A growing competition for rare-earth elements (REEs) could soon handicap a wide swath of the aerospace industry supply chain, from companies that build precision guided-weapon systems to suppliers for commercial widebody jets. The commercial aviation industry has long relied on REEs because they give materials enhanced strength and durability. They are used in everything from tires, avionics and jet engine coatings to actuators and airframe alloys. But demand is beginning to outstrip supply as more and more of the elements are needed to support production of hybrid vehicles, smart phones and other consumer products.
The rare-earth element market has already seen a panic. In 2010, China held 95% of the Earth’s supply of rare-earth elements, with the one U.S. company mining them, MolyCorp, on the verge of bankruptcy. China then established export quotas, drastically limiting the amount of rare-earth minerals on the world market. Panic and speculation increased prices through the roof – in some cases, over tenfold. Manufacturers started stockpiling and finding alternative resources for commercial use, decreasing demand somewhat. It is possible that these technological innovations will prevent a shortage entirely, as aviation and other industries rely less on less on rare-earth elements for vital components; demand will decrease faster than supply.
Eventually, China lifted its quotas, creating an influx of supply and decreasing the risk of a shortage. However, 40% of the new supply is considered “illegal”, coming from black-market mining facilities with little environmental regulation. The pollution resulting from this activity resulted in high costs, upwards of $5.5 billion. This led China to crack down on illegal rare-earth element mining operations, possibly leading to a reduction in supply. Moreover, increased use of green technology could lead to a greater need for rare-earth elements, which are speculated to hit peak levels at 2050. Deep-sea mining has been proposed to find additional supply, but hypothetical reserves on the sea floor have not yet been discovered.
Manufacturers are also facing shortages of other basic metals such as titanium. Re-design of certain components is necessary because of this shortage.
- Production-side hazards to availability of key components and systems
- Environmental risks of increased mining production, traded off against increased compliance costs to mitigate these risks.