Why the U.S. May Be Going from Dependence on Mideast Oil to Rare Metals from China

This story originally appeared in OnEarth Magazine.

Interstate 15 as it crosses the Mojave Desert between Los Angeles and Las Vegas is one of the most remote and desolate stretches of superhighway in the United States. Here and there, a roadside oddity -- like the world's tallest thermometer in Baker, California -- punctuates the endless sagebrush and sere mountain landscapes. Yet the most unusual landmark does not appear on any tourist map. About 15 miles south of the Nevada border lies the tiny town of Mountain Pass, California, where a cluster of low buildings and industrial equipment hints at the existence, just over a low ridge, of a gaping open-pit mine roughly a quarter-mile across and 500 feet deep. For decades after it opened in the early 1950s, this was the world's premier source of the metals known as rare earths -- a group of 17 elements with exotic-sounding names like lanthanum, neodymium, yttrium, and erbium. But the mine shut down in 2002, a casualty of environmental violations and plunging global prices. Today, this eerily quiet hole in the Mojave is the world's largest symbol of a brewing crisis, as the United States and other developed countries risk trading their addiction to oil for a new form of energy dependence.

Rare earths are essential ingredients in a host of high-tech gadgets, including automotive catalytic converters, air-bag sensors, magnetic resonance imaging (MRI) machines, and precision-guided missiles. Although they are produced and used in tiny quantities, rare earths and a few other obscure metals such as indium and gallium are also essential ingredients in virtually every sustainable energy technology. Lanthanum, for example, is required to make nickel metal hydride (NiMH) batteries, which are used in hybrid cars. Energy-efficient fluorescent lightbulbs contain small amounts of both yttrium and europium. "Super magnets" made with neodymium form the heart of compact but powerful motors and generators like those used in wind turbines, today's hybrid cars, and tomorrow's plug-in electric vehicles.

At the cutting edge of science, physicists at the Tokyo Institute of Technology announced last year that they had discovered a new class of superconducting materials containing iron and rare earth metals. These materials break many of the supposed rules of superconductivity and could lead to a new generation of motors, generators, and power transmission lines through which electric current would move with frictionless ease, yielding massive energy savings.

Economically viable concentrations of rare earths are known to exist in only a handful of places -- mainly in China, Australia, and North America, with smaller deposits in India, Brazil, Malaysia, and South Africa. China's reserves, which are located mainly in Inner Mongolia and in soft clay ores in southern China, are, by a wide margin, the world's largest.

Realizing their strategic significance, Chinese leader Deng Xiaoping said in 1992, "There is oil in the Middle East; there is rare earth in China." He clearly understood the West's growing dependence on rare metals for high-tech industries and put China on course to become the world's dominant supplier. By flooding the rare earths market in the 1980s and 1990s, China caused world prices to drop by half, putting other producers -- most prominently, the Mountain Pass mine -- out of business. Today, China covers more than 95 percent of the global demand for rare earths, and the United States relies on imports for 100 percent of its supply.

Having shrewdly positioned itself as the OPEC of rare earths, China is now putting the squeeze on foreign consumers, clamping down on exports by raising tariffs, lowering export quotas, and imposing production limits. Worldwide demand for rare earths is expected to grow by 10 percent a year, yet production has leveled off in recent years. Most of China's annual supply is now staying in the country as consumers there buy more cars and electronic devices. "Sometime in 2011 to 2012, Chinese domestic demand will surpass Chinese domestic production," says Jack Lifton, an analyst and consultant who specializes in what he calls the "technology metals" and advises mining industry clients developing rare earth projects in North America."This means no more Chinese exports of rare earths, other than in finished goods made in China that they allow to be exported."