RARE EARTHS ELEMENTS: DYNAMICS IN THE GLOBAL MARKET

Abstract

The rare earth elements (REEs) are a group of 17 minerals found in nature and in the periodic table sharing the same characteristics. Over time, they have become increasingly important in numerous fields of application and fundamental for a wide variety of sectors such as the high-tech market, the green industry but also for the medical sector and military security. The aim of this study is to provide an overview of this market, considering the political and economic dynamics between the different actors involved. The market of rare earths is imperfect because the supply is not able to adequately meet the demand, this is defined as the balance problem. Actually, from the supply side, the market is a quasi-monopoly governed by China, the largest producer of rare earths. The thesis analyses the strengths and strategies implemented by China that led it to become a leader in the trade of this commodity. This has also happened thanks to the absence of appropriate adjustments in consumer countries that found, and still find, more convenient to import rather than produce due to the high environmental costs it entails. The discontent of the importing countries has begun when China decided to reduce exports by around 40%, causing a global market crisis. The United States, the European Union and Japan accused China of unfair competition and appealed to the World Trade Organization to resolve the dispute. The thesis is organized as follow: Chapter 1 provides a brief introduction; Chapter 2 analyses the supply side while Chapter 3 analyses the demand side; Chapter 4 assesses the balance problem that characterises the rare earth market; Chapter 5 analyses environmental problems and possible solutions.