A systemic approach to the problems of the rare earth market

China's dominance of the rare earth market has been raising issues of major concern since 2010. Reduced export quotas and consecutive price peaks led to fears concerning supply security. Forward integration is shifting the rare earth-dependent high-technology value chain to China. China's export embargo to Japan showed the world the strategic relevance of its economic dependence on China's rare earth products. Despite multiple political and industrial efforts outside China, it has not been possible to diminish the dependence on China, e.g. by building up an independent rare earth supply chain. We think that this is prevented by systemic problems of the rare earth market. This paper examines these distortions of the rare earth market with a systemic approach. Problems are identified and structured qualitatively in order to expose their economic and political connections. The systemic problems are (1) competing political economic models, (2) resource nationalism, (3) market opacity, (4) a lack of trust, (5) weak cooperation and (6) short-versus long-term approaches and profit orientation. These problems are interconnected and amplify each other. In this context, the potential of four solutions to influence the rare earth market system is discussed. (C) 2016 Elsevier Ltd. All rights reserved.