Rare earth elements (REE) are a group of 17 chemical elements with very unique properties that can be found in the Earth’s crust. The rare earths are all metals that occur together in the periodic table (see figure 1). Their oxides are widely used across industries and in many devices that people use every day. Rare earth-enabled products and technologies help fuel global economic growth, maintain high standards of living, and even save lives. It is estimated that industries using rare earths contribute more than $300 billion to the U.S. economy.
Demand for rare earths come from a variety of industries. General Electric uses REE in wind turbines. Toyota and Nissan use them for their hybrid and electric cars, while Apple and Blackberry need them for smartphones and tablet computers. Because of their unique magnetic, luminescent, and electrochemical properties, these elements help make many technologies perform with reduced weight, reduced emissions, and energy consumption; or give them greater efficiency, performance, miniaturization, speed, durability, and thermal stability.
Both prices and demand for rare earth element production have risen dramatically over the past decade, and the demand continues to grow in line with growing environmental concerns along with growth in green technologies. One problem with the rising demand of rare earth element production is that although they are relatively abundant in the Earth’s crust, they are dispersed in low concentrations and very costly to extract. This has led to extreme cost increases due to unprecedented market forces. In fact, in less than one year, costs of some rare earth oxide materials have experienced increases ranging from 500 percent to more than 2,000 percent, and they continue to climb.
High prices have caused manufacturers to do three things: 1) look for ways to reduce the amount of REEs needed to produce each of their products; 2) look for alternative materials to use in place of REEs; and, 3) develop alternative products that do not require REEs. However, these substitutes are usually much less effective and costly.
Japan and the United States are the second and third largest consumers of rare earth elements. In 2012, China controlled roughly 97 percent of the world’s rare earth production, and prices for many of the oxides had risen over 500 percent in just a few years. This steep price increase was an awakening for rare earth consumers and miners throughout the world. China further triggered panic by imposing strict rare earth export quotas, claiming it was trying to curtail pollution and preserve domestic resources. This caused U.S. manufacturers to pay as much as three times more than what their Chinese competitors pay for the exact same rare earths.