Wednesday, August 29, 2012

Resource Security and Risk Management

One of the current hot topics in international politics is resource security. Energy security - specifically fossil fuels - is the most extensively discussed flavor of the issue, but other areas of study include rare earth metals (used in many modern electronics) and even water. Some analysts predict wars revolving around scarce water resources within the foreseeable future.

A few days ago, I ran across this video...



... which reminded me of this podcast from the Department of War Studies at King's College London, which was published in late 2010. The two items provide valuably contrasting points on the topic.

Rare earth metals provide a good case study for some of these phenomena. For those readers who are unaware, rare earth metals are a range of heavy metals whose properties make them indispensable in the manufacture of modern electronics. While they are found in several locations, the vast bulk of rare earth metals are exploited from mines in China. In recent months, China has been accused of restricting rare earth metal exports. As these materials are critical not only for consumer electronics, but also for systems vital to international security, the potential decline in availability relative to demand could become a serious international issue, similar in many respects to the supply and sourcing of fossil fuels. The potential risk affects not only the price, but the actual international availability of the critical commodity in question.

At the same time, the increased risk to global supply makes the potential exploitation of other sources of rare earth metals more lucrative. For example, Japan reported a number of months ago that it had located a source of rare earths in the Pacific seabed - a source that has become lucrative enough to exploit due to the Chinese lockdown on their supplies. According to Wired, it has also compelled the Pentagon to research new ways to mine rare earth metals, and I've also heard (but unfortunately, don't remember the source) that technical experts are also researching methods of manufacturing modern electronics without rare earths.

Of course, the world is seldom so simple: for example, there are allegations that the rare earth mineral coltan has fueled a war in the Democratic Republic of Congo. Additionally, the the mining and refinement of rare earth metals is an ecologically hazardous process. This introducing environmental concerns as an additional limiting factor on sources outside of developing nations, in the same way that environmentalism has limited the use of both traditional fossil fuels and the proliferation of nuclear energy.

The lesson, of course, is that while the so-called "invisible hand" can impact the management of risk, even in matters of resource security, it is ultimately subordinate to human factors.

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