Where Next-Generation Rare Earth Metals May Come From 179
retroworks writes "Great piece in The Atlantic by Kyle Wiens of IFIXIT.org, who visited and photographed the Molycorp Mountain Pass rare earth facility in California's Mojave Desert. The mine is the only source of rare earths in North America, one of the only alternatives to the mineral cartels in China, and one of the only sources for the key metals such as tantalum needed in cell phones. There is of course actually one other source of rare earth metals in the USA — recycled cell phones. Is the best 'state of the art' mining as good as the worst state of the art recycling? If the U.S. Department of Energy subsidizes the mine, will China open the floodgates and put it out of business? Or will electronics be manufactured with alternative materials before the mine ever becomes fully scaleable?"
Mission. ****ing. Accomplished. (Score:2, Insightful)
Naturally, this will have conservatives crawling out of the woodwork to declare that capitalism is being subverted and to let the market decide. I will quietly pray that the other business leaders wait for those conservatives to go home, and then beat them until all the stupid has leaked out...
Re:Why no right-thinking person believes in free t (Score:4, Insightful)
See, there's your problem.
Sadly, the Libertarian model more or less assumes that nothing about current reality applies, and that we can hit a big reset button and start from scratch in a bubble where all of their little assumptions would hold true by sheer force of will.
It's like bed-time stories for economists.
There will always be inequalilties that keep that perfectly free market from happening, and countries will always try to bolster their own industry over others. The US does this in many areas (agriculture, steel, lumber) and seems to expect they can protect their own companies while trying to skew the playing field against foreign competition who have a different cost structure.
To me, there's simply nothing to actually support the notion that the Libertarian free market could ever exist. And, if it did, it sure isn't going to bring about all of the positive things it claims ... mostly the world would devolve into the rich having all of the privileges, and the rest of us being left to duke it out for scraps. But apparently, that's a good thing somehow.
Re:Not the only place (Score:4, Insightful)
It would be even worse running a mine in downtown LA or New York. Imagine trying to get all those Caterpillar 797's and Liebherr T282B's through rush-hour traffic ....
Re:Why no right-thinking person believes in free t (Score:4, Insightful)
Re:Mineral Cartels in China? (Score:5, Insightful)
To clarify, it’s not a monopoly per say. It’s the market structure that makes it hard for anybody to enter.
To start a rare earth mine requires long lead times, large up-front capital spending, and high running costs (As have been mentioned, these mines produce a lot of trailings that need special environmental handling).
Any competitor entering the market would face a opponent that has already spent huge amounts on it’s fixed capital (i.e. sunk costs). What normally happens in these situations is a long, brutal price war as the established company lowers it price because it does not have to recoup it’s sunk costs. So anybody who enters the market could not count on today’s high prices.
If the established company want’s it’s monopoly, it can even “dump” product onto the market for years, starving it’s completion.
Factor in that you are going against a state sponsored Chinese company that has access to cheap capital (effectively reducing the cost of it’s fixed capital) and lower requirements to it’s environmental laws.
Re:In a not so distant future... (Score:4, Insightful)
The flood gates (Score:2, Insightful)
This is where capitalism fails, when the intervention of a government dictates everything. You can only fight such abuse with your own abuse (high traffics to ensure alternatives along with international agreements with other countries). It would otherwise be too easy for China to fully control usage of rare earth around the world. These rare earth mining operations take a long time to both setup and become profitable, China needs only to open up it's export policies every few years to basically destroy any normal company. The only other option is government subsidizes to alternatives. Either way, it would require government to fight against government. (An economic resource war in a way).
Re:Mineral Cartels in China? (Score:4, Insightful)
But the structure of the market dictates the best way to handle this. In industries like this you tend to get monopolies, cartels, collusion, etc.
One choice is to break the company up. Not an option here.
Another choice is to compete head on. In industries like this it will mean years of pouring subsidizes down the new competitor. This “monopoly” (well, “leading oligopoly” would be more correct) can hang on for years until it breaks even without a state subside. It may well be worth it, but don’t kid yourself that it’s going to be a quick battle.
Another choice is to doge the issue. Figure out better ways to recycle. Toyota is figuring out how to make electric motors that don’t require rare earths.etc.
As a counter point, look back to the 80’s when Japanese companies were dumping DRAM onto the market Intel had a choice. They could keep producing their bread and butter, seek US Government subsides, and engage in a very long and expensive fight over a commodity product. Or, they could abandon their main business – which they did – for CPUs. And we know how the battle ended – Intel prospered, Japan stagnated, and South Koreans won.
Now, I do think it’s good to have a supply other than China. It’s not the high prices but forcing companies to relocate to China if they want a supply. But it’s good to know the nature of the fight and to think of other options.