HUGE RARE EARTH MINERAL DEPOSITS FOUND IN PACIFIC OCEAN

Every time someone goes out and buys a new TV, laptop, iPad, Android smartphone, or any such device they are using up some of our rare earth minerals which these gadgets require to work. They are called rare not because there is only a small amount on earth, but because the deposists are small and therefore require a lot of mining to recover very little.

Another problem exists in the fact China holds about 97% of the rare earth mineral market, and it decides how much exits the country. This pushes up prices and makes it more difficult for companies outside of China to not only manufacture enough devices, but also to keep the costs of those gadgets competitive.

It will come with great relief then, to hear that Japanese researchers have found very rich deposits of rare earth minerals as well as the metal yttrium. In total around 26 sites located in the international waters of the Pacific Ocean have been found to have high concentrations buried between 3,500 and 6,000 meters beneath the sea bed.

The deposits are so rich they are thought to increase our reserves by 1000x. Current reserves are estimated at 110 million tonnes, but this new discovery adds another 100 billion tons.

Not only does this take the pressure off in terms of finding alternatives in the near future, the locations of the deposits near Hawaii and Tahiti means the reliance on Chinese exports will be removed. Prices should fall and competition will not be influenced by a lack of supply.

GLOBAL RARE EARTH MINERAL SUPPLY DEFICIT SHOULD TURN TO A SURPLUS BY 2013

It looks like rare earth elements are getting slightly less rare. According to a research note released by Goldman Sachs today, the world's rare earth supply deficit will probably reach its apex this year, before converting into a surplus by 2013.

Goldman's analysts constructed their projections based on evidence that many Western companies have begun building their own mines, in response to China's overwhelming market dominance. Today, the People's Republic produces about 90-percent of the world's rare earth minerals -- a group of 17 elements that are used to manufacture many of the flat screen TVs, hybrids and cellphones we've come to know and love.

Over the course of the past few years, China has only consolidated its hold on the industry, thanks to economic policies aimed at nationalizing private mines and implementing restrictive export quotas. As a result, global rare earth prices have skyrocketed, forcing mining companies in the US and elsewhere to look inward and harvest their own deposits.

The only downside, however, is that even if global supply spills into a surplus within the next two years, prices probably won't cool down until 2015. But at least the horizon looks brighter than it has in recent months.

CHINA NATIONALIZES RARE EARTH MINES

Rare earth minerals can be found in almost every modern electronic device from computers to TVs and hybrid vehicles. Unfortunately, most of the world's supply of these 11 minerals are in China, who recently nationalized the rare earth mines. According to the Chinese Ministry of Land and Resources the nationalization of the facilities was prompted by illegal strip mining and dumping of toxic tailings in nearby waterways. However, China has stated previously they want to reduce rare earth exports by ten percent, inflating the prices.

Japan and the US are working together to find alternatives to these minerals to break China's monopoly.

A group of 17 minerals in the rare earth category go into everything from missile guidance systems and mobile phones, to flat screen TVs, lasers and new energy technology. Pending scarcity— driven by increases in global demand, and China’s near-monopoly on the minerals market— could lead to prices that eat into industry margins, a slow down for clean tech projects worldwide, and diplomatic clashes between supplier nations (China) and buyer nations (U.S., Germany and Japan).

Rare earth minerals are essential to build photovoltaic panels, wind turbines, fuel cells and vehicle batteries. As widely reported, including by the Geosociety, BBC and the New York Times, some 97% of the global supply of rare earth minerals now comes from China.

Canada, Australia and the U.S. used to have more global market share, and rare earth minerals mines but the relative value of the currency, and relaxed-to-poor environmental regulation of mines in China made sourcing there favorable for buyers.

A trade war is imminent, James Burnell of the Colorado Geological Survey explained in a Geosociety report:

“China is preparing to build 330 giga-watts worth of wind generators. That will require about 59,000 tons of neodymium to make high-strength magnets — more than that country’s annual output of neodymium. China supplies the world with a lot of those rare earth elements, like neodymium, and will have little or none to export if it moves ahead with its wind power plans…So the source for the West is problematical.”

Earlier this month, during the East Asia Summit, Chinese officials told U.S. Secretary of State Hillary Clinton that Beijing aims to be a reliable minerals supplier and would not impose bans on exports of industrial minerals for political purposes. Sec. Clinton reportedly expressed gratitude, but requested further details on China’s export policies and new assurances.

Today, Reuters reported, 35 global business and trade associations— including the Consumer Electronics Association and the Alliance of Automobile Manufacturers and other major consumers of rare earth minerals— called on the Group of 20 (G-20) summit of the world’s 20 largest economies to address scarcity and trade war concerns at their forthcoming meeting, Nov. 11-12 in Seoul.

Officials from Japan and Germany have already complained that their automotive, and clean tech industries have been adversely impacted by China’s tightening of mineral exports. China has denied the implications of market manipulation and political motivations to reign in mineral exports. The country’s officials said China was trying to control some of the negative environmental impacts of mining, instead. [TechCrunch]