Major undersea discoveries of rare earth elements (REEs) in the Pacific Ocean in recent weeks mean a potential new source of supply for this group of strategic metals. That could have far-reaching effects on several high-tech industries, since these 17 metals are essential for the renewable energy, aerospace and electronics industries. It may also lead to altered geopolitical equations. China holds a global monopoly in REEs, thanks to easily exploited deposits in Inner Mongolia. It controls over 90 per cent of current global REE production and almost 100 per cent of the supply of four heavy REEs. China has used its stranglehold ruthlessly to force itself up the industrial value chain. In the early 1990s, China cut REE prices, forcing the closure of more expensive mines elsewhere. In 1999, it started imposing export quotas, which encouraged global electronics and renewable majors to relocate production to the People's Republic of China. In 2010, it drastically cut the export quota to 40 per cent of production. That cut-off remains in force despite it being challenged by the World Trade Organisation. Other countries have tried exploiting onshore deposits, and research has also been focused on more efficient usage and recycling of REEs. But although REEs are available in many places in relative abundance, they are difficult to extract since they tend to be dispersed in small quantities. There are also major environmental issues, including radioactivity, to be dealt with in mining processes.
Japan's Agency for Marine-Earth Science and the University of Tokyo have just announced very positive results from a two-year survey across the mid-Pacific. Huge REE reserves with very high concentrations have been discovered undersea, with major "strikes" in several places, including within Japan's Exclusive Economic Zone and off Tahiti. Undersea reserves are now believed to be 1,000 times greater than all land-based deposits. The new discoveries are easily commercially viable, according to the academic in charge of the team; there would also be fewer environmental issues involved in using robotic mining technologies offshore. If the Japanese can indeed scale up undersea mining to significant levels, it would offer relief to a whole range of industries. Reducing the dependence on China would give global electronics and renewable energy majors much more choice in the matter of locating production facilities and also allay fears of theft on the intellectual property front. It would mean less headaches in defence R&D and procurement everywhere, since REEs are hugely important for many military applications.
Almost inevitably, extraction of undersea REE will translate into altered geopolitical equations. There would be a re-evaluation of the strategic importance of the Pacific region and of the economic zones of nations bordering the Pacific Rim and, probably, a huge thrust into undersea exploration there and elsewhere. In a broader sense, it would also reduce China's formidable leverage a little. Japan itself, for instance, uses almost 50 per cent of global REE production, and stresses in the Sino-Japanese relationship have caused jitters in end-user industries. Other nations will also certainly not mind having an alternative and possibly more stable source of supply.
