South African mining company Rare Earth International reports that policy decisions made in China at the release of its twelfth five-year growth plan will sustain demand for rare-earth elements and will lead to a considerable increase in the consumption of products containing these elements.

CEO Jock Harmer says that, in the past, China was a major consumer of fossil-fuel-driven vehicles.

“However, in an effort to [mitigate] the ever- increasing pollution problem in major cities, such as Shanghai and Beijing, the Chinese government has stated that it must increase its dependence on hybrid vehicles, which currently use a mixture of fossil-fuelled energy and clean energy,” says Harmer.

The pollution problem became so bad that, during the 2008 Beijing Olympic Games, from August 8 to 24, Beijing residents were advised that motor vehicles would only be allowed on the roads at allocated times.

Harmer points out that hybrid vehicles, such as the Toyota Prius, are heavily dependent on the use of permanent magnets, which are predominantly driven by rare-earth elements. He adds that studies show that up to 16 kg of rare-earth elements is used in a single Toyota Prius.

“The second policy decision taken by the Chinese government is that the country must start moving away from fossil-fuelled power generation to renewable power generation, the most economical of which was identified as wind turbines. Again, these turbines are driven by permanent magnets, which make use of rare- earth elements,” says Harmer.

In addition, the Global Wind Energy Council estimates that, by 2012, 48 GW of new wind energy generation projects will be installed globally.

“This has had a significant impact on the price of rare-earth elements. If one takes the most common rare-earth element, cerium, which has the same abundance in the earth as copper, its price in January 2010 was a measly $7,81/kg. In April this year, its price was $154/kg,” says Harmer.

He adds that China currently has a significant monopoly on rare-earth elements, as there were no operating mines outside of China in 2010.

“However, the production from the rest of the world will catch up to China in terms of growth, from 2012. The majority of the minerals will still be aimed at the Chinese market, but will be under international control. Mount Weld, in Western Australia, will be the first producing mine outside China, in the post-Chinese era,” says Harmer.

He adds that the world’s dependence on independent suppliers of rare-earth elements came to the fore a few years ago, when the US discovered that most of its classified weapons technology was dependent on supplies of permanent magnets from China. This could lead to the possibility of weapons technology either being compromised or a sanction on supply to the US, should relations between the countries sour.

“In an extraordinary meeting of the US security council, the independent supply of rare-earth elements was seen as a priority, which led to the fast-tracking of plans to reopen the Mountain Pass mine, in California, which is expected to reach full production by the end of 2011,” concludes Harmer.

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