‘Oligopolies’ control over rare earths is key green transition snag

Subject: Economy

Section: National Income

Context:

Countries energy transition efforts face significant uncertainty due to the oligopolistic control over mining and processing of rare earth elements that were critical to scale up green technologies, Chief Economic Advisor V. Anantha Nageswaran observed, adding that external funding to help developing countries move away from fossil fuels could also be potentially weaponised.

What can be done:

Investors in green transitions should avoid excessive greed and prioritize public goods creation.
Public investment is essential for green transitions, similar to past major transformations like post-World War II reconstruction and space exploration.
Market-based solutions to carbon emissions have limitations; focusing on economic growth is important.
Capital market liberalization may not precede economic evolution and can lead to over-financialization.
Supporting countries in prioritizing economic growth is crucial for climate security.
Access to rare earth elements and critical minerals is vital for green technologies but is controlled by an oligopoly so there is a need for decentralization.

About Rare Earth Minerals:

Rare Earth Elements or Rare Earth Metals are a set of 17 elements in the periodic table – the 15 lanthanides, plus scandium and yttrium, which tend to occur in the same ore deposits as the lanthanides, and have similar chemical properties.
They are used in production in a huge number of sectors, including renewable energy technology, oil refinery, electronics, and the glass industry.
Rare Earth elements are used in space shuttle components, jet engine turbines, and drones.
Cerium, the most abundant Rare Earth element, is essential to NASA’s Space Shuttle Programme.
Although called “rare”, they are actually found relatively abundantly in the Earth’s crust.
However, they are hazardous to extract, and there are relatively few places in the world that mine or produce them.
According to the Rare Earth Technology Alliance (RETA), the estimated size of the Rare Earth sector is between $10 billion and $15 billion. About 100,000-110,000 tonnes of Rare Earth elements are produced annually around the world.