Monday, September 26, 2011

A Rare Earth Update

As part of our ongoing look at the rare earth situation in China, and its effect on compact fluorescent bulb users (and suppliers) throughout the rest of the world, we came across this article that provides a little more insight into the underpinnings of the crisis.  The entire article is useful and interesting, and we’d like to highlight and discuss a few of the standout points today.  

  • Although CFLs burn more efficiently, resulting in lower energy use and longer lifespan, the mining of rare earth materials used in their production is still an energy-intensive and potentially toxic process.  This is one of the major reasons behind China’s price increases and export caps on these elements.
  • Rare earth price increases have affected suppliers across the lighting industry, and unfortunately sometimes retail price increases are just unavoidable.  The article mentions that if the same inflation on bulb raw material costs occurred for a $2 cup of coffee, that cup would cost 1200% more - $24.55! 
  • Lighting isn’t the only affected industry.  These same rare earth raw materials are used in wind turbine production and electric motor manufacturing, and these industries have seen similar price increases and drops in production.

What’s next?  The issue will certainly be discussed at the World Trade Organization meetings this winter, as this is a major international commerce situation.  We’ll be sure to keep our blog, Twitter, Facebook and LinkedIn updated with any news.

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