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As a Silicon Valley technology industry worker, I often try to reconcile the humanitarian, environmental, or political aspects of global issues with business realities. I may wish it made business sense for companies to focus on alleviating poverty or improving health care and education, but—even with the best intentions—by definition, for-profit companies are not charities. As it is, big multinational companies spend millions on corporate social responsibility efforts.

Thankfully, the business argument for sustainability is fairly easy to make. At least until emerging market growth slows appreciably and manufacturers find alternative materials to use, the price of elements in our high tech gadgets, and the security risks of not finding alternatives, are both headed up.

First, look at the demand side of the equation. Ironically, many of the technologies that move us toward greener, smarter, and more connected lifestyles are also rare earth and scarce materials hogs. These include wind turbines, hybrid car batteries, liquid crystal displays, audio coil magnets, and solar cells, among others. According to Intel, over 60 elements are used in the manufacture of semiconductors. Depending on the process, these may include boron, phosphorus, platinum group metals, and gallium. Printed wiring boards require large amounts of lead and copper. For every megawatt of electricity generated by a wind turbine, one ton of rare earth permanent magnets are needed. And even as new technologies demand more of these materials, rising living standards around the world mean more people want to buy them, propelling demand even higher.

Now consider supply. Rare earth metals are not scarce in terms of reserves, and only about a third of known reserves are in China. The problem is that 96 percent of active mines are located there. The balance has begun to shift, particularly following a temporary embargo of rare earth exports by China attributed to a diplomatic spat with Japan last year. For its part, Beijing has made it known that it no longer wishes to be the world’s sole supplier of these elements. With an eye to moving exports up the value chain, prioritizing domestic demand and taking steps to protect the environment, Beijing introduced a new export tax on rare earths from 01 April. Existing rare earth mines in the US, Canada and Australia are being brought back online, but the environmental impact of refining methods for rare earths makes refining politically tricky and creates ethical questions. One Australian mining company is building a major new refinery in Malaysia, and rare earths mined in the US will have to be exported for refining, according to various reports.

Rare earths are not the only culprit. Reserves of other elements used in high tech manufacturing including helium, phosphorus, silver, indium and gallium are being depleted. Even experts do not agree on how much remains in the ground, but what is not in question is that prices are have grown volatile. Market fears compound actual supply constraints, encouraging stockpiling, speculation, and hedging. Indeed, some elements with ample reserves are experiencing price spikes, particularly tin and copper, thanks to market speculators.

Resource depletion raises a host of risks for tech companies. Despite our best intentions, many old electronic components end up in dumps in Asia and Africa. There, crude and toxic methods may be used to extract elements whose value is too great for impoverished locals to ignore, even if they understand the illegality and toxicity. Theft of existing infrastructure, as scrap prices rise, is leading to power outages, train signal malfunctions, and Internet outages. Last week, a Georgian woman in her seventies, scavenging for copper, inadvertently cut off Internet access for the entire country of Armenia. The UK has termed copper theft risk its second biggest national security threat after terrorism. As materials prices rise, the residual value of used kit increases, and the grey market expands, posing brand risk as well.

Geopolitics will play too. Governments may get more involved as supply choke points emerge, leading to tensions reminiscent of global oil supply disputes. This was seen last year when a diplomatic disagreement may have contributed to a temporary embargo of rare earth exports from China to Japan. While net consumer countries bicker, supplier countries may enjoy a rise in strategic clout, including:

Given these looming problems, it is pretty easy to argue that sustainability is not just a nice-to-have. I took a look at what some companies are doing, and here are a few examples of what I found.

All of these are good options that companies are looking at, and some are pursuing. To be honest, however, it appears that despite Silicon Valley chatter about disruptive technologies and solutions, sustainability is not a high priority in many technology company boardrooms. That doesn’t make business sense to me, given the risks to supply chain, information security, and the environment. Lately, it seems more canaries are coming up out of mines dead than alive.

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1 Comments.


  1. Very interesting. I was not aware of the efforts of companies to change their designs to reduce the need for rare earths, or to recycle rare earths in hard drives.

    During WW II, the US studied Germany’s economy to identify vulnerabilities to attack. We noted that Germany used a great many ball bearings in their engine and tank designs, and that ball bearings were already in tight supply for war production. Attacks on ball bearing supplies would have an immediate effect on war production. We therefore initiated heavy bombing raids agains the primary ball bearing production plant in Schweinfurt, Germany, which cost us over 60 bombers shot down in one day.

    The Germans had also noted the shortage of ball bearings, and had already started building more ball bearing plants. They had also re-designed their engines to use fewer ball bearings. A third factor was that ball bearing plants use heavy machinery, which was resistant by our bombs, which blew the roofs off buildings without destroying the machinery. The net result was that German ball bearing production was only slightly affected by our raids and German war production continued to increase until the very end of the war.

    The Chinese restriction on exports of rare earths to Japan may have had the effect of causing us to increase national production and change our designs to reduce our dependency on China. Your “canary in a gallium mine” may have been an excellent warning, in time for us to increase production and change designs — just as the Germans did with ball bearings.

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