Tag: rare earth metals

OM in the News: China’s Rare-Earth Escalation Threatens the Global Economy

China’s newest restrictions on rare-earth materials would mark a nearly unprecedented export control that stands to disrupt the global economy and threaten the supply chain for semiconductors, writes The Wall Street Journal (Oct. 10, 2025). Chips are the lifeblood of the economy, powering phones, computers and data centers needed to train artificial-intelligence models. The rule also would affect cars, solar panels and the equipment for making chips and other products, limiting the ability of other countries to support their own industries. China produces roughly 90% of the world’s rare-earth materials.

A rare-earths production site in China

Global companies that sell goods with certain rare-earth materials sourced from China accounting for 0.1% or more of the product’s value would need permission from Beijing, under the new rule. Tech companies will probably find it extremely difficult to show that their chips, the equipment needed to make them and other components fall below the 0.1% threshold.

“These rare-earth minerals and the ability to refine them are just the basis of modern civilization,” said  one industry expert. “It’s an economic equivalent of nuclear war—an intent to destroy the American AI industry,” added a second. The U.S. and other countries are pouring hundreds of billions of dollars into data centers, making AI a key economic engine. China gaining control of the technology would potentially let it catch up in the AI race and upend the world order.

The semiconductor supply chain is vulnerable to actions like China’s because large chip plants require big capital investments from an ecosystem of companies providing specialized equipment, intricate technical processes and final packaging. Companies in the U.S., Taiwan, Japan and the Netherlands all collaborate with one another.

The Trump and Biden administrations have offered subsidies and other policies to aid the process, but domestic capacity generally remains in its infancy. Some analysts said the new rules will fuel new urgency for big tech companies to invest more in these areas.

Classroom discussion questions:

  1. Why are rare earths so important?
  2. Why doesn’t the U.S. produce and process the minerals needed?

OM in the News: Countering China’s Dominance of Key Minerals

The U.S. government is ramping up efforts to secure minerals critical to modern technology but whose supply is dominated by China—a stranglehold that could take years to break , writes The Wall Street Journal (Oct. 6, 2020).

In recent years, the U.S. and other Western nations have invested in projects to mine these resources—essential for the production of electric vehicles, cellphones and wind turbines—an effort these countries are now accelerating given how far they still trail China.

Last week President Trump signed an executive order to speed the development of mines. Miners welcomed the move, but caution it takes around 10 years to set up a mine and that the West also needs to develop the capability to process these resources into the materials used in final products.

Rare-earth elements are one of the 35 types of minerals that the U.S. government has deemed critical to economic and national security. The U.S. imports 80% of its rare-earth elements from China. For 14 of the 35 critical types of minerals, the U.S. has no domestic production. China has built its dominant position because of their abundance there and the country’s more lax environmental laws make it easier to mine them. It today dominates the entire supply chain.

Up until the 1980s, the U.S. was the world’s biggest producer of rare earths and created the technology to process them, but now has only one producing mine and no processing plants. (That one is California”s Mountain Pass mine–shown in the photo)-

Classroom discussion questions:

  1. Why are these rare minerals an OM issue?
  2. Relate the new mining push to the “Triple Bottom Line” discussed in Supp. 5 on p.195-6 of your Heizer/Render/Munson text.

OM in the News: The Rise and Fall of Rare Earths

Manufacturers of high-tech products rely on a steady stream of metals–some of them scarce–to make their goods. These “rare earths” are light-weight, malleable  metals that are essential to hybrid cars, cell phones, and hard disk drives. (Toyota Prius batteries use neodymium to power the car.)  Rare earth metals, a collective name for 17 minerals used in products like these, had skyrocketed in price in the past 2 years as China (which controls 90% of global production) slashed exports to tighten control over the sector. Lanthanum, for example, jumped from $10/kg in 2009 to $160/kg last year. Neodymium surged from $20/kg to $455/kg. Prices of many other rare earth elements rose more than 10-fold in a little more than a year.

But The Wall Street Journal (Nov.13, 2012) reports that companies– like Australia’s Kimberly Rare Earths, Black Fire Minerals, and Sable Minerals– that bet on rare earths as a hot commodity play are canceling investments  after being caught by a sharp fall in prices this year. Fears of overinvestment and a supply glut are the driving forces. Lanthanum—used in oil refining and hybrid vehicles—now fetches just $13/kg. Cerium, which is used in catalytic converters and plasma televisions, is now down to $16 a kilo, from $102 a kilo last year. Neodymium, used in wind turbines and music players as well as in batteries, has fallen to $85 a kilo from $234 a kilo.

Sentiment in the wider mining industry is souring on concerns over the slow pace of the global economic recovery. “All of a sudden we have 400 years of rare earths being drilled out,” said Kimberly’s director. “Smaller projects just aren’t viable anymore.” Although demand for rare earths will more than double to nearly 250,000 tons over the next decade, the growth in supply will outstrip demand between 2014 and 2019 as new mines start operations.

Discussion questions:

1. Why are rare earths so important in manufacturing?

2. What lessons do OM managers learn from these price fluctuations?

OM in the News: Complexity of the African Supply Chain

While the aftermath of the Japanese earthquake is causing many companies to worry about the auto and electronics supply chains, a different pall is hanging over a supply chain in the Democratic Republic of the Congo. The substance in question is a rare earth metal called tantalum, and the Congo is the world’s 3rd largest producer of this ingredient key to smartphones, tablets, and computers. The Wall Street Journal (April 27,2011) reports that Intel, AT&T, H-P, and other big technology companies are caught in a new SEC rule that requires them to report if  their supply chain includes tantalum coming  from war-torn regions of Africa. Key minerals, according to the law, cannot come from the Congo’s rebel-controlled mines.

I have to admit that I did not know much about such “rare earths” until we blogged about neodymium . At that time China cut its exports of that metal by 3/4 to save supplies for its own electronics manufacturers. China makes 97% of the world’s neodymium, dysprosium, and didymium.

The complex African supply chain means that US companies don’t really know who they are buying from. They purchase finished products through suppliers that source from smelters,which in turn buy from traders on the ground. Intel, Dell, TriQuint, AT&T, and Microsoft are all scrambling to work with suppliers to track the minerals. AT&T, hoping for an exemption,  estimates it would have to wade through 35 manufacturers, 60-80 parts suppliers, 1,060 commodity-part suppliers, and an unknown number of brokers and distributors to get to the mine that is the source of its tantalum.

Just as Ford recently discovered that a 3rd tier supplier in Japan was the sole source for 3 paint pigments for its autos, manufacturers around the world are finding that complex supply chains are an OM function that needs to be monitored and managed.

Discussion questions:

1. Why is it so difficult to manage global supply chains such as this one in the Congo?

2. What alternatives do manufacturers have in replacing rare earth suppliers?