Rare earths key to future technologies
EVERYONE is now talking about the green economy. The United Nations Environmental Programme defines the green economy as "one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities". Many believe green consumerism is on an uptrend. In the developed economies of the European Union, Japan and the United States, for example, we have seen impressive growth in green investment.
By Ahmad Ibrahim
The value of the global green trade promises to run into many trillions of dollars. Some are even suggesting that it would be a serious mistake if countries do not start investing in green technology now.
Why this global interest in going green? What are the drivers of green demand? A lot has to do with growing world concern over climate change, depleting global resources and deterioration in the natural ecosystem. Over the last quarter of a century, the world economy has quadrupled, benefiting millions.
However, at the same time, 60 per cent of the world's major ecosystems have been degraded. The economic growth of recent decades has been achieved mainly through drawing down natural resources, without allowing stocks to regenerate, and through allowing widespread ecosystem degradation and loss.
Water is also becoming scarce. And water stress is projected to increase, with water supplying only 60 per cent of world demand in 20 years. Overconsumption and wastage have been described by some as the root cause of all the problems. As man has more wealth at his disposal, his consumption inevitably grows. More often than not, his consumption rises to a level exceeding his true needs.
The exploding demand cuts across all consumption goods. But one which many claim to be most damaging is the excessive demand for energy and fuel. The fact that many countries distort their energy prices through blanket subsidies does not help matters.
World energy is now up against many challenges. Fossil fuels have become taboo because of global warming. The supply of crude petroleum and natural gas is also in decline. This drives the frantic search for non-fossil alternatives. Countries which are net importers of fuels are especially active. Despite all the research, none of the alternatives has yet to match the cost offered by fossil fuels. But there have been improvements for renewables such as solar and wind power. Prices have come down. Efficiency has gone up.
Admittedly, replacing fossils is not the only way to arrest global warming. Improving energy efficiency is also needed. In countries where energy costs are high, energy efficiency has improved. However, in countries where the cost of energy is still low because of subsidies, there has not been much change. Phasing out fuel subsidies has not been easy.
There are two major stumbling blocks in the development of solar and wind energy. Prohibitive costs remain a major challenge. The other concerns the need to have effective technology for energy storage. This is to take care of the large energy swings in both solar and wind. Much research has gone into the development of more efficient energy conversion and storage technologies.
To date, the ideal battery has yet to be found. Scientists believe new materials with the right magnetic and electrical properties will be key.
Many studies have uncovered the unique attributes of rare earth elements for applications in magnets, batteries, superconductors and lasers. These are all critically important in the development of renewables. For example, the incorporation of rare earth elements in the electromagnets used in wind turbines would significantly increase the conversion of wind into electricity. Suddenly, there is an explosion in world demand for rare earths.
Although rare earth deposits are found in 29 countries worldwide, China has emerged as the only country which has given serious attention to mining and production of rare earths. It in fact started mining them in the 1950s. It is now supplying 97 per cent of the world's demand for rare earths. China now has about 100 companies involved in this industry. It is estimated that each year, China produces more than 230,000 tonnes of rare earths. About 50 per cent are exported.
The global market for rare earths is estimated at US$1 billion (RM3.02 billion). But the market for the downstream products may run into tens of billions of dollars and is growing by the day.
Japan now dominates the downstream high-value products made from rare earths. But China is strategising to expand the downstream products business in rare earths.
With the projected expansion in the world green economy, many predict the global demand for rare earths will rise further. Admittedly, there are risks involved in the industry.
But, technically, it has been shown that the risks are not insurmountable if the right technologies are deployed. What is certain is that the business opportunities in the rare earths industry are destined to be even more lucrative in the coming years.
Many countries have started to seriously consider investing in the industry. This became more evident after an article in The Times of London in 2009 suggested that China will take charge of key technologies of the future with their massive investments in rare earths.
It is clear the world can no longer ignore the opportunities presented by the expanding global demand for rare earths products.
Dr Ahmad Ibrahim is a fellow of the Academy of Sciences Malaysia