Study On Optimal Depletiopn Paths Of Rare-Earth Resources Under Technological Uncertainty

Rare-earth is one of the non-renewable strategic resources. The study on optimal depletion paths of rare-earth is of significance to national security and economic development. Because the rare-earth’s application technology and alternative technology progress exist at the same time and the uncertainty of technology is particularly significant, this paper establishes rare-earth dynamic optimization model under application technology and alternative technology uncertainty, solving the each phase of the rare-earth’s optimal exploitation through the use of optimal control theory. Then we analyze the influence of different technological progress and the uncertainty of the technological progress to the optimal depletion of rare-earth, and the extraction paths under different depletion time. The study has found the specific impact of technological progress. When the progress of application technology appears, enterprise will reduce the exploitation of rare-earth in order to obtain more option value in pre-exploitation phase, and will increase the exploitation of rare-earth because of the huge demand in late-exploitation phase, tending to lengthen the depletion time of resources on the whole. When the progress of alternative technology appears, enterprise will increase the exploitation of rare-earth in order to get the initial investment as soon as possible in pre-exploitation phase, and will reduce the exploitation of rare-earth because of the less demand in late-exploitation phase, tending to shorten the depletion time of resources on the whole. Finally combined with the conclusion drawn from model analysis, the paper puts forward the corresponding suggestions from the perspective of healthy and orderly development of rare-earth industry. It suggests that promoting greatly the development of China application technology of rare-earth in order to take advantage of resource reserve and strengthening the reasonable expectation on the probability of technical progress are very important for the optimal use of rare-earth resources at the same time.