Business and Industry

China Restricts Export of Rare Earth Minerals. Companies Figure Out Other Places to Get Them. Surprise!


china propaganda

Remember a couple of years ago when China started restricting exports of rare earth minerals?

Small amounts of minerals like Europium are vitally important to making gadgets like night vision goggles, smartphones, and the batteries in hybrid cars. It's hard to find big, mineable deposits of some of the substances, so when China ramped up extraction dramatically over the last few years prices fell. Some companies moved their factories to be closer to the source of these important minerals and competing operations elsewhere closed up shop.

Then China clamped down and EVERYBODY PANICKED!

Governments whined to the World Trade Organization:

The United States, the European Union and Japan filed a World Trade Organization complaint alleging that China was using its monopoly over the minerals as a political and economic weapon—for instance, to punish Japan over its claims to contested islands in the South China Sea and to entice companies to relocate factories inside China by offering a cheaper supply of rare earth materials.

But meanwhile: 

Colorado-based Molycorp…reopened a rare earth mine in Mountain Pass, Calif., that had been shuttered a decade ago because the supply of the minerals coming from China was so cheap….

[Plus,] the company recently acquired China-based Neo Materials and with it the technology needed to provide the more purely refined rare earth oxides used in computer, defense and telecommunications equipment.

Similar developments have occurred in North Carolina and elsewhere. Turns out that when the price of something goes up or access to it becomes uncertain (or both) people figure out other ways to get that thing, and more people try to figure out way to supply that thing. Neat!

Koshi Okamoto, executive director of New York-based Hitachi Metals America, explained what happened in a very no-nonsense way: "Reliable sources of supply are clearly one of the top priorities."

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  1. I hear Romney’s gonna get them wiley Chineses.

  2. Colorado-based Molycorp…reopened a rare earth mine in Mountain Pass, Calif…

    They’re not fooling me. All they’re doing is drilling through the Earth and stealing China’s minerals from the other side.

    1. Imagine, if you will, that you have a milkshake…

      1. I would prefer this milkshake, thanks.

  3. But I thought China was our only source of Unobtanium?!

    1. They’re our source of High Speed Trains to nowhere.

    2. We’ll just have to unobtain it elsewhere.

    3. That’s why we’re looking elsewhere …
      *glances toward the stars*

  4. This is like bitching about not being able to get oil. It exists, therefore we need it!

    1. What?

      1. I am suggesting that anyone who feels the United States government should do something about Chinamen or A-rabs not selling stuff should go blow.

  5. Now only if Reason could apply the same logic (supply and demand) to immigration.

    1. They do.

    2. You mean control immigration the way China’s tries to control rare earths? Decide in a centralized, planned fashion what the supply of something should be and try to monopolize it for nationalist reasons?

      The US government already applies that logic to immigration. Why should Reason?

    3. Yeah, I totally agree. Reason needs to apply the logic of the market into all areas including labor and the movement of people.

      Oh wait…they already do.

  6. Those guys seem to know whats going on over there. Wow.

  7. Good old Adam Smith: Still batting strong after 236 years!

  8. This must be racist if we aren’t using Top Men? and their access to NGOs such as the UN to facilitate business transactions.

    What else could be it be? I mean, it’s not like when there is a demand for a product/service, someone will fulfill the demand with a supply. There’s just no fucking way that it works out right.

  9. This is also the reason why the prices of gold and silver cannot maintain their current value in the long run.

    1. ???

      Silver and gold have a demand as money. If the demand for paper currency were to collapse, not only would metals maintain their value, their nominal value would in fact explode by many multiples as their demand dramatically increased.

      1. I’m saying that gold and silver prices have skyrocketed in the past 5 years.

        That has caused previously inactive mines to re-start production, now that they’re profitable. Increased supply should lower prices.

        The same thing the article talks about.

        1. Those mines are only worthwhile now because the price skyrocketed so much. They are extremely labor intensive to obtain small amounts of gold, and by them self can not reduce gold prices- only slow the increase slightly. It will take drastically decreased demand to lower gold prices.

        2. Sigh, you don’t actually follow this do you?

          Gold production is something around 1.5% a year. As long as the demand for gold exceeds that–as it has for the past decade+ — then the price of gold will continue to increase.

          It’s easy to say that they can just open up new silver and gold mines, but this is something that has been continually done during the past decade so it’s not like this is a novel idea. After all, the secular bull market that metals have experienced has been a decade long, it’s not like it snuck up on anyone. We aren’t talking about a price spike, people have been adjusting to these higher prices and attempting to produce new supply.

        3. I should also add that the price of metals is more a product of the demand then it is of the supply.

          Rare earths received a supply shortage shock.

          PM’s have been under demand increase pressures. Ultimately, barring some dramatic new mine discovery, and mining technology breakthrough, the real threat to PM’s is an end to the demand.

          What might bring that about? An end to international inflationary policies.

          Since that’s an unlikely event, I remain unconcerned for the long term value of gold and silver.

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