Saturday, January 02, 2010

Green Technology is a Scarce Resource Hog; And Moves Dependence from Saudi Arabia to China

Rare Earth Element (RRE): Neodymium

William Jacobsen at the Legal Insurrection blog writes:

The whole "green" revolution is based on the false assumption that the technology does not use scarce resources. In fact, "green" technology is a "scarce resource hog," and he points to an article in UK's
The Independent:

Britain and other Western countries risk running out of supplies of certain highly sought-after rare metals that are vital to a host of green technologies, amid growing evidence that China, which has a monopoly on global production, is set to choke off exports of valuable compounds. Failure to secure alternative long-term sources of rare earth elements (REEs) would affect the manufacturing and development of low-carbon technology, which relies on the unique properties of the 17 metals to mass-produce eco-friendly innovations such as wind turbines and low-energy light bulbs.

After decades in which they were considered little more than geological oddities, rare earths have recently become a boom industry after the invention of a succession of devices, including iPhones and X-ray machines, which rely on their specific properties. Global demand has tripled from 40,000 tons to 120,000 tons over the past 10 years, during which time China has steadily cut annual exports from 48,500 tons to 31,310 tons.

Once extracted and refined, the rare earth metals can be put to a dizzying range of hi-tech uses. Neodymium (pictured above), one of the most common rare earths, is a key part of neodymium-iron-boron magnets used in hyper-efficient motors and generators. Around two tons of neodymium are needed for each wind turbine. Lanthanum, another REE, is a major ingredient for hybrid car batteries (each Prius uses up to 33 lbs.), while terbium is vital for low-energy light bulbs and cerium is used in catalytic converters.

As William pointed out on another post:

The green revolution which is the centerpiece of Obama's economic plan essentially relies on substituting our dependence on Saudi oil with a dependence on Chinese metals.


At 1/02/2010 10:23 AM, Anonymous Anonymous said...

If this predicted future validates then these REE mining stocks from areas outside of China will be great investments.

They are penny stocks, mostly exploration with no production but have lands that drilling cores indicate are rich in REEs outside China, mainly in Canada and Austalia. I have small positions in the stocks below and so far have made good money on paper and will continue to hold.


Do your own DD and Good Luck to All!

At 1/02/2010 10:33 AM, Anonymous Lyle said...

There a known resources in the US , its just a matter of being sure that there remains a market at a price that can make money. The resources were identified after WWII where the US got stung by being dependent on foreign sources of rubber tin and other materials. The chinese undercut the other mines and drove them out of business. This is the other side of the protectionist coin, drive the competition out of business and then charge an arm and a leg, if you have let the domestic industry be demolished.

At 1/02/2010 11:49 AM, Anonymous gettingrational said...

At there is a section on Rare Earth Metals. This was a fascinating primer for myself on rare earth metals. The stocks mentioned can be wildly speculative so individual results may vary greatly.

At 1/03/2010 9:23 AM, Blogger Michael Smith said...

I keep waiting for an economist of note to point out that Obama's "green revolution" that is supposed to create millions of jobs is nothing but the "broken window fallacy" -- it's just the same old poppycock of conflating "need" with "demand".

Americans don't have trillions of dollars just sitting around waiting to be spent on millions of wind mills, solar panels and electric cars. Any large-scale government program that forces Americans to spend their money on such things will inevitably mean that Americans will be forced to spend correspondingly less on other things. Any gains in employment in the "green energy" sector will thus be cancelled by losses in employment from the decreased spending in other sectors.

Nor will this be a merely neutral shift in employment patterns. Millions of workers will have to be retrained -- which isn’t free -- and since government always adds staff to administer such programs, thousands of additional government bureaucrats will be hired, further draining our wealth.

The whole thing is a pipe dream and an economic disaster waiting to happen. Why won’t some economists step forward to point out the obvious fallacy in Obama’s claims?

At 1/03/2010 11:27 AM, Blogger Greg Turco said...

The market will sort out the rare material issues with pricing. Why is anyone worried?

At 1/03/2010 11:46 AM, Blogger Marko said...

I believe the U.S. has plenty of Uranium ore. Let's remove the 'visible foot' of government from the neck of the nuclear industry and they can create all the "green" energy anyone could want, and reduce dependence on the middle east at the same time.

Granted, this issue points out that electric cars need rare earth elements for batteries currently, but as demand increases, so too will domestic supplies.

Great point about the Broken Window Fallacy Mr. Smith, thanks for bringing that up. I think the de-over-regulation the nuclear industry would not fall under that fallacy though.

At 1/03/2010 8:10 PM, Blogger juandos said...

China to choke off rare earths?!?!

It seems according to some folks China selling rare earths can help fix their supposed population problem...

At 1/04/2010 6:43 PM, Anonymous Dr. T said...

I don't know why China was singled out. It supplies only one-third of rare earth metals. As it increases its own high tech manufacturing, it is logical that it would have less metal to export.

Russia and South Africa both have large supplies of rare earth metals, but those nations weren't mentioned. Neither has any significant high tech manufacturing, so they can export as much as they can mine.


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