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The number-one product we use rare earths to make is permanent magnets—components that convert movement into electricity, and electricity back into movement. Scientists began developing permanent magnets in the 1980s, when they figured out that adding a little bit of rare earth metals like neodymium and dysprosium to common metals like iron and boron produced a very powerful magnet. Tiny versions of these magnets make your cell phone vibrate when you get a call. Bigger ones turn the wheels of electric cars. And really big ones in wind turbines convert the movement of air into electricity. A single wind turbine can require as much as five hundred pounds of rare earth metals. 

In the 1990s, almost all of these magnets were made in the United States, Japan, and Europe. Ten years later, most were made in China. That didn’t happen by accident. In the mid-1990s, two Chinese companies bought an American company called Magnequench, a GM spinoff that held the patent for a key type of neodymium-based magnet. The American government approved the deal on condition that the company stay in the United States for at least five years. “The day after the deal expired,” writes Sophia Kalantzakos in China and the Geopolitics of Rare Earths, “the company shut down its US operations; employees were laid off, and the entire business was relocated to China.” 

The shift of the magnet industry to China was part of the epochal shift from West to East of so many heavy industries. This happened partly because developing countries—especially China, which began opening its economy to the global market in the 1970s—were eager to build their industrial bases, had lots of natural resources, and had millions of people willing to work for far lower wages than their Western counterparts. But it also happened because Western countries were tired of the pollution and destruction caused by industries like mining and started leaning on those industries to clean up their acts. “Things began to change in the 1970s,” laments a BusinessWeek article from 1984 titled “The Death of Mining in America.” “The North American industry was hit with large environmental expenditures. New competitors from the Third World appeared, many of them state-owned and blessed with abundant reserves.” 

Excerpted from Chp 2 of Power Metal: The Race for the Resources that will shape the future by Vince Beiser.