Australian mine gets into the rare earths game
Rescue workers enter a mine shaft to try and rescue 21 workers trapped underground after an explosion tore through the state-run coal mine in northeast China's Heilongjiang province -- November 22, 2009
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Tess Vigeland: They're called the fuel of tomorrow: rare earths. Critical metals in next-generation everything: wind turbines, electric vehicles, light bulbs. China controls the global supply and a few months ago was widely believed to have cut exports of these substances to Japan, the world's key buyer.
But today, Tokyo reports Beijing has restarted shipments. From the Marketplace Sustainability Desk, Scott Tong reports that competition from another supplier may be behind the change of heart.
Scott Tong: The industrial world may be heaving a sigh of relief now that slow boats from China are shipping rare earth metals again. But Beijing says it won't be exporting much anymore because of its own demand. That may explain why Japanese factories signed up with the Australian mining company Lynas.
Japan hopes to get a quarter of its supply from Down Under. The thing is, the shipments won't start for a year. The mine's not ready and the process is hard, says analyst Byron King at Agora Financial.
Byron King: This is very, very high-end, technically challenging. The West is really behind the 8-ball on this. We don't have the people, we don't have the engineers, we don't have the scientists.
But Western companies do have ambition. Mark Smith is CEO of Colorado-based mining company Molycorp.
Mark Smith: There is only one conclusion at the end of the day: the rest of the world had better find alternative sources of rare earths, because China cannot supply the entire world as they had done for many years.
The U.S. once mined rare earths, but low prices and stiff environmental rules killed off the industry. Now Molycorp wants to fill the void, by reopening its own mine. And King says with rare earth prices sky high, other miners are coming out of the woodwork too. He recalls a trade show last month in Hong Kong.
King: Many of the up-and-coming developers staged what I call a swimsuit contest, where they would get up on the stage and put their slide show and talk about how great their ore deposit is.
Analysts figure it could take five, 10 years before the West's rare earth ecosystem revives. Until then, hold onto that Chinese rolodex.
In Washington, I'm Scott Tong for Marketplace.