It sounds like the plot of a science fiction movie: humans are destroying the Earth, gouging huge scars in its crust, and polluting the air and the ground as they mine and refine a key element essential for technological advance. One day, scientists examining an alien meteorite discover a unique metal that negates the need for all that excavation and pollution. Best of all, the metal can be replicated, in a laboratory, using base materials. The world is saved!

OK, we amped the story a wee bit there. No aliens, for one thing (unless you know something we don't). But the rest of it is true. Two teams of scientists — one at Northeastern University in Boston; the other at the University of Cambridge in the UK — recently announced that they managed to manufacture, in a lab, a material that does not exist naturally on Earth. It — until now — has only been found in meteorites.

We spoke to Laura Henderson Lewis, one of the professors on the Northeastern team, and she told us the material found in the meteorites is a combination of two base metals, nickel and iron, which were cooled over millions of years as meteoroids and asteroids tumbled through space. That process created a unique compound with a particular set of characteristics that make it ideal for use in the high-end permanent magnets that are an essential component of a vast range of advanced machines, from electric vehicles to space shuttle turbines.

The compound is called tetrataenite, and the fact that scientists have found a way to make it in a lab is a huge deal. If synthetic tetrataenite works in industrial applications, it could make green energy technologies significantly cheaper. It could also roil the market in rare earths, currently dominated by China, and create a seismic shift in the industrial balance between China and the West.

Earthly, yet oh, so rare

As all of our readers will doubtless remember from their high school science classes, magnets are an essential component of any piece of machinery that runs on electricity: they are the conduit that transforms electric power into mechanical action.

Most magnets, like the magnet in the battery-powered clock on your office wall, for example, are pretty cheap and easy to produce. The permanent magnets that are used in advanced machinery, on the other hand, have to be able to resist tremendous pressures and temperatures for long periods of time. And to acquire those properties, they need a special ingredient: a rare earth.

Rare earths aren't that rare. They're elements that can be found all over the world. The difficult part is extracting them. For one thing, you have to dig them out of the ground. That's hard enough. Then you have to separate them out: they're usually combined with other elements or materials. Breaking these compounds down, and refining them to get the raw elements, is an expensive and messy business.

The China syndrome

The US used to be a leader in the rare earths world, but, in the 1980s, China found a huge deposit of these elements within its borders. Jonathan Hykawy is president of Stormcrow Capital, an investment firm that tracks rare earths markets. He has a good story about this discovery.

"A few Chinese companies opened mines in inner Mongolia and they were iron ore mines, and they were producing a waste material that ended up in their tailings piles," Hykawy says. "The Japanese were buying large quantities of this iron, and they said, 'Can we sample the waste piles?' And the Chinese said, 'Sure, take all you want.' The Japanese came back a little while later and said, 'We'd like to buy the waste.' And the Chinese said, 'Well, why wouldn't we sell it to you? I mean, it's waste. What are we going to do with it?' Turns out it was rich in rare earths."

The Chinese caught on pretty quickly, and began extracting these rare elements themselves. They could do it a lot more cheaply than anyone else, because their labor costs were a lot lower, and they were willing to put up with the environmental costs, which were not insignificant. Pretty soon, Hykawy says, US production ceased, and China effectively took over the market. Today, China controls more than 71% of the world's extraction and 87% of the world's processing capacity of rare earths.

Two of these rare earths, neodymium and praseodymium, are key components in the manufacturing of permanent magnets, which means that China now dominates the permanent magnet market, too, making more than 80 percent of these high-end instruments. A decade ago, this didn't seem to be a problem. China was a willing and cooperative trading partner, apparently so unthreatening that in 2004 the US actually outsourced the production of magnets used in the guidance systems for American cruise missile and precision bombs to a Chinese company.

"We had US production," Laura Lewis says. "Magnaquench, a subsidiary of General Motors. It was in Anderson, Indiana, and it went wholesale over to China. It was a short-term view of economics; profit up front, but then we lost our capabilities down the road."

Today, relations with China are more fraught. And the need for both rare earths and permanent magnets is increasing, as we move to a clean-energy economy.

The US has awoken to the realization that it is at a significant strategic disadvantage to China in this vital area for its economy and national security. It has restarted an idled rare earths mine in California, and it is looking at potential new mining sites in Arizona, Nevada, and Wyoming. But those mines will take more than a decade to come online.

Game changer

This is why the discovery of synthetic tetrataenite is so exciting, Jonathan Hykawy says. The compound is so tough that manufacturers could make permanent magnets out of it for all but the most demanding pieces of machinery. If that happens, the US could fill a huge part of the magnet market itself, and reduce its need for certain rare earths. And it would make for a huge shift in America's relationship with China. No longer would the US be beholden to a competitor for these key materials or dependent on them for certain parts essential for the production of vital technology.

There is a potential downside, however. Rare earths aren't just used in the production of permanent magnets. They're used in fiber optics, in radiation scanners, in televisions, in personal electronics. If a big part of the rare earths market disappears because of tetrataenite, Hykawy says, the production of all of these other important rare earths could be disrupted. They could become significantly more expensive to produce, which could drive up the cost of a range of consumer and industrial goods.

Far out

But it will be a long time before tetrataenite is in a position to disrupt any existing markets, Laura Lewis says. She says there is still a lot of testing to be done to find out whether lab tetrataenite is as hardy and as useful as the outer space material. And even if it turns out to be as good, it will be five to eight years "pedal to the metal" before anyone could make permanent magnets out of it.

In the meantime, China's competitors are working hard to source rare earths of their own. The US is investing in mines in Australia; there's exploration ongoing in Malaysia, and the Japanese are researching ways to extract elements from mud mined from the sea bed. Jonathan Hykawy says if countries are willing to invest in rare earth extraction, and tolerate the environmental implications, there's no reason they can't level the playing field with China.

"If we were willing to pay enough to produce these things, you can overcome those issues and you can produce these things in an environmentally responsible manner, " he says. "This is no worse than mining and producing aluminum, for example."