Rare earth elements – the name conjures up the vision of precious material on the cusp of disappearing from the Earth just as we need them the most. But in fact many so-called rare earth elements are actually rather plentiful on the Earth. Take, for example, cerium, which is actually the 25th most abundant element. But the minerals composed of these elements tell a different story.

After all, if you can’t economically harvest these elements, then there existence will be of little value. And the elements that make the harvesting practical are not in such widespread distribution across the earth.

Rare Earth Minerals

Until 1948, rare earth mineral processing was centered in Brazil and India. But with the discovery of monazite in South Africa in the 50’s, that became the source for rare earths. This shifted again in the 60’s, when the Mountain Pass rare earth mine in California came to be the leading producer, and it held the leading spot until well into the 80’s.

Then, through more discoveries and new efforts, China came to be a leading producer of rare earths. That leads us to today, where China now produces a whopping 97% of the world’s rare earth supply. Now, having a single source for the world’s need could possibly lead to problems if something happened to that source. Well, that is exactly what is happening.

The Chinese Stranglehold

China has recently announced that it will start stockpiling its rare earth supply. It plans to cut its quota for rare earth exports by 35%. Of course, cutting 35% of the world’s rare earth supply would have a marked impact on the production of items that are dependent on these rare earth sources.

The area that would be most severely impacted by any shortage is in technological production, since many of our gadgets are rare earth dependent. And if there is any area that grows in production demands year over year, that is technological gadget production. In fact, China is of particular importance to products like smartphones, since it produces 99 percent of the world’s rare earth dysprosium, which is vital for such products.

The announcement from Beijing has sent stock speculators scrambling, and the word on the street seems to be – buy rare earth stocks, the need is going to outstrip the supply. It would seem logical, given a 35% drop in production from the source that supplies 97% of the world’s rare earth needs. And the production of technological goods would be suffering.

Actual Chinese Reaction

But in further examination, just maybe the rare earth sky is not falling. China had announced it was going to cut shipments drastically in 2010, yet total shipments only dropped by roughly 9% as compared to the previous year.

The source for a lot of these quota busting Chinese exports come from small mining efforts that are virtually illegal in China, and Beijing has committed to shutting them down this year. This should show a marked decrease in exports to the world’s rare earth market.

But even as the talk of reduced production is taking place, manufacturers of dependent tech products are researching ways to reduce their dependence on rare earth materials. For example, Toyota Motor has announced that it was advancing its efforts on building hybrid and electric vehicles without the need of rare earth material.

Likely Scenario

It seems certain that technological production is going to be impacted, either directly in manufacturing costs or in research to replace rare earth material with an alternative, if possible. At best estimates, most major technological production will remain dependent on rare earths for at least the next 15 years.

The interesting thing to note is that, while China produces 97% of the global rare earth material, it has only about 37% of the proven reserves. This leaves the door open for other sources to step up and increase production to fill the void in time. In fact, it could be argued that one of China’s motivations in restricting production quotas is to protect its future interests – it does not take a lot of math to realize that China is exporting a fixed resource.

Are We Lucky This Time?

As the rare earth drama continues to unfold, we can expect to see a lot of anticipation on the part of the parties involved. One thing that we should expect is that the price of technological goods will be impacted, at least until the time alternatives can be put in place.

But if we look beyond the current known need of rare earth material, what possible impact could this have on general life? Imagine if there was a medical discovery that was greatly dependent on such material – how would a country’s forced reduction on export quotas impact the medical community?

Rare earths are already being researched and applied to the medical world of implants, with a great degree of success. It is not hard to imagine that more success will increase the demand for rare earths, to the point that our lives could literally depend on the global sources. That is a far cry from a slightly more expensive smart phone

When it comes down to it, we may not know the impact the next rare earth element has on the fortunes and power of any single country. That knowledge is but one scientific discovery away. But when it does surface, how are we set up to handle it? Already trade with many countries is strained, with peak imports not matching to ongoing exports. How will they meet the struggle of a sudden super need to be imported?

As much as it is hard to call, we may be able to consider the current model in place to answer the question. And that answer, as we consider how China has seized and is currently stockpiling rare earth elements, is not a pleasant one.

This is a guest post from TestFreaks.com. TestFreaks is the world’s largest review comparison site with over 10 million reviews and 30 sites worldwide. We help 6 million consumers every month find better product information at our TestFreaks sites.