(or at least “less”)
…to rare earths
There has been much concern, and rightly so, about the increasing dependence of the U.S. and other economies on the elements known as rare earths, for which the primary current supplier is China. These concerns have been further increased by the rather high-handed manner in which the Chinese government has conducted itself in this matter. As a result, stocks of companies with access to rare-earth mineral deposits outside of China have been doing pretty well.
A couple of weeks ago, General Electric posted about their efforts to reduce the need for rhenium in jet engines. Although it is not technically a rare earth, rhenium is indeed rare–world production about 50 tons per year–and expensive. GE’s rhenium-reduction project has three elements: recycling metal grindings from the manufacturing process, developing alloys that require less or no rhenium, and reclaiming rhenium from used engine parts.
When reading the GE post, it struck me that just about every company that is highly dependent on rare earths probably has similar projects underway. Comes now Toyota, with an announcement that it’s making good progress in developing an electric motor (for hybrids) which has no need of neodymium, a mainly-Chinese-source element that is a key component in today’s hybrid motors. (Toyota’s new motor is based on the induction-motor principle–scarcely a new technology, but one that has required considerable reengineering to meet the weight and efficiency needs of the hybrid application.)
Too often, forecasters and analysts extrapolate demand for commodities under the assumption that users of these commodities will continue to use them at pretty much the same levels, regardless of price and growing scarcity. In reality, though, some users will be intelligent enough to do what GE and Toyota are doing and to look for full or partial substitutes.
I’m by no means asserting that the rare-earths issue is solved or soon will be: even in the case of Toyota’s new motor, there’s a long road from a successful research project to a volume-deliverable commercial product. But I do expect the problem to be widely addressed on the demand side as well as via the opening of new mines and processing faciliies on the supply side.
Fancy what a game of chess would be if all the chessman had passions and intellects, more or less small and cunning; if you were not only uncertain about your adversary’s men, but a little uncertain also about your own . . . You would be especially likely to be beaten if you depneded arrogantly on your mathematical imagination, and regarded your passionate pieces with contempt. Yet this imaginary chess is easy compared with a game man has to play against his fellow-men with other fellow-men for instruments.
–George Eliot, in Felix Holt, the Radical (1866)