REEs from China: Global Economic Impact

There is a global demand for electronics such as cell phones, computers and electronics needed for “green energy.” Rare earth elements (REEs) are required to build electronics and currently China is the primary location for mining and producing REEs. There is a worldwide dependence on China’s production and distribution of REEs giving China control over the global REE market. This allow them to regulate prices and supply of REEs, presenting an opportunity to analyze one of the many issues related to REEs; economics. Controlling the production of REE’s is economically beneficial to China because they need REEs to continue to be a predominant provider of electronics globally. Therefore, China is able to capitalize on the global need for both REEs and electronics.

 When examining the control over REEs and electronic production by China, the basic economic principle of supply and demand is something to be considered. The overall concept is the quantity, or supply, of a product combined with the need, or demand, for said product determines the price. If the supply of REEs is low or reduced while the demand remains high, prices will continue to grow. On the other hand, when the supply of REEs increases while the demand for REE’s remains high, prices should decrease. The United States is aware of their fiscal dependence on China in general which gives them a reason to be interested in finding ways to reduce dependence on REEs from China.

The high demand for the REEs supplied by China provides them with an opportunity to drive the prices up to the rest of the world. China is mindful of their own needs for REEs in order to continue to be a leading producer of electronics. Therefore, retaining strong control over the global supply of REEs is dually profitable to China’s economy. China claims they are concerned they are diminishing their own supply of REEs and have been reducing availability to the global economy. With the projected decreased supply, a shortage is projected, which creates concern for the rest of the world. Without a supply of REEs outside of China, prices for REEs will continue to increase; causing prices for electronics to increase, and therefore, the electronics we wish to buy will cost us more.

If the global economy can increase their sources outside of China it can increase independence from China. Two main ways to obtain REEs without China is to find new sources to mine these elements or recycle the REEs we already have. Much effort is being placed on finding new locations for mining REEs but the effort placed on recycling REEs could arguable be increased. Removing REEs in electronics no longer in use and recycling them for future use in electronics may be the best option for global independence. For example, if we repurpose the REEs that already exist in The United States locally, we can create our own stock of REEs. Building a system of using and reusing REEs within an economy provides an opportunity to control our own price for our supply for our own demand. Recycling REEs is an additional step that would require action from individuals, companies, and communities. This action may be seen as a risk by some who worry they will compromise any personal information stored on electronics deemed for recycling. Some might consider recycling as too much for them to act, seeing their voluntary action of recycling costing them too much time or effort. Ultimately recycling REEs eliminates the process of mining for REEs and the need to buy them from those who produce them, a benefit which may outweigh the cost of recycling.

Sources

http://www.theatlantic.com/technology/archive/2012/02/a-visit-to-the-only-american-mine-for-rare-earth-metals/253372/