WASHINGTON, (Reuters) – The 2011 scare about Chinese control of rare earth elements critical for defense manufacturing has faded, with market forces boosting production outside China and prompting a shift to alternative substances, according to a new Pentagon report.
China, Japan and the United States are the biggest consumers of rare earth elements, which are used in everything from wind turbines, hybrid vehicles and earphones and computer hard drives to television sets and energy-efficient lamps.
A jump in prices for rare earth elements in 2011, 95 percent of which came from China, led to Pentagon concerns that the supply of rare earths for defense manufacturing might dry up.
But an annual report sent to Congress in recent weeks said, “Global market forces are leading to positive change in rare earth supply chains, and a sufficient supply of most of these materials likely will be available to the defense industrial base.”
The report, dated October 2013 but not yet released publicly, said there was a “significant reversal” in the situation with rare earth elements between 2011 and 2012, with one expert projecting a 20 percent drop in global demand.
The decline in demand, in part due to increasing use of alternatives, has resulted in a 60 percent slide in the prices of most rare earth oxides and metals from their peaks in the summer of 2011, according to the annual industrial capabilities report.
