A few short years ago, China controlled virtually all of the world’s supply of most of the so-called rare earth minerals that are increasingly important for modern technologies like batteries and speakers and cars. This came to a dramatic head in 2010 when China used its monopoly to turn the screws on Japan, with whom it was having a maritime border dispute (plus ça change…). But, it seems, no more. From the recent Council on Foreign Relations report on this phenomenon:
Despite its relatively small size, the rare earths market managed to attract plenty of interest outside China prior to the 2010 supply scares. Motivated by expected increases in demand, investors in the United States, Japan, and Australia were already opening rare earth mines and building new processing capabilities by 2010, and other investors were moving ahead on mines around the world in places like Canada, South Africa, and Kazakhstan. The major investments made by Molycorp in the United States and Lynas in Australia and Malaysia started delivering non-Chinese rare earths to global markets by 2013.
When rare earth prices surged in 2010, even more potential entrants swarmed. Hundreds of companies around the world started raising money for new mining projects.
In part because the international community was spooked by the 2010 incident, the market reacted to the threat of China’s sole control of the rare earth supply. Now, alternative production sources, coupled with technologies developed specifically to minimize the use of these minerals, are eating away at China’s strategic monopoly.
Hand-wringing over China’s rise has become background noise in the West, but it is important to remember that market forces do tend to act to keep economic power balanced and that market actors will look for creative ways around problems. The combination of need and cleverness in either economics or engineering often ends up yielding solutions.