For similar reasons that I'm skeptical that gold will remain being a useful/safe peg of value, there are supposedly smart people from the dawn of time who believe that they can manipulate or corner the market on XYZ commodities (and the corollary of politicians who flame fears of shortage).
Needed in everything from electronics to small motors, "rare earth metals" are only the most recent scare that China has restricted exports for domestic production needs (The Australian). While it's true that in the short term resources are finite, in the long run, they're only limited by human ingenuity. And as Forbes is reporting, so it's true here - Japanese companies (and I'm sure others around the world) are responding to high prices to generate alternatives:
With prices spiking following the latest in a series of annual export quota reductions by Beijing earlier this summer, miners have been scrambling to develop deposits of the essential industrial minerals worldwide. Now Japan’s Nikkei business daily reports that Japanese manufacturers have developed technologies to make automotive and home appliance motors without rare earth metals. Hitachi has come up with a motor that uses a ferrite magnet made of the cheaper and more common ferric oxide. Meanwhile the chemicals conglomerate Teijin and Tohoku University have co-developed technology to make a powerful magnet using a new composite made of iron and nitrogen.
Take another step back and you also see the remarkable power that pricing communicates to the market. While the reactionary political response invariably is to further restrict and regulate trade, it would be refreshing if the opposite were pursued - that measures to innovate and unleash innovation to find additional or create alternative resources were pursued. Alas, dare to dream.
More on that topic of gold (Sept 13, BusinessInsider):
Reasons that gold is a religion masquerading as an asset Class.