It's no secret that China produces more than 95% of the world's rare earth elements. It's also no secret that China cut its export quotas by 72 percent in the second half of 2010 — then 35 percent for the first half of 2011. .
Of course, this has been an amazing opportunity for investors in rare earths...
But it could also soon prove to be an amazing opportunity for forward-thinking companies that aren't wasting any time trying to find alternatives for their rare earth needs.
Building a better electric mousetrap
Toyota (NYSE: TM) recently announced it's very close to developing new electric motors for its hybrid cars — motors that don't depend on robust supplies of rare earth metals.
According to Toyota engineers, they're working on an inductive motor that's much more efficient (and lighter) than the type they're using now in the Prius.
This doesn't mean Toyota's banking on immediately eliminating its need for rare earths; in fact last month, the company announced it was building a rare earth processing plant in India.
But it's no secret now that most companies relying on rare earths are desperately trying to find products that can help hedge against Chinese control of rare earths.
In fact, back in November, we reported on a company called NovaTorque, which has developed an electric motor that uses ferrite magnets in place of rare earth metals like neodymium.
The motor design also requires about half as much copper and 40% less steel than competing motors.
Also worth noting is German auto parts maker Continental AG (CTTAY.PK), which has already come up with its own motor that doesn't require rare earths.
As China continues to secure its rare earth supplies for its own needs, the search for non-Chinese-controlled rare earths will continue...
But so will the search for new technologies that simply don't require rare earth metals.