Rare Earth Elements cause international trade dispute

Rare earth minerals: From smart bombs to smartphones – what four major economies are fighting over

by Josh Rubin, Toronto Star


Rare earths can be found in everything from big screen TVs to smartphone and smart bombs, which is why a global trade dispute has erupted over them.
Krzysztof Grzymaj¬ao/Dreamstime
A fight over obscure minerals used in the electronics industry pits four of the world’s largest economies against each other in a massive trade dispute that could take several years to resolve.

Tuesday, the U.S., Japan and EU filed a complaint with the World Trade Organization claiming that China was illegally restricting the export of several so-called rare earth minerals, favouring Chinese manufacturers in the process.

U.S. president Barack Obama railed against China’s efforts to restrict the exports, saying it was hampering competition in the electronics manufacturing market. China currently uses 70 per cent of the world’s supply of “rare earths,” including several used in the making of everything from glass on smart phones to industrial coatings and smart bombs.

“We want our companies building those products right here in America,” Obama told an audience in Washington, D.C. “But to do that, American manufacturers need to have access to rare earth materials, which China supplies.”

Here’s a look at what the dispute’s about, what it all means, and why Canada’s not actively taking part — at least not for now:

Lantha-what?

Though rare earths aren’t exactly household names, the minerals are found over much of the planet’s surface. The “rare” part of the name comes because they’re often spread so thinly, or mixed with so many other material, that extracting them can be a giant pain.

Among the rare earths are such fun-to-pronounce minerals as lanthanum, dysprosium oxide and neodymium oxide. A form of lanthanum oxide is used in fuel cells for hybrid cars.

Who cares?

Manufacturers outside of China are keeping a close eye on the trade dispute. That’s because they’re more vulnerable than ever to interruptions in their supply chain, says Duncan Stewart, head of technology research at Deloitte Canada.

“Decades ago, companies would have several month’s supply of parts and materials on hand. Now, that’s just not the case any more. Supply interruptions can have a real ripple effect,” said Stewart.

Still, Stewart says most manufacturers haven’t experienced major shortages of rare earth minerals. At least not yet.

A rare price

China could be attempting to drive up the price of the various rare earths it mines, as well as ensuring its own manufacturers have a steady supply, says lawyer John Boscariol, head of the international trade division at McCarthy Tetrault.

Those would both be no-nos, according to Boscariol.

“If you’re doing this to favour Chinese companies, or drive up the price, the WTO rules say you can’t,” said Boscariol, adding the U.S.-led trade complaint is a strong one.

“There’s a legitimate case here.”