China Begins Stockpiling Rare Earths, Draws WTO Attention 227
eldavojohn writes "A report by China Securities Journal claims that China is now stockpiling rare earths although it has not indicated when this stockpiling started. Many WTO members have complained about China's tightening restrictions on exports of rare earths while China maintains that such restrictions are an attempt to clean up its environmental problems. A WTO special conference scheduled for July 10th will hopefully decide if China's restrictions are unfair trade practices or if the US, the EU and Japan are merely upset that they can't export their pollution and receive rare earths at low prices. Last year, China granted its mining companies the right to export 30,200 tons but in actuality only 18,600 tons were shipped out of country."
Re:Smart but not nice (Score:4, Informative)
Comment removed (Score:5, Informative)
Re:Why shouldn't they? (Score:5, Informative)
Re:Except we may have just as much (Score:4, Informative)
Yeah, but we also have environmental regulations that make it VERY difficult(costly) extract the Rare Earth Elements. It's these environmental regulations that is the only reason that China is the leading producer of these elements. Getting this stuff out of the ore is a rather nasty processes which is expensive to do in the US.
Also until recently it was not clear it was worth extracting these elements. I know that there was a large mine that used to produce much of the worlds supply in the 80's-90's located in California. They shutdown because of the regulations and the fact that they couldn't compete with the low cost of stuff coming out of China. At that time it wasn't clear that these elements were that vital. Long term this action will cause other countries to re-open old mines or start extraction of new deposits. Rare-Earth deposits aren't really that rare it's the concentration of these elements in the "ore" that are low which is why they are called "rare".
This action by the Chinese has only caused people to start looking for new deposits and different methods of extraction. Last I heard, the Californian mine is in the process of being re-opened and should start producing in 2013.
Molycorp already on line (Score:5, Informative)
Molycorp, which owns a big rare earths mine at Mountain Pass, California, is back on line [molycorp.com]. That mine used to supply 100% of US demand, plus exports. It was shut down in 2002 due to cheaper rare earths from China. Now it's back.
Rare earths aren't that rare. They're just present in small concentrations. So mining produces huge volumes of waste for small amounts of product. The big rare earths mine in China is an environmental disaster area. The one in California had to comply with US and California regulations. At current rare earths prices, that's not a problem. (They do, however, ship some of the sludge to Nevada through a 20 mile pipeline. Really).
A year from now, rare earth supplies won't be a problem. Then people will be bitching about the Molycorp monopoly.
Re:Smart but not nice (Score:5, Informative)
Diamonds aren't that rare. In fact, it is less expensive to create man made diamonds than it is to mine them. Diamonds are expensive because DeBeers has convinced women that they need a big fat expensive but utterly useless gem to get married. As for the manufactured diamonds, they are indistinguishable from real diamonds except for the fact that they are typically more "pure". DeBeers is now selling a machine that can tell the composition of diamonds and thus distinguish between natural vs man made diamonds, AND also verify if the diamonds are from their "legit" sources (no blood diamonds).
"Diamonds are a girls best friend" and "Diamonds are forever" indeed.
Re:Smart but not nice (Score:4, Informative)
Because there are lots of them and more and more would open.
Re:Smart but not nice (Score:5, Informative)
Naturally occurring diamonds are rare. But the overall scarcity of diamonds is a man-made affair. It's easier, and cheaper, to produce diamonds artificially. Not only that, but lab produced diamonds can be made even more purely than what is normally found in nature. De Beers however, has managed to severely limit the production of artificial diamonds. Nearly a decade ago, De Beers even paid a paltry fine for colluding with GE to fix prices on industrial diamonds. Interestingly enough, diamonds have been discovered around the world in areas outside of De Beers control. So their decades long monopoly has eroded.
China, however, is not even close to being in the same situation when it comes to rare earths. Rare earths is relatively plentiful. Mining has stopped in the US moreso because of environmental regulation and cost than because of scarcity. China is gambling that it will be too difficult and costly for Western nations to reopen or start up new mines and that they'll eventually cave. The logistics of overseas manufacturing are getting to complex, inflexible and expensive. Given the rise to automated manufacturing the benefits of cheap labor are dwindling. This is giving rise to one of two scenarios: in-source manufacturing or move it where it's substantially cheaper. China is already trying to hedge its bets by expanding into Africa. But at that point why not just cut out the middle man?
The point being that China is getting too ambitious for it's own good; they're thinking too highly of their position in the world. Yes, the China owns a bit of American debt. What's the worst case scenario? The US defaults on it's debt? It's in China's best interest that the US continue to thrive. The US, on the other hand, just needs a cheap manufacturing base. That could be anywhere; Southeast Asia, India, Middle East, Africa, South America, Detroit.
The main thing China has going for it is experience and established infrastructure. But in the scheme of things those are easy challenges to address... I don't know about you, but I've been noticing an increasing number of products made some place other than China.