US warns of rare earths risk

Australian
Friday 17/12/2010 Page: 23

Supplies of rare earth materials, mined mostly in China and used in a handful of clean-energy products, could be cut off or disrupted in future years, according to the US Energy Department.

Five rare earth materials that are used to build electric vehicles, energy efficient lighting, solar panels and wind turbines "are at risk of supply disruptions", David Sandalow, assistant secretary for policy and international affairs at the US Energy Department, said yesterday at the Centre for Strategic and International Studies.

Concern over the supply of these materials is surfacing at the same time the US is encouraging the development of clean energy technologies as a way to reduce the use of fossil fuels. China currently produces more than 95% of these rare-earth materials, presenting a scenario in which much of the world's clean technology makers rely on the country for valuable resources. "China has said it intends to be a reliable supplier", Mr Sandalow said.

However, the US should try to diversify global supply chains and develop substitutes "so that we are not reliant on any particular input", Mr Sandalow cautioned. Non-government analysts believe China could reduce exports of rare-earth materials to countries that rely on them.

China's willingness to supply these materials constitutes a "fragile relationship", said Jim Hedrick of Hedrick Consultants. China intends to raise tariffs on some rare-earth exports starting next year, the Associated Press reported the state media as saying yesterday. China's Ministry of Finance did not say which rare earths would be affected, the AP reported.

A material known as dysprosium, used in magnets for wind turbines and electric vehicles, is particularly important to the clean technology sector. According to the Energy Department, supplies of dysprosium are also among the most threatened. In addition to being the largest producer of rare earth materials, China was currently the largest consumer, said Clint Cox, founder of Anchor House, a firm that specialises in rare earth elements.

Companies operating in China are the largest consumers of the materials. Colorado-based Molycorp announced earlier this week that it had received environmental permits to begin construction of a new rare earth manufacturing facility in Mountain Pass, California.