China Suspends Rare Earth Production

This is Cross-Posted from ASP's Flashpoint Blog
I see, via the AP, that China's biggest producer of Rare Earth minerals is suspending production for one month. The DailyTech has a great article explaining what Rare Earths are, and why they're important. Short summary: they're needed for a lot of high-tech and renewable energy devices.

Recall, about a year ago China suspended exports of Rare Earths to Japan, in a clear linkage to an international incident in a disputed sea boundary. That was a wake-up call to many - both the businesses that use them and the producers who supply them.  It is interesting that the reason for the suspension this time is not geopolitical, but instead is economic: a slumping global economy means there's less demand and lower prices.

ASP published an important report "Rare Earth Metals and U.S. National Security" in February, 2011. Take a read, or look at the fact-sheet when you can.

It is important to remember that Rare Earths actually are not that rare. The fact that China has 97% of their production is a historical accident. The U.S. and Canada have reserves in the Rocky Mountains of Rare Earth minerals, but there are no operating mines.

Molycorp is beginning to change that with plans to re-open its mine in Mountain Pass, California. Businesses, too, that rely on Rare Earths are finding ways to build the batteries they need without the minerals.

There is no reason for Rare Earth Minerals to be a strategic resource. In the end, they should be little different from copper or iron: necessary for production, but easily sourced from the lowest-cost producer.