The following is an excerpt from a New York Times article, China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, dysprosium and terbium, vital for a wide range of green energy technologies and military applications like missiles.
Deng Xiaoping once observed that the Mideast had oil, but China had rare earth elements. As the Organization of the Petroleum Exporting Countries has done with oil, China is now starting to flex its muscle.
Even tighter limits on production and exports, part of a plan from the Ministry of Industry and Information Technology, would ensure China has the supply for its own technological and economic needs, and force more manufacturers to make their wares here in order to have access to the minerals.
In each of the last three years, China has reduced the amount of rare earths that can be exported. This year’s export quotas are on track to be the smallest yet. But what is really starting to alarm Western governments and multinationals alike is the possibility that exports will be further restricted.
Staggering statistic isn't it? That China controls more than 90% of the resources required for not only the next generation cars, but also for all portable electronic devices from cellular phones to notebooks.
As an example, the latest third generation Toyota Prius requires 1kg of neodymium for each of its electric motors. The Prius has 2 main electric motors. The Prius NiMh battery requires up to 15kg of lanthanum. And Toyota is targeting an annual sales of hybrid (including plug-in hybrids) of 1 million units a year by 2012. Go do the math and consider where will these rare earth metals be sourced from. It's definitely not going to be anywhere near Toyota's own Tsutsumi plant where the Prius is currently made or even near Toyota's battery partner Panasonic EV Energy's newest plant in Taiwa Miyagi.
Those "analysts" folks have been projecting many positive sales numbers for hybrids and EV in the future, and that one of the major push in this is the lowering cost of hybrids with wider adoption. Personally I still don't understand how will this work out eventually. Closer to reality, the cost to produce clean diesel engine vehicles are not coming down. In fact they are actually going up, given the additional technical challenges to fit diesel engines with particulate filters to control emission of fine particulate matter and selective catalyst reduction for NOx control as well as a host of other precision ignition control functions which an equivalent petrol engine does not need to keep itself environmentally legal. Then you have the increasing cost of producing diesel fuel - with strong competition not only from diesel vehicles in Europe but also farm as well as power generation equipment in rapidly developing markets of India and China pushing demand up. The cost of rare metals required in a conventional emission control system of a diesel is only a fraction of that of a hybrid or electric car. So how is it possible that the cost of hybrids is going to be reduced over time when the same is not observed in an existing popular technology?
China has since come under heavy fire from Western powers since news of the Chinese Central government's plan to limit or even ban export of these minerals. Below is taken from another article by NY Times.
BEIJING — Chinese officials said on Thursday that they would not entirely ban exports of two minerals vital to manufacturing hybrid cars, cellphones, large wind turbines, missiles and computer monitors, although they would tightly regulate production.
China produces more than 99 percent of the world’s supply of dysprosium and terbium, two rare minerals essential to recent breakthroughs in high-technology industries.
A bureaucratic reshuffling in Beijing this year prompted a review of Chinese policy, and regulations were drafted that would ban the export of these minerals. That incited anger and dismay from Western governments and multinational companies that depend on Chinese supplies.
Wang Caifang, deputy director general of China’s Ministry of Industry and Information Technology, tried on Thursday to allay concerns that the draft rules would become the final policy, saying the regulatory review was still under way.
“China is very responsible. We will not take arbitrary decisions. All our decisions will be consistent with scientific development,” she said in a speech at the Minor Metals and Rare Earths 2009 conference in Beijing. “China will not close its doors.”
During an interview after her speech, Ms. Wang said that China would continue to set an annual quota for the export of each mineral, adding, “I don’t think it will be zero.”
Pushing Chinese car makers to develop their own hybrid / electric cars fits in neatly with China's own strategic interest. Unlike the US, oil is not traded in Chinese yuan / renminbi currency. It has no further interest other than selling extracts of its own oil reserve. Given that oil is mainly traded in US dollars, promoting oil trade irrespective of whether it comes from the Middle East or its own domestic oil wells is crucial for the US economy. China is determined not to be held hostage by volatile regimes of the Middle East in the same way US is. Plus it has yet to significantly tap into its own vast oil reserve. Recent unrest in China's own Urumqi district could be manipulated by various Islamic interest groups. Currently China prefers to deal with African states (which are just as volatile) for its oil, possibly to avoid conflicts with US who have various interests and alliance with Middle East states. The current largest lithium ion battery manufacturer in the world is BYD, a company which Warren Buffett has a share in it. BYD has leap-frogged all other car makers by producing the world's first plug-in hybrid car - F3DM. Though many choose to dismiss its achievement.
Promoting EVs and hybrids will allow China to exert its own influence in the same way oil cartel group OPEC is currently doing. Plus, China is a developing country with very little legacy infrastructural baggage. Compared to developed markets of US and Western Europe, China has greater flexibility to retrofit its transport and power grid network to support EV and plug-in HVs than developed countries. Compared to major car producing countries like US, Western Europe, Korea or even Japan, China have invested very little in internal combustion engines.
China's push for environmentally friendly vehicles is not so much done out of their concern for the planet. It's pure politics and sits in very well with their strategic interest. China is not just stopping at cars. The Chinese government has strong intentions to make China the main producer of green vehicles, from electric scooters, passenger cars to buses and trucks in the near future. Large amount of subsidies are currently being dished out to taxi fleet operators and local government agencies to purchase domestically produced hybrid or electric vehicles.
Related link :
The great powertrain debate - diesel vs hybrid.
EVs - the great leveller for the auto industry?
Busting Myths About Hybrid Battery Reliability
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