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Is China playing a clever capitalist or malicious miscreant?

To the victor go the spoils, they say.  But the U.S. isn't happy with China's control of over 95 percent of rare earth metal production.  It's lodged a formal complaint with the World Trade Organization, with President Barack Obama accusing the Asian economic giant of playing dirty.

I. Once the U.S. Was a Rare Earth Leader

The earliest mining of rare earth elements came from placer sands in India and Brazil.  Then in the 1950s, South Africa took the lead with its rare earth containing monazite deposits.  Between the 1960s and 1980s, Mountain Pass mine in California was a leading producer.

Then came the red giant.  China, which owns an estimated third of the world's rare earth deposits, pumped up production in Inner Mongolia in the 1990s, putting price pressure on American and other producers.  It worked.  The Mountain Pass mine was shuttered in 2002, and with it the majority of American rare earth mineral mining.

Neodymium wide
Slowly China came to dominate rare earth metal production, a realm once dominated by the U.S. (neodymium magnets pictured) [Image Source: Doug Kanter/Bloomberg]

But in their quest for ever more-efficient power electronics, electric vehicle makers, flat-panel television makers, wind turbine makers, and solar panel makers all turned to this category of scarce resources.  In short, rare earth minerals suddenly became a prized commodity, just as the U.S. exited the market and China cornered it.

China responded by imposing a 2010 cap on exports, which continued into 2011.  The artificial ceiling limited exports and sent prices soaring, adversely affecting the electronics, alternative energy, and automotive industries.

That pain finally boiled over in the form of the trade complaint filed by the EU, U.S. and Japan last week.

II. Tough Talk

"We met at least a half a dozen times with the other countries that joined us. And I'm not talking about 'howdy dowdy' kind of meetings. These were three and four day-long sessions of going through legal issues," a U.S. official is quoted by Reuters as saying.  "Literally thousands of pages of Chinese language documents needed to be found, translated and analyzed."

Rare Earth miner
Fertile sands: a laborer moves earth at a Chinese company's Inner Mongolia rare earth metal mining facility [Image Source: Stringer Shanghai/Reuters]

U.S. Trade Representative Ron Kirk views this as a case of a fresh player not wanting to play by the rules.  He states:

In fact China adds a small fraction of value to such a product - as reflected in the final price - usually at the assembly stage. China's share is well below 10 percent.  Our businesses, as a general rule, really do believe, and maybe it's that American spirit, let me go compete in the global market and I'll accept that if (my friend) has got a better idea she wins and sometimes I'll win. But you've got to promise me that the deck's not going to be stacked.

I'm not saying you can't have state-owned enterprises. But how do we determine to give my businesses and competitors the sense that they truly are operating as independent market-driven entities?

Ironically the U.S. effort received a boost from a WTO loss to the EU in a complaint about subsidies the U.S. government paid to The Boeing Comp. (BA), a Seattle, Wash. based firm and top aircraft contractor.  The U.S. has an almost identical counter-complaint about EU subsidies to Airbus, a subsidiary of the European Aeronautic Defence and Space Company N.V. (ETR:EAD).

In the WTO complaint, judges set in place new guidelines.  Under these rules, if a nation refuses to reveal information on subsidies (as the U.S. did with Boeing) it will "draw negative inferences" -- assume the worse.  This could be a fatal policy for China who reportedly hasn't published information on any of its subsidy efforts in five years.

III. Is the U.S. Being Unfair?

But some say the U.S. and Europe are being unfair to China.  While China doesn't necessarily have the best environmental track record, expanding rare earth production could damage the Mongolian wilds, as well as put miners' lives at risk.  Also, there is some irony that the U.S. and European authorities are irate at China for playing skillful entrepeneur at driving a hard bargain when it comes to rare earth resources.

Jonathan Fenby, head of China research at Trusted Sources, says that China is a convenient whipping boy for American politicians, stating, "I think that in this electoral season (in France and the United States), China-bashing is on the rise. Hence the action.  China is an obvious easy candidate and it is interesting that in the U.S. the Republicans, normally free traders, have gone for China."

But he warns that the WTO complaints and tough rhetoric may backfire, commenting, "If China hits back, how important is the Chinese market to Western firms, and what is the impact on foreign companies that rely on China for assembly such as Apple?"

iPhone 4S
Pushing China too hard could backfire, particularly for U.S. companies like Apple who rely on the nation to produce their products. [Image Source: PocketLint] 

China isn't above such petty retaliation.  It recently sunk a $12B USD Airbus deal after the EU moved to enforce carbon taxes on it.  With the manufacturing futures of virtually every American devicemaker -- including Apple, Inc. (AAPL) -- on the line, Mr. Fenby argues that America may have more to lose than the Chinese.

Source: Reuters



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Solution?
By 440sixpack on 3/19/2012 4:17:47 PM , Rating: 5
quote:
Between the 1960s and 1980s, Mountain Pass mine in California was a leading producer.

Then came the red giant.... The Mountain Pass mine was shuttered in 2002, and with it the majority of American rare earth mineral mining.


Sooooo....... reopen it?




RE: Solution?
By pensive on 3/19/2012 4:42:55 PM , Rating: 2
no problem with that....
reopen it.
aha! Obama and the CA regulators don't
really WANT mining here.
aside from costs, that's why this mine
is still not in current production.
there are other deposits of RE's in
the USA...
http://pubs.usgs.gov/sir/2010/5220/


RE: Solution?
By sigmatau on 3/19/2012 10:16:28 PM , Rating: 2
Your little link didn't say anything about Obama wanting to prevent mining. Lie much?

The mine will reopen soon by the way. But monkeys that hold their hands to their ears, eyes and nose should really be holding their hands to their mouths.


RE: Solution?
By Reclaimer77 on 3/19/12, Rating: -1
RE: Solution?
By Integral9 on 3/20/2012 8:56:50 AM , Rating: 3
From March 5, 2012

President Obama, while in New Hampshire last Thursday, countered Republican charges that he was to blame for the rising pain at the pump. “We’ve opened millions of new acres for oil and gas exploration, and approved more than 400 drilling permits since we put in place new safety standards in the wake of the gulf oil spill,” Mr. Obama said.

http://www.nytimes.com/2012/03/05/business/deepwat...

Presidential abuse? Vietnam was a colassal abuse of presidential power. Stopping the oil drilling to adjust the safety measures and review the equipment is not abuse, more like prudent.


RE: Solution?
By Reclaimer77 on 3/20/12, Rating: 0
RE: Solution?
By Reclaimer77 on 3/20/12, Rating: -1
RE: Solution?
By Integral9 on 3/20/2012 1:56:27 PM , Rating: 4
What war would that be? Libya? The Libyans started that themselves. Sending planes over to bomb aid rebels against a regime we've had an "antagonist" approach towards since the 1970s is hardly starting a war. We were just leveling the playing field.

Don't fool yourself, the impeachment hearing began because the republicans are in congress. It's just another "feather" in their caps and headlines for reelection purposes. Nothing will come of it. Clinton was impeached for adultery. Still served 2 terms.

btw. Was there an impeachment of Bush when he started the Iraqi war? against all international support and with falsified evidence and the illegal torture of militants and the illegal termination of government employees. I don't believe so.

Speaking of "Czar's" how many "Czar's" did Bush create and appoint? And back room dealings, the Republicans are the largest offenders. Why do you think they all vote together? Then there's Chaneys abuse of power by voting in Congress when his vote is only needed for a tie breakers. Did I mention that he also orchestrated the "de-fanging" of the EPA? Allowing oil companies to destroy the ground water while fraking w/ little more than a letter of disappointment?


RE: Solution?
By Reclaimer77 on 3/20/12, Rating: -1
RE: Solution?
By Integral9 on 3/20/2012 4:46:17 PM , Rating: 4
If you had read he constitution, you would know that the War Powers Act allows the president is commit a certain amount of troops w/out congressional approval for up to 60 days. And every President has done it since I can remember.

Iraq was a war Bush started with falsified evidence. How is that not a high crime? Torturing people not a high crime?

It's a fools errand to assume anything in politics isn't partisan gamesmanship. Almost everything in politics is partisan gamesmanship. Politicians are professional liars and spin doctors and get where they go mostly through back room dealings and lying. So all this dribble about ending back room dealings, et al is just political dogmatic dribble. Remember the ear-marks crap from a year or so ago? What happened? Nada. Everybody just put their ear-marks back in their bills and life went on.

Impeached for lying under oath about adultery. So sorry.


RE: Solution?
By sigmatau on 3/20/2012 6:41:52 PM , Rating: 4
Aw the monkeys came out to play today. You guys can't stand being called liars? Obama is not blocking it. This mine has already been approved and they are trying to accelerate the proccess to open it.

But hey, monkeys going to throw feces anyways.


RE: Solution?
By JasonMick (blog) on 3/19/2012 4:44:29 PM , Rating: 5
quote:
Sooooo....... reopen it?
MolyCorp is in the process of doing that. It bought the mine and is investing $500M USD to reopen/restart it. It's actually cleared all the environmentalist red-tape more or less.

However, restarting production and reaching full capacity will likely take 4-8 years.

In the meantime, expect plenty of tension between the U.S. and China.

Also keep in mind that the U.S.'s demand for rare earth metals has risen -- so even if the Mountain Pass mine is reopened, it is unclear whether the U.S. will be capable of self-sufficiency. It's very likely that reliance on Chinese imports will be reduced, not eliminated.


RE: Solution?
By havoti97 on 3/19/2012 5:25:43 PM , Rating: 5
After MolyCorp or any US compnay has heavily invested in the mines, China will again flood the market with cheap rare earth metals, crippling their start up rivals. With no cash flow, they will quickly file for bankruptcy and China will rinse and repeat.


RE: Solution?
By Zhuubaajie on 3/19/2012 6:01:20 PM , Rating: 2
Note that it is now the joint forces of U.S.A., EU and Japan that are forcing Beijing to lower prices (and thus kill the new mining efforts), seeking to ensure that rare earths are only available from China.

It is Alice in Wonderland.


RE: Solution?
By Solandri on 3/19/2012 6:42:59 PM , Rating: 2
From a national standpoint, it makes sense to use up China's rare earths before harvesting your own supplies.

But I think you're mischaracterizing it as The US, EU, and Japan wanting to force Beijing to lower its prices. They just want consistency - the same price for domestic and international buyers, and a stable (market-driven) price over time. If China deems to set that price lower than those of US, EU, and Japanese producers, then so be it. If China sets it higher, that's no big deal too. It doesn't matter one way or the other, as long as China is consistent about it.


RE: Solution?
By FishTankX on 3/19/2012 11:36:33 PM , Rating: 3
The obvious solution to this is, as soon as China floods the market with cheap rare earths, slap on an indefinite subsidy on the american production of rare earths. Assault largely abated. I doubt it'd take more than ~$5b a year to make all of this mess go away.


RE: Solution?
By Samus on 3/20/2012 1:32:06 PM , Rating: 2
with all the worlds super-economies on board, if it is suspected China will rinse and repeat, I think the pact will simply purchase from the mountain-pass (or other friendly facilities) even if the prices are higher.

China is playing with the big dogs, and like Iran, shouldn't be taken seriously.


RE: Solution?
By The0ne on 3/19/2012 6:55:07 PM , Rating: 2
Both of your points are the main ones and ones that I believe most members don't understand. Cost and time to reopen a mine. Having said that however I'll again state that China has the smarts to capitalize on this for decades now. Having this get started up seems fruitless. China was just smarter to get ahead that's all and there's no point in complaining. They invested millions upon millions in various countries/nations to gain this advantage.

And lastly I agree, US will never be self-sufficient on REM. China is too dominant now as every nation knows. US and Japan can do absolutely nothing except for the extremely drastic measures. We've seen throughout China's industrial progress how they've manipulated REM from the process. They can do the same again, over and over.


RE: Solution?
By Jaybus on 3/20/2012 4:19:00 PM , Rating: 2
Don't forget that the name for these elements is very misleading. The rare earth elements are the 15 lanthanide series (elements 57-71) plus yttrium. Of these, the only one that is really rare is promethium, which wouldn't be a first choice anyway, as it is radioactive.

With cheaper labor and far more lax mining regulations China simply undercut the competition and made the European, US, and Japanese mines unprofitable. It had nothing to do with the elements being very scarce.

With increased demand and China forcing up the price, mines elsewhere in the world will once again be profitable. In the end, more competition should force supply/demand equilibrium. Unless, of course, China persists with state subsidies in the form of tariff rebates, which indeed IS government interference with free trade.


RE: Solution?
By jimbojimbo on 3/19/2012 7:35:26 PM , Rating: 4
The only winner in any attempt to reopen the mines are lawyers. Smart people and all the environmental hypocrite hippies who are pushing for electric cars will both hire lawyers like crazy to fight it out.

So environmentalists, you want everyone to drive electric cars how about doing something that'll let the US help achieve that??


RE: Solution?
By Shig on 3/19/2012 8:02:13 PM , Rating: 3
Fair point. I consider myself middle-left, but a lot of these environmental people are like the Tea Party except the polar opposite.

Just once I'd like to see Congress compromise on something without the republicans wanting NO regulations and the liberals wanting insane over-regulation. This all or nothing BS has got to go.

Lithium mining is also going to be a major issue soon. The major Lithium countries are Argentina, Chile, Bolivia, US, China. China is already trying to buy them up, but it's looking like the governments who have the lithium deposits are as bad as OPEC in the middle east.


Unfair?
By lightfoot on 3/19/2012 4:32:20 PM , Rating: 5
If Chinese firms and US firms were paying the same price for the same product (less shipping and transportation costs) due to China restricting production of rare-earth materials, then yes it would be an unfair complaint.

However this is NOT the case. China is not limiting production of rare-earths, they are limiting export of rare earths.

If China had a policy of taxing all exports this too would not be an issue. However China is widely known for subsidizing its exports, so adding a quota (which acts like an export tax) is clearly discriminatory. They can't even claim the environmental high ground because that is clearly NOT the reason for the quotas.

So, no, accusing China of unfair trade practices is not its self unfair.




RE: Unfair?
By StevoLincolnite on 3/19/2012 4:45:27 PM , Rating: 3
I think China has the right to do whatever it wants with whatever resources it finds/controls on it's land.
They own it... Not us and you can only dig it up once.

I find it silly how other countries are calling it unfair. Let capitalism take it's course and open up new mines.


RE: Unfair?
By Motoman on 3/19/2012 4:46:48 PM , Rating: 1
I think the idea is that it's being perceived as an anti-"fair trade" kind of concept. China is doing it with the explicit goal of causing harm to other countries' industries...in other words, it's actually a malicious act.

Anyway as noted, the market can respond by investing in said resources elsewhere...it will take a lot of time and investment, during which time you'll have to play China's game...but a few years (and a few billion dollars) from now you won't have to anymore.


RE: Unfair?
By dsx724 on 3/19/2012 9:02:57 PM , Rating: 2
http://www.iags.org/rareearth0310hurst.pdf

China warned that the REM's were going to be cutoff because of their vital strategic importance back in 2005. It's silly to accuse China of explicitly causing harm to other countries when the market didn't have the foresight to plan accordingly. I would call it market failure because no one knows what they're doing rather than China's game.


RE: Unfair?
By lightfoot on 3/19/2012 6:21:34 PM , Rating: 2
quote:
I think China has the right to do whatever it wants with whatever resources it finds/controls on it's land.

I agree, to an extent. They have the right to not mine the materials if they choose not to (for environmental reasons or any other reason.) However they ARE continuing to mine it and choosing only to sell it to domestic companies.

It would be like if we started building cars and decided to only sell them to English speaking white people. Would that be fair? No. If we chose to simply not make cars that would be one thing, but discriminating against who can BUY them would make it unfair.

That is what China is doing, they are saying who can and who can not buy the product that they are already producing.

OPEC can get away with limiting production of oil. That's fine, they can choose not to extract their natural resources. What they CAN'T do is say that specific people aren't allowed to buy that oil, or that a particular group must pay a higher price. That's why we have the WTO, to prevent embargos from occuring and causing trade (and actual) wars.


RE: Unfair?
By StevoLincolnite on 3/19/2012 6:29:32 PM , Rating: 2
quote:
It would be like if we started building cars and decided to only sell them to English speaking white people. Would that be fair? No.


That's bringing race into it which completely changes it.

It would be more attuned to the USA designing and building a car and only selling it in the United States. Which... Funnily enough does happen. :P


RE: Unfair?
By Reclaimer77 on 3/19/2012 9:57:18 PM , Rating: 1
quote:
However they ARE continuing to mine it and choosing only to sell it to domestic companies.


And?


RE: Unfair?
By carniver on 3/20/2012 5:11:30 PM , Rating: 2
Gas sold in Venezula is ultra cheap. How is it fair that they don't sell US the same cheap gasoline according to your logic?


RE: Unfair?
By lightfoot on 3/20/2012 5:42:29 PM , Rating: 2
Counter example - we export food to China. Would it be fair if we didn't let them buy OUR food? Or if we charged them MORE for consuming our food than our domestic ethanol producers?

Just because others engage in unfair practices does not make unfair practices fair.

The WTO prohibits such activities, if you don't want to follow the rules, don't join.

If they want to place embargos on us, we should be able to do the same to them.


RE: Unfair?
By Solandri on 3/19/2012 6:52:00 PM , Rating: 4
quote:
I think China has the right to do whatever it wants with whatever resources it finds/controls on it's land.
They own it... Not us and you can only dig it up once.

China gave up that right when they signed and joined the WTO.

If every country did whatever it wants, then you'd see high tariffs on all international trade as each country tried to favor its domestic economy. That causes a tragedy of the commons situation, with the worst possible outcome for everyone overall. The WTO was created to combat this, with member countries mutually agreeing to various free trade provisions to avoid the tragedy of the commons.

China is trying to have it both ways. They signed onto the WTO so other countries would trade with it without favoring their own domestic suppliers and producers. Now that they've benefited from other countries letting down their tariffs, they're trying to prevent other countries from getting the same benefit with China.


RE: Unfair?
By torpor on 3/20/2012 12:06:25 AM , Rating: 3
I might add that China strongly pursued WTO membership after bowing out during the Revolution.

They knew well that WTO membership means getting rid of most protective tariffs and behaviors. But China valued clearing such obstacles to modern economies like the US and Europe, and figured they could obfuscate and dodge requirements on them by some of the means cited in the article.

In fact, people sort of expected China to act this way; look here for a prescient run-down of the potential snares.
http://www.epi.org/publication/issuebriefs_ib137/

In fact, it could be argued that the reason Clinton got Chinese campaign money was to decouple human rights improvements from economic relation improvement.

Well, China, low trade barriers are a two-way street. That's why the WTO exists. Welcome to it.


RE: Unfair?
By Strunf on 3/20/12, Rating: 0
RE: Unfair?
By BZDTemp on 3/20/2012 4:07:45 AM , Rating: 2
You do realize that with China it's not capitalism but more a sort of dictatorship calling the shots. Is there capitalism in China - yes, but only as long as it fits with what the rulers want.

For instance China is not beyond to block or hinder business for countries that support a free Tibet, not that it's any different then how other big nations will do their best to use business to influence politics where ever they can.


RE: Unfair?
By ipay on 3/19/12, Rating: -1
RE: Unfair?
By jtemplin on 3/19/2012 8:38:36 PM , Rating: 2
^ Someone isn't chinese


RE: Unfair?
By someguy123 on 3/19/2012 8:35:03 PM , Rating: 2
They're certainly limiting/profiting from their investment in rare earth, but how exactly is this unfair? China is profiting from its foresight. Isn't this exactly what capitalism is all about? They have no control over foreign soil, and, as pointed out in this comment section, the US is attempting to reopen its mines. You bring in export subsidies, yet export subsidizing is the exact opposite of fair considering they're essentially undercutting private companies in other countries by making their exports incredibly cheap through government intervention. If china suddenly drops price and undercuts everyone into bankruptcy, then you'd have a legitimate complaint, but these competitors need to exist before we make that claim.

If the US didn't want China playing their game they should've never asked them to open their borders for trade.


cheaper to buy full assembly
By Yofa on 3/19/2012 5:02:47 PM , Rating: 5
when it's cheaper to get a fully-assembled magnet assembly than it is to just buy the raw material, then yes, there is some unfairness involved.

china's policies are forcing north-american magnet designers to either pay ludicrous prices for the raw material, or do the right thing business-wise and get the assembly made in china, by a company that gets domestic pricing for the raw material, and shipped over for less than the cost of the raw material.

that means you're sending over your designs overseas so it can easily be duplicated. and the material still gets exported in the end, so the environmental concern excuse doesn't stand up. it's monopoly tactics.




RE: cheaper to buy full assembly
By Goty on 3/19/2012 6:24:43 PM , Rating: 2
China does this frequently. Want to do business here? Give us all of your designs so we can make cheap knockoffs and pocket the profits ourselves.


RE: cheaper to buy full assembly
By TSS on 3/20/2012 2:07:19 AM , Rating: 3
So china is always looking for the best deal for themselves. That's no different then the US or the EU.

I'd argue the fool here would be the person who would rely on somebody else to not do so.

The fool, in this case, is clearly the US for not keeping the mines operational at a low volume, with the option of scaling it to full production within a short timeframe. Instead i'm sure US presidents loved the possibility of shutting down the mines and getting some good graces from the enviromental movements.

China's still in the wrong though. Nothing good has ever come from a trade war. They are a new player in the global markets, the last time this happened (the 20's and 30's) they really weren't a significant power.

And we all know how that trade war ended.


Hypocracy
By SuckRaven on 3/20/2012 12:20:59 AM , Rating: 1
America is a sore loser when any country does something better, or for that matter any country that does something that we are not.

During the space race between the U.S. and the U.S.S.R., America got its panties all in a bunch, and was all wah wah wah..., just like a little baby. After all, how can these commie Soviets be good at anything? Isn't America the ONLY country on the planet?

Let's not forget that innumerable chemistry and physics discoveries were made by prominent Russian scientists.

Let's also not forget that many "American" scientific discoveries were in fact made by scientists that were neither born, nor educated in this country. A fact many people seem to conveniently forget.

Take a look, for instance, at most of the names of the physicists that worked on the Manhattan Project for example? See very many Joe Smiths or the like? A couple of Hungarian guys, Leo Szilard and Teller Ede, Enrico Fermi, and Italian, Niels Bohr, a Danish dood, just to name a few. Ahh yes, the good ol' brain-drain during post-war Europe.

And now, just like ever before, Amuricah is loosing it's cool over something 1) it cannot control (It's own appetite for cheaply made Chinese goods and tech-gadgets), and 2) China itself, and it's sovereign right to develop whatever-the-hell kind of mining operations they want, including the option not to sell those mined metals to anyone if they chose not to.

It's not China's fault that it saw the tech-gadget-crazed pig of America feeding at the trough, and decided to plan ahead, nor is it China's fault that America fell asleep at the wheel in the late 80's and early 90's when China was buying up rights to regions rich in these metals because it had the foresight to see the industrial need for these rare-earth metals.

Too bad, so sad. I'm sure America has rare earths, but it's hard to get them out of the ground with lazy-ass people not willing to work below a certain wage, and thus the economic in-feasibility of getting the infrastructure set up, especially since rare-earth mining operations take years, sometimes decades to come on-line to full capacity.

So we can either quit whining and get our heads out of our asses, and get crackin' on investing in our own domestic infrastructure for such things, or we need to shut the hell up.

I wonder...if we were in such dire need of rare-earth metals as we are addicted to foreign oil, would America have the balls to go to war with China over it? I dare say no.




RE: Hypocracy
By Joepublic2 on 3/20/2012 12:51:24 AM , Rating: 1
The difference is you can live on 50c an hour in china but can't in the US, dumbfuck. If the politicians in this country had any balls they'd just threaten to slap say a 50% import tariff on any Chinese made goods until they resumed shipments of rare earths to the states.


RE: Hypocracy
By Reclaimer77 on 3/20/2012 1:18:17 AM , Rating: 1
Great plan. Making just about everything we buy cost 50% more would totally rock for our economy.

p.s. extreme sarcasm


RE: Hypocracy
By Joepublic2 on 3/20/2012 1:53:37 PM , Rating: 2
Yeah, manufacturing everything in China has been working great at making ultra rich globalists richer at the expense of everybody else. You'd phase in a 50% tariff over say 5 years (or more if necessary depending on the logistics of a particular industry) to make it increasing unprofitable to manufacture in china and put the cash into a fund that's used to set subsidize relocating chinese manufacturing operations to the US.


RE: Hypocracy
By Rasputin814 on 3/20/2012 4:55:32 PM , Rating: 2
Um...They'll just move to vietnam or somewhere else. Manufacturing jobs are gone from this country for good. China will lose its hold on manufacturing as well as it slowly continues its development. Once all the cheap labor runs out, as in once the chain hits Africa, robotics take over.


RE: Hypocracy
By lightfoot on 3/20/2012 2:49:30 PM , Rating: 2
I'm generally strongly in favor of free trade, but not if the other side isn't playing by the same rules.

The proper response to the Rare Earth embargo is import and export taxes levied against China.

Or we can act like pussies and bring a complaint to the WTO and discuss the dispute.

As you can tell we are crying to mom and expect the WTO to punish China for us.

The presumption that we are more dependant on China than they are on us is ridiculous. Our economy is over three times the size of theirs. We will survive a trade dispute, they won't. And yes, you may have to cut back on your cheap Chinese-made plastic crap for a few months, but you'll survive.


Anyone here who actually knows about China
By masamasa on 3/20/2012 10:58:23 AM , Rating: 3
"Is China playing a clever capitalist or malicious miscreant?"

Anyone here who actually knows about China knows it's both. They are far more clever than the market driven economies of the West and very clever capitalists. However, the flipside is that those in power or those who make these decisions are as crooked as they come and certainly don't give two hoots about anything or anyone that does not benefit their own financial position. Just as bad the cronies on Wallstreet. Not a business partner I would trust.




By masamasa on 3/20/2012 11:00:22 AM , Rating: 5
On another note, never put your eggs in one basket. Be it OPEC or the rare earth issues, these governments or groups will hold you hostage for a buck, that much is clear. Diversify or prepare to get owned.


How Rare Earths Can Benefit America
By Zhuubaajie on 3/19/2012 5:23:04 PM , Rating: 2
The irony is that Beijing has literally been pleading with everyone that will listen, that THEY should start up new production and not just sponge off of China's limited resources.

This whole rare earth thing smirks of being 100% politics, and zero common sense.

If access to rare earths (not so rare) is truly the goal, it would be a wonderful opportunity for America to gain a leg up on the other industrial players (such as Germany, Japan, and S. Korea) that are true peer competitors with America. China is still so very much lower on that tech step ladder, its industries are more complementary (rather than competitive) with American manufacture.

WHY is this a good opportunity? China + America can easily control the pricing of Rare Earths. Do a cartel with China and stick it to the other industrial competitors. If processing the ores is too environmentally unfriendly, it can always be subcontracted out to China, with contracts to bring back the refined products (i.e., have the likes of Molycorp export the ores to be processed in China, with agreements to bring back the refined products). Japan and German and S. Korea do not have the ores, and would thus be disadvantaged.

Mining and exporting of the ores provide good jobs (see Australia). The refined rare earth materials (pure metals, instead of radioactive ores), imported at substantially lower prices (vis-a-vis the true peer industrial competitors) and to be processed further into high tech products by American companies in America - now that's a viable industrial policy that takes advantage of the high end expertise of America.




RE: How Rare Earths Can Benefit America
By Zhuubaajie on 3/19/2012 5:35:33 PM , Rating: 2
The most critical is that the cartel arrangement would be the ONLY viable short to intermediate term solution to bring rare earth products at preferential prices to American manufacturers. A WTO action can easily wind through the system and take 3-5 years to finally resolve. NONE of the new mines being reopened, would have real production for another 2 years - even assuming they pass environmental scrutiny.

In contrast, digging dirt and exporting (it is the processed tailings that are radioactive, with mostly thorium) can be done TODAY. The preferential agreement (basically a "lai liao jia gong" (bring materials to process) deal in China trade parlance) could make processed rare earth products IMMEDIATELY AVAILABLE - you ship 100 tons of ores, you get back the equivalent amt. (0.5 ton?) of the refined metals at preferential prices, and that can be done TODAY.


By Gondor on 3/19/2012 6:23:36 PM , Rating: 2
I don't see the problem with thorium - it can be used for different things and perhaps more uses will crop up.

This is like refusing to grow pumpkins for their seeds just because you're then left with a truckload of pumpkins that can feed the pigs ... Just make best use of everything you can and throw away only as little as you can.


FUSA
By anandtech02148 on 3/20/2012 1:04:55 AM , Rating: 1
China does less damage than Goldman Sachs. American politicians are dirty, like their voters. Those pictures of the 2011 Hungarian Bauxite disaster should be a good reason why China should curb rare earth mining. Funny how Japan and their cronies friends of the West need all this stuff for their latest radar,weapons,tech gadget now depend on something so rare that China has.




RE: FUSA
By eddieroolz on 3/20/2012 4:16:45 PM , Rating: 2
You seem to be illiterate. Let me clear this up for you.

Rare Earth metals aren't only found in China. It just happens that China exports >90% of the supply currently mined because, well, Chinese labor is cheap.

Oh, and your thing about "Japan and their chronies" reveal your true nature - that of a brainwashed Chinese.


RE: FUSA
By anandtech02148 on 3/20/2012 7:16:21 PM , Rating: 2
You seems to be handicap on world views comprehension. If you understand why China has to curb rare earth metals its because it's for the sake of their enviroment, who GOD damn cares what America thinks, if USA has the natural resources then exploit them, use them and stop complaining. Don't use chinese cheap labor as an excuse, that overused excuse has been applied to everything part of USA passive cultural war against others. Unless you forget America's tendency to exploits others and forget all about their unsavoury histories, a simple reminder why you have 7-8millions african americans its because USA didn't do it owns cotton picking. Somethings never changed.


Just because
By Motoman on 3/19/2012 4:34:48 PM , Rating: 3
All your dirt are belong to us mao!

I mean nao. Er, now.




is this why...
By Manch on 3/19/2012 5:50:14 PM , Rating: 2
Is this why those electric cars cost so much? This cant be good for reducing there costs.




And this is surprising how?
By IcePickFreak on 3/20/2012 1:17:47 AM , Rating: 2
How is this surprising? China makes up their own rules when it comes to the value of the yuan, why wouldn't they with everything else?




global alliance
By Samus on 3/20/2012 1:27:32 PM , Rating: 2
with all the worlds super-economies on board, if it is suspected China will rinse and repeat, I think the pact will simply purchase from the mountain-pass (or other friendly facilities) even if the prices are higher.

China is playing with the big dogs, and like Iran, shouldn't be taken seriously.




Uranium anyone?
By meeetooo on 3/20/2012 5:04:27 PM , Rating: 2
So... if China has to sell REM to others, shouldn't the US also have to sell Uranium to others...

hmmm.




By Trisped on 3/20/2012 6:11:22 PM , Rating: 2
So the long term solution is to stop shipping EVERYTHING to China for manufacturing and assembly.

Personally I am surprised that most of the Chinese jobs have not been automated away.

That isn't to say that the change will be difficult and costly, but we need to stop shipping out all our money for products from other nations (unless there is an equal trade level).

The fact is that China makes most of our stuff and holds most of our debt. At this point they can do what ever they want and we have to take it.




Keep it simple....
By wordsworm on 3/19/2012 5:27:25 PM , Rating: 1
Rather than wasting time and resources in these stupid arguments, the US should take Japan's lead and look into improving its recycling techniques. Governments could force consumers to pay a recycling tax on all electronic goods as well as a recoverable deposit to make sure that electronic devices don't get erroneously placed into landfills. It could make sure that electronic devices be required to undergo changes that make recycling rare earths easier.




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