Summary
- Apple iPhones contain essential components that are enabled by rare earth elements.
- Some of these metals are produced exclusively in China, which means Apple is dependent on Chinese mining, processing and exports that are out of its control.
- There is a very real risk that Apple or its suppliers will not be able to get the REEs that they need – this could put the company’s production at
- Chinese REE production causes environmental damage that contradicts Apple’s “green” aspirations.
- Apple refuses to publicly acknowledge these issues, although as the world’s largest company in terms of market capitalization, it should be held to the highest level of scrutiny.
Overview
Apple (NASDAQ:AAPL) shares have been touching all-time highs. Meanwhile, headlines lauding the company’s achievement of topping a $700 billion market capitalization and analyst calls for a $150/share price have created the sort of euphoria that should concern contrarian investors. But what can go wrong? A survey of Seeking Alpha and other venues reveals that the company could be vulnerable to competition from commodity-priced phones, computers and tablets, and that the strong dollar could create a headwind considering that the bulk of Apple sales come from overseas…
Investors interested in this issue and China’s REE industry more generally are encouraged to read Cindy Hurst’s 2010 China’s Rare Earth Elements Industry: What Can The West Learn? In it, you will find a short section entitled “Severe Environmental Damage.” Hurst cites an article published by the Chinese Society of Rare Earths, which says that:
Every ton of rare earth produced, generates approximately 8.5 kg. of fluorine and 13 kg of dust; and using sulfuric acid high temperature calcination techniques to produce approximately one ton of calcinated rare earth ore generates 9,600 to 12,000 cubic meters of waste gas containing dust concentrate, hydrofluoric acid, sulfur dioxide, and sulfuric acid, approximately 75 cubic meters of acidic wastewater, and about one ton of radioactive waste residue…
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