The deposits we located following a survey by a team from the University of Tokyo. The Rare Earths are in the bottom of the Pacific, in international waters east and west of Hawaii, and east of French Polynesia, at depths of 3,500 to 6,000 metres.
However finding new reserves means nothing if their recovery costs are not competitive, as vast other sources exist on shore that are not being exploited (because both costs and environmental issues). Technology for recovery of such deposits is in its early stages, so cost are bound to be non-competitive with the prices offer by the People's Republic.
Anyway in a crisis situation, where like last year, China imposed a short lived embargo on Japan, alternative sources may be the only sources, so there is on more backstop solution.
Furthermore the scale of the discovery may be a game changer in terms of physical scarcity considerations: the University of Tokyo estimates these deposits to contain 80 to 100 billion tonnes of Rare Earths, while current viable reserves are about 110 billion tonnes (USGS). Nevertheless one major issue is still unclear: exactly which elements were found.
As time progresses we'll see how important this discovery will be, but as usual in Economics, the "crisis" will probably solve itself. Prices are rising, and less competitive mines will be competitive again entering the positive rents area. Molycorp is already restarting operations at the Mountain Pass mine in California, certainly others will follow. No physical scarcity is in sight!
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| table of rare earth elements |
See this older post for more on rare earths.
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