It was announced today-ish that China are increasing tarrifs on their rare earth exports. This means everything from flat screen TVs to laser-guided missles will become more expensive to produce as the access to these minerals declines. And this will only get worse for the rest of the world as it’s predicted China will consume all the rare they exhume within a few years. Meaning, finders keepers!
Do the math: As of now, China produce 95% of the world’s rare earth and creating new mines is costly and very time-consuming. The Chinese govt have declared they will be limiting exports of said minerals to 35,000t as of January 2011 with a gradual reduction henceforth. The world uses approximately 4 times this amount currently with a 3-year projected consumption of 200,000t.
So, are our soon-to-be Sino overlords spoiling for war ‘their enemies’ won’t have the wherewithal to fight beyond a week or two or are they merely holding the world to randsom?
Quotes of interest:
“[Rare earth] will do for China what oil did for Saudi Arabia.” -Deng Xiaoping
“and the number of the forces of the horsemen is two myriads of myriads, and I heard the number of them.” -Revelation 9:16
Seems kinda dumb. China isn’t the only place with rare earth reserves, they’re just the main source because they can mine it cheaply, for pretty much the same reasons they produce everything else cheaply. Presumably if they raise tariffs and ban exports (IIRC, they stopped exporting to Japan over a spat over martime borders a few months ago), other countries will just dig their own mines and China will gain some competitors.
I think there are already plans for mines in Canada and the US, simply due to the increase in global demand.
Huh… earth isn’t rare, I’ve got a truckload of it just sitting on the ground under my garden. There’s a field near my house that is pretty much just earth and that’s loads bigger than my garden, they just keep horses on it, or grow turnips, stuff like that. If the Americans or Japanese want it that bad they’re welcome to pop round with a shovel and take some… I’ll swap it for a few beers to be honest, we were planning on putting down decking anyway.
I remember when the global recession hit. Nations were desperate for cash and China had tons of it, so they bought up tons of mines and cornered the market.
I have no idea what the long term consequences are. My impression is the results will be more mining outside of China and economic alliances by nations against China.
Another part of why China is doing this is so companies are forced to do R&D and manufacturing within China (which would also likely require them to share R&D secrets with the Chinese government). There will be an abundant supply of rare earth minerals within China, but very few outside so a company will have no choice as to where to do manufacturing. It is a pretty smart move on their part.
I don’t think this is a military thing on China’s part. I think they are just being intelligent and finding ways to give themselves economic leverage against other nations. They want to ensure that R&D and manufacturing of consumer electronics and alternative energy products (both of which require rare earth minerals to produce, and both of which will be huge parts of the 21st century economy) is done within Chinese borders.
But I hope they fail, and I hope mining development outside China grows at a clip.
Yep, being capitalists. That is to be praised. Rare earth is a component of magnets and batteries. There is no reason they should give the ability to other countries to excel in those fields. We in America are quite fond of using economic leverage . China is learning fast.
To take a counter-position, I don’t think that governments raising tarriffs and limiting exports is ever ‘being good capitalists.’ If it was just the Chinese companies involved (government-owned or not) raising their prices, then that’s all well and good, but for the government to be getting involved in such a protectionist way is something entirely different. They’re being anti-free-trade, which is stupid for them in the long run I think.
While it is true that the ‘rare earth’ minerals can be found well distributed in the Earth’s crust, extracting those elements is difficult and often produced polluting byproducts that are difficult to reduce or contain and lead to movies starring Julia Roberts as a spunky single mother cum environmental crusader. China, which is relatively unconcerned with pollution, has little cost associated with this processing, while developed nations of Europe and the United States have significant restrictions that make this kind of refinement prohibitive.
South Africa , Brazil, California, Canada, and others stooped production when China undercut the market. Mountain Pass ,Calif. expects to back up next year. Other countries are following suit. So China’s capitalistic actions may backfire.
It’s kind of ironic. One of the main pillars of Chinese economic policy is to undervalue their currency which acts as a subsidy for exports. Now they apparently want to tax exports for this one industry. Doesn’t make a whole lot of sense. The Chinese have been behaving extremely foolishly in recent months on rare earths, the fishing boat standoff and their Nobel Peace Prize hissy fit. If they wanted to deliberately scare the rest of the region into moving closer to the US and scare multinationals into diversifying their supply chains away from China they could hardly do a better job.
The rare earths are raw materials for a lot of electronics and the like, so the idea seems to be that the tariff will give Chinese exporters of the finished goods that rare earths are a component of a leg up over foreign competitors. So while I agree it isn’t a great strategy in the long term, I don’t think its in obvious contradiction to Chinese policy of encouraging export surpluses.
300 million capitalists isn’t so bad. A billion may be a problem.
I think they should be praised for encouraging us to develop our own resources, especially for one that is so vital. Maybe they could raise the price of labor so some jobs will scoot back over to the USA?
I read somewhere that the Californian mine doesn’t contain any of certain sorts of rare earth elements that are critical for modern electronics. In other words, for certain minerals, the Chinese really are almost cornering the market. I’m not sure how true this is.
There aren’t any rare earth elements that exist solely in China afaik…they have merely developed their resources more than other nations at the moment. They will be shooting themselves in the, um, foot, long and medium term if they go through with this…all for a short term gain. So much for the supposed wisdom and long term thinking of the Chinese.
Eventually their antics (as well as their antics with their currency) is going to come back and bite them squarely on the ass…which is why predictions of China taking over are even less grounded in reality than the folks who used to worry so much about the Japanese menace…IMHO anyway. Guess we’ll see.
