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OM in the News: The Quest for Rare Earths Leads to Japan

April 13, 2018

Rare earth mining can be a dirty and ecologically damaging business. Here, a rare-earth metals mine in China.

“Japan has discovered hundreds of years’ worth of rare-earth metal deposits in its waters,” writes The Wall Street Journal (April 12, 2018). Why is this important? It reflects Tokyo’s concern about China’s hegemony over minerals used in batteries, x-rays, TVs, cell phones, electric vehicles, and 100s of other electronic devices.

The deposits were found about 1,150 miles southeast of Tokyo. Extracting them will be costly, but resource-poor Japan is pushing ahead in hopes of getting more control over next-generation technologies and weapon systems. A 965-square-mile seabed contains more than 16 million tons of rare-earth oxides, estimated to hold 780 years’ worth of the global supply of yttrium, 620 years’ worth of europium, 420 years’ worth of terbium and 730 years’ worth of dysprosium.

The U.S. Department of Energy and the E.U. have issued warnings about shortages of rare earths as China’s own consumption of them increases. “This is a game changer for Japan,” said an industry expert. “The race to develop these resources is well under way.”

In 2010, China pushed rare-earth prices up as much as 10 times by cutting its export quota on 17 rare earth elements by 40% from the previous year. It said it wanted to clean up a polluting industry, but the move left Japan and other nations seeking more independence from prices dictated by its neighbor. It is important for countries’ supply chains to secure their own source of resources, given how China controls the prices.

Classroom discussion questions:
1. Why are rare earths important to OM?

2. Where else can supply chain managers turn to procure these critical minerals?

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