2013_IJC_H1_Econs_QP

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8819/01/IJC/Sep 2013 2 Section A Answer all questions in this section. Question 1 Rare Earths Market Rare earths are a group of 17 chemical elements that are used widely in high- technology and clean-energy products becaus e they impart special properties of magnetism, luminescence, and strength. So me of these products include magnets, lasers, nuclear reactors, plasma TVs, energy-saving light bulbs, wind turbines, hybrid cars and even guided missiles. Extract 1: Rare earths prices The demand for rare-earths is rising rapidly as they are increasin gly being used in a wide range of high-technology products. Produc tion of wind turbines is expected to climb sharply amid the cl amour for cleaner energy alte rnatives that reduce dependence on fossil fuels blamed for global climate change. China, supplier of 95% of the 17 elements known as ra re earths, has shut-down many of its rare earths mi ning sites and cut its export quotas of rare earths. The government may further reduce export quotas. Hitachi Metals Ltd, which uses rare earths to make magnets used in hybrid cars, said that it has become increasingly difficult to procure rare earths. Toshinori Hata, a spokesman for Hitachi Metals, said that the company would hav e no choice but to pass on some of its costs to the consumers. Adapted from Bloomberg, 17 June 2011 Figure 1: Rare Earths Price Index: 2002 – 2010 Source: The Economist 400 Price Index Year 1,200 1,000 800 600 200 100 0

8819/01/IJC/Sep 2013