Home > Trends and perspectives > Sustainability and security issues in Rare Earth supply chains

Sustainability and security issues in Rare Earth supply chains

A nice video of June 16th 2011 by BBC News of points out issues related to Rare Earth Elements (for instance Ores, Concentrates, Compounds,  Oxides and Metals.)

These materials are always more used in many consumers products (for instance: electronics, batteries, lenses, medical devices) and in many high-efficiency products (for instance: flat panels television, generators for wind turbines, efficient electric motors, efficient light bulbs). Toyota Prius has more than 25 pounds of lanthanum in its nickel-metal hydride battery.

However, several sustainability and security issues are related to the adoption of these materials.

  • China has almost the monopoly (95-97% of the global production) of the production of these Rare Erath Elements and has been imposing tariffs and decreasing quotas on its rare earth exports for several years
  • Demand for rare-earth metals is estimated around 134,000 tons in 2009, and only 124,000 tons have being produced. By 2012, demand will reach 180,000 tons, which could exhaust the world’s remaining inventory
  • Prices are very variable and, generally, soaring
  • A lot of water, acid and electricity has to be used in to extract and manufacture rare earhts
  • Workers might be exposed to radioactive material
  • Only low wages make economically efficient the production of Rare Earhts

Companies are worried about the situation. General Electric, about the production of efficient light bulbs that involve the use of rare earths, has a dedicated web page. In a recent note, Gerenal Electric also reported the trend of soaring prices of Rare Earths.

From General Electric note on rare earths

From a supply chain perspective, companies should:

  • Secure the supplies through partnerships with suppliers
  • Hedge price variability through financial instruments
  • Forecast needs and order with advance
  • Were possible assess suppliers’ sustainability performance
  • Design products with less need of rare earths and more easy to be recycled
  • Increase alternative supply sources (e.g. from reciclying)

Sources:

http://www.bbc.co.uk/news/world-asia-pacific-13777439

http://www.economist.com/blogs/babbage/2010/09/rare-earth_metals

http://www.altenergystocks.com/archives/2011/05/the_rare_earth_supply_chain_ores_concentrates_compounds_oxides_and_metals.html

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