China Begins Stockpiling Rare Earths, Draws WTO Attention

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."

Smart but not nice

[GameboyRMH]

China thinks ahead, but doesn't play nice.

They could be doing it not just for practical purposes but possibly for setting up a DeBeers of rare earth metals.

Why shouldn't they?

[Gothmolly]

The minerals are theirs; why shouldn't they keep them?

Hmmmm

[Vinegar Joe]

So why isn't the WTO complaining about OPEC?

Re:Hmmmm

[cpghost]

Why should it? OPEC are exporting their oil while China is withholding its Rare Earths from being exported. WTO could complain about OPEC if OPEC refused to export oil (which it doesn't), and if it had a near monopoly on it (which it doesn't either).

Comment removed

[account_deleted]

Comment removed based on user account deletion

Double Standard

[Anonymous Coward]

I thought that this is what the Free Market is all about. Why do I have to hear my country's (USA) leaders complain ONLY when it doesn't benefit us? It's not like we're an impoverished nation. China can do whatever they want, and we can pay them for the resources or not buy them. It's not like we can't survive without them providing rare earth metals. So tired of the hypocritical whining ONLY when things don't go our way.

Re:Why shouldn't they?

[Anonymous Coward]

Did you. . .Did you just advocate war and environmental devastation?

Re:Wait

[i kan reed]

They sell low cost consumer goods by manipulating exchange rates.
They don't see low cost raw materials by manipulating supply.

Both sides function as pro-Chinese manufacturing, anti-US manufacturing.

Re:Perhaps appeasement for business & China wa

[k(wi)r(kipedia)]

China has not had a history of projecting its occupation forces well beyond its borders. Sure, China has invaded Tibet and is threatening to do the same with Taiwan and some puny islands near the Philippines. But unlike the US and the old European empires, China has not sent its armed forces across continents to conquer people of vastly different cultures. And you can't talk about China's "100 years of humiliation" without taking into account fiercely pro-American Taiwan, political heirs to the government that the Communist Party kicked out of the mainland. The Communists have been in power only since 1949, well short of 100 years.

Re:Smart but not nice

[Anonymous Coward]

The issue is that for suppliers in other countries to emerge, there basically needs to be some profit in it for the investor.

With China sitting on enormous stockpiles however, they could just release a bit of that stockpile, causing the price to crash and putting any foreign company out of business.

WTO basically needs to either tell China to allow unlimited sales abroad, or, to allow foreign nations to subsidise their rare earth metal industry to cover for any price crash caused by China.

Re:What the hell

[Archangel Michael]

America used to be a place where effort was rewarded with success, so the people who did well in Math and Science were rewarded. Now it is all about making things "fair" to all the various "groups".

Re:Double Standard

[thrich81]

This is where the "free market" and "free trade" as practiced in the US now (everything done by private companies with short term profits above all) fails. When some entrepreneur tries to ramp up production of rare earths in the US, the Chinese will release enough of their stockpile to put him out of business, similar (but not exactly the same) as for solar panel production lately. The US should just close its market to Chinese produced goods which incorporate Chinese produced rare earths unless US manufacturers have the same access to the Chinese rare earths.

Pump and dump?

[erice]

Stockpiling does two things:

1) In the short term it limits supply, causing prices and profits to rise.
2) In the medium term, it gives the Chinese the means to flood the market, driving out new competitors and restoring their near monopoly.

Rinse, lather, repeat

Re:Smart but not nice

[meddle99]

This is what happens when you present one fact and leave out the context. Most of the workers at the factory can't afford cars, and would probably drive them to work if they could. Are you suggesting that poverty is a good way to improve the environment?

Re:Double Standard

[magarity]

I thought that this is what the Free Market is all about

There are always comments like this whenever articles about trade problems come up and I can never tell whether they're honestly in the dark about how free trade and markets work or if they're just snarky trolls.

The second sentence of the article clearly states that the Chinese government is buying up and stockpiling the material in question. Sometimes it's rare earths, sometimes some other material. Whatever the commodity, the definition of free market operations is that individual businesses buy and sell in competition with each other, When governments get involved then it stops being a free market to one degree or another .

Sure, the USA hardly has a model free market system due to regulatory oversight, taxation, subsidies, etc, but it is *relatively* free in comparison. The US government doesn't stockpile much and when it does, it's a rare case that it's trying to actively influence international markets. Mainly the US government just messes around with protectionist tarriffs with the international market and various subsidies for the domestic market but outright stockpiling to influence markets almost never happens. This stockpiling operation by the Chinese government is an extremely "up yours" move and thus all the fuss.

Meanwhile, if an individual non-governmental player decides to stockpile a resource as a competitive strategy against other players, that would be a free market action. Perhaps it's impossible to have free market operations in a country such as China where the government takes such a active role but that's a different problem. It's not a cause to make a snide remark about free markets.

Re:Molycorp already on line

[WindBourne]

Molycorp went out first time because China was dumping and CA was after them to clean up (but mostly China's dumping).
Right now, it appears that China is building a large stockpile so that they can dump it on the market and destroy Molycorp.

Re:What the hell

[Archangel Michael]

unfair places of the world full of stupid people doing it to themselves

Allowing people to do stupid shit to themselves is my idea of "fair". What is unfair is expecting the rest of us to bail out their stupidity in the name of "fairness" or whatever. Sorry, but trying to fix people's idiocy doesn't accomplish a thing except make a few people feel better about themselves as being some form of superior or another.

Stupid should hurt. That is how some people learn (and often the ONLY way they learn)