Chinese Rare Earth Restrictions To Raise Hard Drive Prices

Multiple manufacturers in the IT industry have been keeping a wary eye on China's decision to cut back on rare earth exports and the impact it may have on component prices. An article from DigiTimes suggests consumers will see that decision hit the hard drive industry this year, with HDD prices trending upwards an estimated 5-10 percent depending on capacity.

Although rare earth magnets are only a small part of a hard drive's total cost, China cut exports last year by 40 percent, which drove pricing for these particular components up an estimated 20-30x. At that point, a rare earth component that originally cost 25 cents is suddenly $5—and given how cheap hard drives have become, that translates into a 5-10 percent increase to the retail cost. With the HDD market divided between Western Digital, Seagate, and Toshiba, there's no room in rock-bottom margins to absorb the cost jump, so the major manufacturers will have no choice but to pass it on.

The good news is, it's doubtful that anyone will notice. 1.5TB HDDs are down to $59 on NewEgg.com for those willing to accept a 5900 RPM spindle speed, and some 7200 RPM 1TB drives are $59 as well. WD is currently selling a Caviar Green 2TB drive for $69, which works out to 3.4 cents/GB. Since HDD rare earth costs don't scale linearly as drive capacities increase, this is an impact that will mostly be felt at smaller capacities.

Wikipedia

China's export restrictions have caused some short-term supply issues, as the country currently controls 97 percent of the rare earth market. Despite their classification, however, the elements in question (including such popular metals as neodymium, cerium, yttrium and ytterbium) aren't actually all that uncommon. They are called rare earth elements because they tend to be geographically dispersed in an area, as opposed to clumping together into handy veins of ore.

The Chinese restrictions have spurred a worldwide search for additional deposits. Molycorp intends to re-open the Mountain Pass rare earth mine in California and the exploration firm Quantum Rare Earths Development Corp announced two weeks ago that it has located what may be one of the world's largest deposits of rare earth minerals underneath a small Nebraskan town.