China holding the world to ransom? (*rare earth)

[gonzomax]

As long as money is being made by capitalists, they will not allow China to fail.

[Magiver]

@gonzomax

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.

As has already been pointed out, it’s not capitalism that invoked the tariffs. It was a political system that did it.

[Chimera]

Part of the long term Economics of Raw Materials, that we’ve seen in spades with Oil, is “While it is cheap, buy it from the other guy”. This preserves your own supplies for the long run while consuming the other guy’s supply. Then when things tighten up or run out, ideally you still have a larger percentage of your supply than he does of his.

So right now, China is the cheap supplier. They may hold more of the resource pie, but we’re buying it from them and not using our own supplies. Were they to cut off the supply or jack up the price, we naturally would turn and exploit our own reserves. Of course, there will be some short-term panic and shortages, but nothing more than ripples in the long term.

[DSeid]

A very pertinent article.

For as long as the next 15 years, the supplies of at least five minerals that come almost exclusively from China will remain as vulnerable to disruption as they are absolutely vital to the manufacture of small yet powerful electric motors, energy-efficient compact fluorescent bulbs and other clean energy technologies, the report said.

The five minerals are medium and heavy rare earth elements of which China mines an estimated 96 percent to 99.8 percent of the world’s supply: dysprosium, terbium, neodymium, europium and yttrium.

China also increasingly dominates the manufacture of clean energy technologies that require such minerals …

… Demand for rare earths and China’s virtual chokehold on supplies have prompted some overseas companies to enter, or re-enter, the field.

Molycorp, an American company that in August made an initial public offering of its shares on the New York Stock Exchange, plans to open in 2012 a large rare earth mine at Mountain Pass, Calif., that closed in 2002 after prices were undercut by Chinese competitors. Molycorp announced on Monday that it had received the last of the construction permits needed to proceed.

The Lynas Corporation of Australia plans to open at the end of next year a large rare earths mine at Mount Weld, Australia.

But both the Molycorp and Lynas mines will produce mostly light rare earths and relatively little of the medium and heavy rare earths needed for magnets and other significant clean energy applications.

Dozens of small mining companies hope to open new mines in the United States and elsewhere that could tap reserves of medium and heavy rare earths. But these small companies face formidable legal, financial, marketing and management obstacles, the Energy Department report said.

Interestingly enough many true EVs do not need the rare earths as they typically use induction motors; HEVs OTOH are heavy consumers of the stuff. (A point lost in many articles published on the subject.)

Yes, new sources will be developed, and not only from mines. Recycling might be a good option as well. Still, developing resources, even developing recycling programs, takes a few years. In that time China will further develop their already extant lead in these sectors. OTOH, having that lead may motivate them to embrace binding consenses on Climate Change, as the technology to achieve the goals will increasingly be bought from them.

[tingbudong]

That China controlled 90%+ of rare-earth metal production was a fact hardly lost on decision-makers, policy-wonks and China watchers. It has been a well-known fact for some time, actually. But they always appeared to be playing ball with the rest of the world so it didn’t really sit on the top of the to-do pile.

I think what caught folks off-guard was their decision to drop this ace over a bloody fishing boat captain and a insignificant dispute with Japan over a commonly argued oceanic border. The canary cried and now everyone is rushing to ramp up alternative production sites and it wouldn’t surprise me if companies start to come up with some alternative substances if China really starts to get greedy with their metals.

Waste of a strategic advantage IMHO. They could have kept that card out of play, holding it for something more significant than a childish spat.

[DSeid]

Not totally off-guard - the SDMB talked about the possibility a year ago :).

And as referenced in that thread, even Newsweek was talking about the threat. The rush was on before the fishing boat incident.

You’re not alone if you can’t name any of these rare-earth minerals. Words like yttrium, holmium, lanthanum, and thulium don’t exactly roll off the tongue. All you have to know is that China has a near stranglehold on such ores, currently producing 95 percent of the world’s supply and claiming about 60 percent of known reserves within its borders, mostly in the region of Inner Mongolia. The region’s vice governor, Zhao Shuanglian, declared in early September that China planned to streamline the domestic rare-earth industry, impose export controls, and establish a national reserve mechanism. “We’re not taking a short-term view of just trying to prop up rare-earth prices,” he maintained. … Problem is, it takes up to a decade to develop a rare-earth mine on a commercial scale. Yet these 15 metallic elements happen to be essential in many emerging green technologies. … just as these elements are becoming more essential, China is undertaking a new bout of resource nationalism. For some time, intellectuals representing what they call “patriotic” Chinese (that is, those who are hawkish about defending their country’s national interests and skeptical of Western intentions) have demanded that their government play hardball in international trade–including rare-earth exports—and the decibel level has risen significantly since Western excesses triggered the global financial crisis almost exactly a year ago.
The government has fallen in line. China has already moved dramatically to curb export quotas for rare earths: last month a draft report by China’s Ministry of Industry and Information Technology called for a total ban on shipments of terbium (a key ingredient in low-energy lightbulbs), dysprosium (used in the nuclear industry and lasers), yttrium (present in LEDs and TVs), thulium (which enhances medical imaging), and lutetium (used in alloys and polymerization). Other minerals, such as neodymium (crucial for hard-disk drives and wind turbines), europium (used in lasers), cerium (which reduces carbon monoxide in engine exhaust), and lanthanum (key for many hybrid and electric-car batteries), would face a combined export quota of 35,000 tons annually—woefully insufficient to fill global needs. World demand this year is an estimated 124,000 tons, and is expected to double by 2015.
Beijing officials say their goal is not to squirrel away the ores for themselves but rather to persuade manufacturers to build plants in China if they want to use Chinese-produced rare earths in manufacturing. But jitters have already swept through the Japanese government, which has drafted a “Strategy for Ensuring Stable Supplies of Rare Metals” that calls for stockpiling and securing supplies abroad. … Other countries—namely Australia, the United States, Canada, and South Africa—are redoubling efforts to exploit their own reserves of rare earths. … But these alternative producers cannot reach optimum capacity right away, so a crunch is inevitable. Among China’s trading partners, there’s some talk of invoking WTO commitments to try to prod the regime into more generous exports. But it’ll be hard to force Beijing into magnanimity when it claims domestic supplies are needed just to meet internal demand. Worried about their own shortfalls, Chinese firms have scrambled to hook up with Australian rare-earth producers. One Chinese company doubled its stake (to 25 percent) in Arafura Resources Ltd., and another is awaiting Canberra’s approval of its bid for majority share of Lynas Corp. Ltd.
In other words, rare earths are the sword of Damocles hanging over Beijing’s trading partners. If and when they anger China, the People’s Republic can cut them off on these essential elements. And nationalistic citizens will surely call on their government to play that card if China finds itself in a trade war like the one it is now spiraling toward with the United States. The effect would be felt across the developed world desperate for the technologies these metals enable. Tension would beset China’s ties with the U.S. and Japan. And the long-term economic repercussions would affect the renewable-energy initiatives and defense industries of tomorrow

(bolding mine)

[Sablicious]

@tingbudong

it wouldn’t surprise me if companies start to come up with some alternative substances if China really starts to get greedy with their metals.

It may not surprise you, but it’ll likely be news to those who can actually pronounce the elements in question as they’re supposedly “un-substitutable”. Hence the growing concern over their hoarding it would seem.

Problem is, it takes up to a decade to develop a rare-earth mine on a commercial scale.

This^ in a country where health, safety, environmental offshoots and peoples’ rights have little-to-no-bearing on what the Polit Bureau wants and you have a multiplying factor of [insert speculation and fear mongering] to the ten years quoted. Gotchya peeps’ attention now…?

What people always seem to elide regarding China is their system is not our system - and I don’t mean the Pinko thing. Tradition in the Chinese political system and governance is still very apparent and the way they look at things in not something an outsider can take an accurate stab at oftentimes. Heck, ‘round eyes’ still try lure Asianettes with dick pics- lol! :rolleyes:

So hence the sudden interest in Aussie prime minister-cum-foreign minister Rudd and his Mandarin skills - the US are fumbling around in the dark when it comes to their fast up and coming Sino rivals. This is how desparate they are, massaging a guy who advocates “force” against the country that’s single-handedly kept his country in the black while all others have fallen by the GFC wayside. (…albeit at the expense of the country’s precious resources in exchange for poorly [child-]manufactured cheap knock-offs, admittedly). It’s like he’s the interpreter for an extraterrestrial race! Moreover, just because one speaks the tongue it doesn’t automatically qualify one for intimate knowledge of a country’s intra-governmental affairs, especially in the case of China.

They haven’t forgotten what the drug-dealing ‘barbarians’ did to their sacred Forbidden City after the Boxer Uprising, much less what their much-loathed Japanese neighbours did at Nanking. Methinks we’d be wise not to either.

[Lumpy]

@Ravenman

Yeah, two myriads of myriads is only 200,000,000. There are something like 16 myriads of myriads of Chinese. Maybe they have a shortage of horses?

At the time Revelations was written, there probably weren’t 200,000,000 people in the entire world. Back in the 1960s Mao claimed that China could field 200,000,000 militia*, which made Biblical end-times people jump up and take note.

*in the sense of “give every able-bodied adult a stick or a rock and point them at the enemy”.