Seeking to meet new demands by increasing its export controls, China is creating a range of investment opportunities in the U.S., particularly with its production of rare earth magnets.
By catering to an ongoing American need for imported rare earth elements – or REEs – the Chinese have assumed the role of primary provider in the 21st century. The country boasts some 55 million tons of extractable reserves, the most in the world, and low extraction costs combined with government incentive programs have placed a renewed emphasis on REE production within the past 10 to 15 years. That confluence of events has left companies like Rare Earth Magnet Limited at the forefront of a movement to get more of these materials into the U.S., supplying companies like Siemens and Intel, whose demands are buoyed by shortages in North and South America.
Applications galore
Most of the REEs exported from China include lanthanides, tantalum, niobium and scandium, often used in magnets for motors in vehicles and wind turbines. Lanthanum is frequently employed in semiconductor chips for memory and processing devices, while something like tantalum can help form stronger yet more light-weight steel. The applications are wide-ranging, with defense uses like jet fighter airframes and engines, space communication systems and anti-missile devices common in the U.S.
The advantage maintained by companies like Rare Earth Magnet lies in the variety of magnetic products they offer, as well as the seemingly limitless resources at their disposal. In comparison to the 95,000 tons of extractable reserves produced by China in 2012, the United States produced 7,000 tons – as many as Brazil, Australia and Malaysia combined.
Particular provinces in China – like Nanshan, where Rare Earth elements is based – have begun to conduct a disproportionate amount of the rare earth production. Only licensed mines can produce certain elements, and they may be subject to government and environmental audits, ultimately limiting the number of operations that viably make profits.
As a result, companies with the resources and technology, not to mention the connections, to fill the ever-present need that exists across the globe are extremely well-positioned. Price fluctuations threaten that dominance somewhat, but considering that it takes five to seven years to develop a new mine, processing facilities already ahead of the curve figure to maintain their streams of business in 2014 and beyond.
