Recent predictions that a critical shortage of rare earth metals is coming are, unfortunately, proving true. While China, which provides about 95% of the world's supply of rare earths, has said it will continue to supply the world with the metals, it cut its second-half exports by 72% in July and a Bloomberg news report quotes industry insiders as saying further restrictions are on the way. Those restrictions will undoubtedly have a nasty impact on smart grid technologies. Rare earths are used in everything from wind turbine and EV magnets to consumer electronics and smart bombs. Jeff Green, president of J.A. Green & Company LLC gave a bleak assessment in the Bloomberg article. "Many believe rare earth quotas for the second half of 2010 are exhausted, leaving materials unavailable for sale," Green said. His company represents rare earth users and miners. And to make matters worse, the scarcity has sparked a massive price hike. For its part, China says it needs to cut its export quotas because it is closing polluting mines and needs to keep up with its domestic demand. While California had the world's largest rare earth mine at one time, it closed down in 2002 after China flooded the market with relatively inexpensive supplies. The company that owns the California mine, Molycorp Inc., plans to re-open it and ramp up production as fast as possible. But that is expected to take at least two years and a recent U.S. Government Accountability Office (GAO) review said it could take up to 15 years for the U.S. to produce an adequate supply of its own.
Quick Take: It really is a bleak picture. While the race to find new technologies to replace or cut dependence on rare earths is officially on, it's expected to take years to develop them.
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