Rare earths prices on the riseChina recently reduced its export quotas for rare earths - minerals, metals and their oxides.

"Rare" earths is something a misnomer. Rather than being rare in a traditional sense, the minerals are very widely dispersed throughout the soil and require tedious, labor-intensive mining to be uncovered.

Prices are on the rise as the market responded to China's announcement by nervously hiking up costs and manufacturers that use the products began hoarding their supplies. Rare earths are crucial in the manufacturing of dozens of items, such as the magnets that go into everything from hard drive heads to smart bombs, the phosphors used in many LEDs and fluorescent lamps, the slurries used for semiconductor polishing, components that go into hybrid car batteries and the dopants that are often used in lasers and other optical components.

The market worldwide for rare earths exceeds $1.3 billion, or approximately 124,000 metric tons - and nearly all of it, 96.8 percent, comes from China. India, Brazil and Malaysia make up the remainder. The reason for this isn't that China has more rare earths than elsewhere, but that China can produce them more cheaply.

"We have allowed the Chinese to bankrupt our local rare earth industries," Tom Valliere, senior vice president at the San Francisco-based Design Chain Associates, told EETimes. "We shut down our own mine in the U.S. We can rebuild that, but it will take time."

The price hike could have serious implications for the U.S. military, which is heavily dependent on rare earths, Market Oracle predicts.
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