Undersea trove could upend rare earths market

Japanese researchers have discovered a trove of rare earths — valuable materials that are essential to the production of high-tech products — in the nation’s exclusive economic zone. The deposits could yield several hundred years of supplies if mining techniques can be developed to make their extraction economically viable. If that problem can be solved, then the international market for rare earths could be transformed, and that would have profound implications for Japan’s relations with China, if not China’s relationship with much of the high-tech manufacturing supply chain.

Rare earths are a group of 17 metals that are highly prized for their use in products such as smartphones, batteries, displays and even wind turbines. They have tongue-twisting names like dysprosium, praseodymium, ytterbium and yttrium. In fact, “rare earths” is a bit of a misnomer: They are not hard to find — only promethium is actually scarce — but the deposits tend to be dispersed rather than concentrated in single areas, and when they are found they are often intermingled and can be difficult to separate.

Mining rare earths can be expensive because of the dispersion, location and the environmental consequences of recovery. It is a dirty process and the ensuring pollution, which can do extensive damage to wildlife, human life and the environment, has deterred many countries from exploiting their rare earths deposits. This is one of the reasons that China has become the world’s main supplier: About 90 percent of the world’s supply of rare earths — the proportion reaches as high as 97 percent for some metals — is now produced there.

That could change with the discovery by a team of researchers from Waseda University, the University of Tokyo and the Japan Agency for Marine-Earth Science and Technology (JAMSTEC) of more than 16 million metric tons of rare earths deposits in waters near Minamitorishima, an island located about 1,800 km southeast of Tokyo that is part of the Ogasawara Island group. The find is spread across a 2,500-square-km area in Japan’s EEZ, and is thought to contain 780 years’ worth of yttrium, 620 years’ worth of europium, 420 years’ worth of terbium and 730 years’ worth of dysprosium. The researchers concluded that it “has the potential to supply these metals on a semi-infinite basis to the world.”

China’s virtual monopoly has given it leverage over rare earths’ consumers and it has not shied away from using that power. Japan — and the entire world — got a wake-up call in 2010, when China cut shipments of those metals after a Chinese fishing boat captain was arrested for fishing in the waters around the Senkaku Islands — which China also claims — and then running from and ramming the Japan Coast Guard cutters that chased him.

Chinese explanations for what was happening varied. At one point, Beijing denied that anything was afoot, then it said the embargo reflected the anger of local customs officials rather than a national decision. After hoots of derision, China explained that it had imposed quotas to protect the environment, ease illegal exploitation and preserve its supplies. Several nations then brought a case in the World Trade Organization alleging the cutoff violated China’s obligations — a case that China lost.

Ironically, the victory could prove Pyrrhic. China’s cutback sparked an increase in prices— 10 times in some cases — which inspired other countries to reconsider the economics of their own production. Prices fell in the aftermath of the WTO case, but demand has risen, which has helped push prices higher and sustain the incentive to open new production lines.

The price of extraction is the key to the viability of the Japanese discovery. They are deeply buried — as much as 6.4 km underwater — and getting them out is expensive. The researchers also noted, however, that granules of the materials they discovered are at least four times the diameter of usual mud grains, and they invented a way (and a machine) to separate them from nearby sludge. The “mineral processing procedure” has, the researchers say, “greatly enhanced its economic value.” Yasuhiro Kato, a professor at the University of Tokyo and a research team member, noted that “the possibility of extracting them efficiently is rising, and we are one step closer to making development of this resource a reality.” A feasibility test is reportedly expected within five years.

The Japanese discovery could transform the global market for these metals. Given Japan’s own reliance on these materials for its manufacturing products, and the importance of such manufacturing for its economy, it would recalibrate the relationship between Japan and China. It would also redefine Japan’s position in the global supply chain. While it is too soon to assume that these developments are certain, they are promising portents.