In the race for green tech, the leading position of Europe and the United States is coming under new pressure.
During the summer break, China's commerce ministry cut export quotas for so-called rare earth elements by 72 percent for the second half of this year.
This has serious implications. Rare earth elements are playing a rapidly growing role in our drive toward a high-tech, low-carbon economy, in everything from batteries for hybrid and plug-in cars to catalysts in energy-efficient light bulbs.
The rare-earth element terbium, for example, can cut the electricity demand of lights by up to 80 percent, while fractions of dysprosium can significantly reduce the weight of magnets in electric motors. Rare earth elements also have found military applications.
China holds the largest reserves of rare earths and is responsible for over 95 percent of their current global production. Beijing is well aware of the importance of these strategic resources. In 1992, Deng Xiaoping noted that "the Middle East has its oil, China has rare earth."
With China seeking to shift its industry to the manufacture of higher-value goods needed for a green industrial transformation, it will increasingly require the lion's share of its own rare-earth production to satisfy domestic demand.
No wonder that Beijing is slowly pulling the plug on exports. A year ago, the Chinese Ministry of Industry and Information Technology suggested in a policy paper that the export of the most valuable rare earth elements be terminated.
Eoin Treacy's view When did a western politician last show the prescience of Deng Xiaoping, quoted above? I cannot recall.
China's rulers are scarily authoritarian but they are also smart strategic planners. Virtually every tech product requires some rare earths. Western politicians and even manufacturers have been slow to recognise this supply crisis.
A Search of the Fullermoney Archive (fourth item down, upper left), will produce 22 items on 'rare earth' dating back to March 2009. A Search under 'rare earths' will produce 16 items dating back to January 2007.
Shares that mine rare earths metals, or have promising properties which they hope to mine, are back in play once again. They are also highly speculative since most have yet to make money. That will change, presumably, but I would still treat their currenty strength as a recovery become momentum move, which should have further to run over the short to medium term.