China controls key ingredient for NiMH batteries, supply may run short as hybrids gain popularity

Lanthanides. What are they and why do we care about them? Well, lanthanides are rare-earth metals that are a key ingredient in nickel metal hydride (NiMH) batteries. More specifically, lanthanides make up an entire row on the periodic table which includes 15 elements, some of which are utilized in the NiMH batteries found in hybrid vehicles. Okay, now that the chemistry class is over, why should we care about this metal with a funky name? Well, China controls an estimated 95 to 100 percent of the world's supply of lanthanides. Yep, you read it right, China may be home to the world's entire supply of these essential hybrid battery additives.

The real problem revolves around just how much of these materials are available. A U.S. Geological Surveys predicts that total lanthanide reserves are about 99 million tons. Annual usage right now is at 124,000 tons, but that is increasing each year as hybrids gain popularity and regulations demand more efficient vehicles. The Toyota Prius, for example, uses 25 pounds of these rare-earth metals in each vehicle and other hybrids aren't far behind.

China is no fool when its comes to these rare-earth metals. The country understands its position as the world's only real supplier and is playing its cards right. As China's former Communist Party leader Deg Xioping said, "There is oil in the Middle East, there are rare-earths in China; we must take full advantage of this resource." To take advantage of its position as the world leader in this resource, China is reducing exports and increasing tariffs to convince companies in need of the lanthanides to locate production facilities within the country. China's reasoning is simple: they would rather become the world's largest hybrid vehicle production site than just a leading exporter of lanthanides. Can you blame them?

One more thought to ponder, the U.S. has found potential lanthanide sites in several states, but extracting the rare-earth metals from these locations could prove pointless as China has the immediate ability to undercut our price big time. So, what's the lesser of two evils, relying on oil from the Middle East or lanthanides from China?

[Source: Ward's Auto]