Over the past few years, much has been made of China's grip on the rare earth metals market. The country produces 95 percent of the world's supply and in 2010 it began restricting exports of the metals which are used in electronics, hybrid cars, solar panels, wind turbines and more. It's been thought that clean technology development could be held back or stalled because China was seemingly trying to keep most of the rare earth metals for their own manufacturing needs while exporting the rest at a high price.
It looks like that reign is now ending. The price of rare earth metals has actually been falling since spiking in 2010. See the chart below by Reuter's Scott Barber that demonstrates how those prices have fallen while prices for gold and silver have remained the same.
The reason for the turnaround is that when faced with this roadblock from China, other countries and technology companies quickly found solutions. Countries like the U.S., Brazil, India and South Africa all began ramping up mining of the metals from their own reserves, decreasing their dependence on Chinese exports. Then, more importantly, companies began recycling the metals from their products and finding manufacturing processes that used less of the metals in the first place.
In particular, Japan has aggressively reduced its imports from China. The Washington Post reports, "Meanwhile, Japan has rushed to reduce its dependence on rare earths over the past few years—especially since China has a habit of restricting exports every time the two nations get into a territorial spat. Panasonic has developed a technique to recycle neodymium from old electronic appliances. Honda is extracting rare earths from used car batteries. TDK Corp., which creates magnets for motors, now sprays dysprosium on its motors rather than mixing it in, in order to conserve. All told, reports the Asahi Shinbun, Japan’s demand for rare earths dropped from 31,000 tons in 2010 to 23,000 tons in 2011."
They say necessity is the father of invention and this was certainly the case here. China's restrictions on the export of these metals actually lead to more responsible actions by manufacturers like in-house recycling of their products. Not only did they find a way to work around a limited supply of rare earth metals, but they are now cutting down on e-waste too. As rare earth metal mining is actually not so great for the environment, recycling what we use so that we have to mine less is the best solution.
However, China is reacting to the fall in prices by increasing their export quota. We hope that doesn't discourage any of the progress that has been made.