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Chinese Rare Earths Producer Suspends Output 265

Posted by timothy
from the free-market-except-oh-not-really dept.
concealment writes "State-owned Baotou Steel Rare Earth (Group) Hi-tech Co. said in a statement released through the Shanghai Stock Exchange that it suspended production Tuesday to promote 'healthy development' of rare earths prices. It gave no indication when production would resume and phone calls to the company on Thursday were not answered. Beijing is tightening control over rare earths mining and exports to capture more of the profits that flow to Western makers of lightweight batteries and other products made of rare earths. China has about 30 percent of rare earths deposits but accounts for more than 90 percent of production. Beijing alarmed global manufacturers by imposing export quotas in 2009. It also is trying to force Chinese rare earths miners and processors to consolidate into a handful of government-controlled groups."
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Chinese Rare Earths Producer Suspends Output

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  • Trade war (Score:4, Insightful)

    by Anonymous Coward on Thursday October 25, 2012 @12:48PM (#41766797)

    Start putting tariffs on anything made with Chinese rare earths. Since China is a net exporter, they have the most to lose playing these games.

  • by bjdevil66 (583941) on Thursday October 25, 2012 @12:53PM (#41766863)

    They're capitalists, with all the dirty trappings and failings of western businessmen, only without the whole problem of human rights.

    Someone probably needs to remind these people that artificially manipulating prices like this can get burned badly in the end.

  • 70% (Score:4, Insightful)

    by Githaron (2462596) on Thursday October 25, 2012 @12:55PM (#41766905)

    China has about 30 percent of rare earths deposits but accounts for more than 90 percent of production.

    It sounds like we should consider mining from the other 70 percent.

  • by Kenja (541830) on Thursday October 25, 2012 @12:59PM (#41766985)
    Try starting a Chinese company that competes with one of the party backed ones and you'll see how capitalist they are not.
  • by Anonymous Coward on Thursday October 25, 2012 @01:08PM (#41767161)

    Um, no. We are not in Afganistan for the minerals. Sending valuable peolpe and equipment into a mine in a country where explosives-enthusiastic people want you dead is just insane.

    Seriously, if you get a bonus check at your job, for $10k and you go to invest it are you going to be remotely tempted to chip in on a "New Long Term Afgani Business Venture?"

    Because if that appeals I can connect you to a very well known Nigean Prince with even better offers.

  • so what? (Score:5, Insightful)

    by nimbius (983462) on Thursday October 25, 2012 @01:08PM (#41767163) Homepage

    America exports the worlds supply of helium, hasnt produced a millilitre more for over 2 decades, and keeps the price artificially low.

    OPEC sets quotas and prices for global oil supplies, and can suspend or restrict production whenever they feel the need.

    American agricultural conglomerates like ADM and General Mills collude to set the price at which they will accept corn from farmers. too much corn does not drive the price of it down, instead its maintained by dumping cheap corn as an export, or siloing it for next year.

    how has china in any way changed how capitalism has worked for the past 270 years? The only thing thats generated outrage is chinas willingness to take an aggressively competitive position in the global economy, instead of a subservient one. If you dont like it, consider pushing for more organized labor.

  • Re:Trade war (Score:5, Insightful)

    by Dan East (318230) on Thursday October 25, 2012 @01:14PM (#41767277) Homepage Journal

    No, don't put tariffs on them. Why would the US want to sell or produce rare earths? They are a finite resource. If China wants to burn through their supplies so the rest of the world can enjoy cheaper technology, then that is their prerogative. Once it's out of the ground and used to manufacture products shipped to the US then it can be recycled for reuse in new products. Either way the material is no longer in China. This is a gamble China has made to try and prop up their massive industry and population, is to not only undercut worldwide labor with a very cheap workforce, but also burn through their physical resources as well.

    Nothing about China is sustainable, and there will be great sorrow and suffering in that country when the bottom drops out of various markets over the next decades.

    The USA's production at various rare earth mines simply idled or completely stopped as prices dropped and it was not longer profitable to mine them. The rare earths are still sitting there waiting for us when we need them. No hurry to get to those resources at all.

  • by Anonymous Coward on Thursday October 25, 2012 @01:22PM (#41767413)

    How can it possibly NOT be "economic" when the entire economy is forced (at gunpoint if necessary, like any instance of government) to "contribute" to the political system?

    Let's call a spade a spade here. If a government takes your money by force -- which all of them do -- then the political system effectively *is* the economy.

  • Re:Trade war (Score:4, Insightful)

    by Sydin (2598829) on Thursday October 25, 2012 @01:26PM (#41767481)

    Nothing about China is sustainable, and there will be great sorrow and suffering in that country when the bottom drops out of various markets over the next decades.

    There will be a great sorrow in every country, especially the US. We are all deeply tied into China's market, and whatever affects them, affects us. The next great depression will not also be a result of domestic economic negligence. It will be the result of China sinking, and dragging the world's economy down with it.

  • Re:Outsourcing (Score:4, Insightful)

    by Dan East (318230) on Thursday October 25, 2012 @01:26PM (#41767483) Homepage Journal

    This is simply inevitable. China has been producing rare earths at unsustainable and artificially low prices, which is why the rest of the world no longer needed to bother with mining and consuming their own finite resources.

    Everyone needs to grasp that this is an inevitability - the prices of various products (mainly higher technology) will have to go up, and thus the global markets and product will rebalance themselves. The manipulation was already done in keeping the prices too low, not in making them go up. Your complaints are coming way too late in this game - you should have been complaining at least a decade ago when they flooded the market with cheap resources, not now that the bubble has burst.

    Say a new hot dog stand opens up in town, and for the first month they sell hotdogs for 25 cents at a massive and unsustainable loss. Maybe that's long enough to run the other hot dog stands out of business, or at least make them realize it's just not worth bothering with. Then after the introductory price they go up to where the market belongs. Now at that point the other hot dog stands can re-open, with new owners or with their old owners - doesn't really matter. At the end of the day it's all the same end result - hotdogs cost what they're worth.

    My question is this - was it wrong for the rest of us to enjoy hotdogs for only a quarter apiece while we were able to? My opinion is no, that's not wrong of us, nor is it wrong that the world enjoyed lower priced rare earths (and thus technology) because of China's willing sacrifice of their finite resources.

  • by afidel (530433) on Thursday October 25, 2012 @01:43PM (#41767819)

    It depends on what you consider China "has", if it's just the minerals in the sovereign territory of China then 30% is probably a bit inflated, if you consider it explored proven reserves owned/controlled by China or Chinese companies it's probably understated.

  • by Dahamma (304068) on Thursday October 25, 2012 @03:08PM (#41769137)

    The problem is China can turn on production whenever they want and undercut any competition, driving those other producers out of business again and again so that no one wants to invest in such a risky industry.

    I'm not a big fan of excessive tariffs, but the only way to prevent China from manipulating the market like that is for other governments to step in with their own manipulation, putting enough tariffs on Chinese exports that domestic mining of rare earths can survive (and also showing China if they pull this shit, there will be consequences).

    The problem is businesses and consumers are so into short term savings they are more than happy to screw over their long term viability - when that happens it may be up to regulatory bodies/governments to look at the long term.

  • by torkus (1133985) on Thursday October 25, 2012 @03:48PM (#41769775)

    Driving up supply chain costs in a cornerstone of a shakey global economy is a good idea? China is nowhere near mining out all their rare earths. If they were, other countries would have set up mines and production facilities in preparation for that because they'd have guaranteed profit. What exactly indicates other countries would have higher prices though? Plus we won't "run out" of rare earths. Unlike oil most can be recycled and reused more or less indefinitely.

    This is 100% about China trying to streghten their powerbase in the global economy. It's blatant price manipulation in what's supposed to be open markets. China is taking their ball and going home till all the other kids come begging. Unfortunately someone else is going to buy their own ball eventually.

    As for environmental concerns - sorry but that's just laughable. If they cared, they would close the mine or update to more modern and clean processes (which are still quite dirty.) Also they'd so something about the myriad of severe pollution problems they have. The main reason China has a monopoly right now is because they were content to pollute their country and (more or less) everyone else was (more or less) happy to let them. That balance is shifting now.

  • by fox171171 (1425329) on Thursday October 25, 2012 @05:38PM (#41771147)
    BTW it was my understanding America used to be the major provider over a decade ago and we simply stopped. Shows this was a bad idea.

    Not if your intention is to let the competition use up their supply while ensuring your own in the the future.

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