Image caption Rare earth metals have vital industrial purposes

You may never have heard of lanthanum, cerium or neodymium, but these and other so-called "rare earth" metals play a vital role in many modern technologies.

Cerium, for example, is an abrasive used in the manufacture of flat screen televisions.

Lanthanum is a catalyst much prized by the oil industry, while neodymium is found in computer hard drives.

A shortage of rare earths would be a serious problem for businesses around the world, and could lead to higher prices for many consumer goods.

Yet analysts say there is a real risk of such a shortage developing.

The reason is that this is a market controlled almost entirely by China - 97% of the rare earths used around the world come from China, the bulk of them mined in the mountains of Inner Mongolia.

But in recent years, Beijing been limiting exports, by establishing quotas and banning the sale of some products outside the country altogether.

There is mounting concern it could soon restrict supplies even further.

Not so rare

Despite their name, rare earths are not particularly rare.

Image caption China currently has almost total control of extraction of rare earth metals

The term refers to 17 elements, most of which are fairly abundant in nature.

Some are as common as copper or zinc, while even the rarest occur in greater quantities than gold or platinum.

Mining and processing them, however, is a difficult and costly process, which requires large amounts of energy and produces a range of toxic emissions and residues, some of them radioactive.

During the 1990s and for much of the past decade, China was able to produce rare earths more cheaply than other countries, leading to the closure of mines elsewhere, notably in Australia and the US.

However, the Chinese government is now promoting the development of high-tech industries, which has pushed up domestic demand for rare earths.

There are very real risks of a shortage John Meyer, Head of resources, Fairfax bank

At the same time it is under pressure to rein in the environmental impact of rampant economic growth.

"They want to restrict the amount of environmental damage they do," says John Meyer, head of resources at Fairfax investment bank.

"They want to restrict the amount of energy they put into the production of rare earths and they're saying 'we don't really want to export these things any more; we'll do it for ourselves but other countries need to take care of their own rare earth supply.'"

Japanese concerns

China's dominance of the market raises political concerns too. Some experts have expressed fears Beijing could use its monopoly as a tool in disputes with other countries.

Image caption Cerium is used in the manufacture of flat screen TVs

These were fuelled recently by reports that China had blocked shipments to Japan during a diplomatic confrontation with Tokyo.

Any interruption in supplies of rare earths would be a serious problem for Japan's vital electronics industry.

It would also make life difficult for the country's carmakers, notably Toyota, which is a leading player in the market for hybrid vehicles. It needs a regular supply of rare earths to make batteries and electric motors for them.

Small wonder then, that Toyota recently set up a corporate task force to look for new sources of the minerals it needs.

Meanwhile the Japanese government has outlined plans to develop a "rare earths partnership" with Vietnam.

Reopening mines

In the US, moves are under way to reopen mines which were mothballed when Chinese production was at its height.

They include the giant Mountain Pass mine in California, which was once the world's biggest source of rare earth elements.

It was the cause of numerous leaks of hazardous waste, before it effectively shut down in 2002, amid mounting environmental concerns and increasing competition.

Now, the mine's owner, Molycorp Minerals, is planning to resume full production at the site, allowing it to produce 20,000 tonnes of rare earth products by 2012.

The company is keen to emphasise its social responsibility, pointing out that rare earths are widely used in the production of green technologies, as well as in other vital areas such as communications and healthcare.

"We see this not so much as an economic opportunity, to help supply the world with rare earths from America," says spokesman Jim Sims.

"We really see this as a mission."

'Government action'

But reopening mines, or establishing new ones, is a costly process. The modernisation of Mountain Pass, for example, is expected to cost more than half a billion dollars.

It can also be time consuming, particularly in developed countries, because of the need to obtain environmental permits.

So there is a real risk that if China does clamp down on exports, mines elsewhere may not be ready to meet demand.

"There are very real risks of a shortage," says John Meyer.

"It's going to be very important and perhaps critical for governments to step in and help companies to push through the environmental processes, in order to get these mines up and running in time."

So rare earths may not be rare, but they could soon be in very short supply.

If that happens, prices are certain to rise, manufactured goods are likely to become more expensive and consumers could be in for a big shock.