The sub-prime crisis and the subsequent global meltdown has further strengthened China’s grip on rare earths. Aggressive pricing techniques and military aid piggybacked on its enormous forex reserves has proved to be a potent weapon for a country desperate to triumph in its super-power ambitions. The Chinese conquest to crown itself as the world leader in Green technology may well be the greatest paradox for nation infamous for its role in years of environmental disintegration.