Adam Minter writes:  Rare earths aren’t the world’s sexiest commodity. The 17 elements are notoriously difficult to extract from the ground and have brazenly obscure names. (Don’t make the classic rookie mistake of confusing yttrium with yttribium.) But what they lack in branding, they certainly make up for in utility and ubiquity: they’re essential to products as wide-ranging as wind turbines, smartphones, high tech weapon systems and a fishing reels.

Although the United States was once a major supplier of rare earths, China has been the world’s primary source since the 1990s.

As recently as 2013 China provided 86 pecent of the world’s rare earths supply and, especially over the past several years, Chinese officials have made no secret of their plans to use their accumulating monopoly power.

In 2009, a senior official in Inner Mongolia, home to China’s most productive rare earth mine, explaind how export controls on rare earths (dating back to 1999) were designed “to attract more Chinese and foreign investors into the region.

When it comes to rare earths, China sees no reason to separate economic goals from political ones.

By 2011, several foreign users of rare earths had relocaed production to China.  Fear and speculation served to drive up prices. For example, cerium — a rare earth often used in aluminum and iron alloys rose from $6 per pound in 2008 to a record of $77 per pound in August 2011.

Alternatives to Chinese rare earths quickly began cropping up, whether via recycling, new mines, alternative materials, or even smuggling. In July 2010, the Colorado-based Molycorp raised $393.8 million in an IPO, the proceeds of which went to re-opening a rare earths mine it had closed the previous decade.

By mid-2011, the combination of conservation, new mine, and alternative materials had produced a price crash from which the rare earth market has yet to recover.  This has forced China to change course:.

Rescinding the export quotas wasn’t a very significant concession.  Demand had fallen off so significantly that the quotas had ceased to be an issue. When the WTO ruled in March 2013 that China’s export controls on rare earths and other industrial metals violated its rules, China did not complain.

China has now consolidated the industry into two state-owned companies.  This should address two main problems in China’s market;  the proliferation of private mines and wildcatters who can and do supply smugglers.

It’s an open question whether Chinese industrial policy can maintain the country’s rare earths primacy — and a return to high rare earth prices — via consolidation.  Even if China doesn’t dominate rare earth mining, it continues to dominate rare earth processing (the dirty, dangerous, energy-intensive and expensive process of turning rare earths into something useful).

Even Molycorp, the company that was meant to be America’s great rare earths hope, sends some of its rare earths to China for processing.  China’s new rare earth conglomerates — which enjoy state-backing to cover their losses — seem likely to continue their dominance for years to come.