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The hand giveth, the hand taketh away

China only has about 30 percent of the world's rare earth metal deposits, but thanks to clever planning it today controls 97 percent of the world's production of these scarce resources.  Deposits of this family of 17 elements -- vital to power electronics found in televisions, smart phones, electric vehicles, and a variety of other devices -- are found in California, Canada, Australia, and Russia, but it will take years to bring them online.

In short the world is at China's mercy for now when it comes to rare earth supply.  And China's biggest rare earth metal producer -- the Inner Mongolia Baotou Steel Rare-Earth (Group) has announced that it is severing shipments to the U.S., Japan, and Europe for one month in an attempt to artificially inflate prices.

Inner Mongolia Baotou Steel Rare-Earth also plans to buy rare earth metals in an attempt to further move prices upward.  The company already controls 60 percent of China's rare earth production, thanks to the Chinese government's decision to merge 35 other local companies into the Inner Mongolia business, or fade them out.

Rare earth metals
China controls 97 percent of the world's rare earth metal production.
[Source: Wikimedia Commons]

While the Sichuan province in the southwest and Shandong in the east produce significant amounts of rare earth as well, the Inner Mongolia Baotou Steel Rare-Earth Group's decision should be enough to move prices significantly.

Doing so will benefit China in a couple ways.  First, prices will almost certainly go up, reverse a downward slide.  Lynas Corp., an Australian rare earth producer reveals that since June the price of neodymium oxide has declined 34 percent to $157 per kilogram, while europium oxide is down 35 percent at $2,904 per kilogram.

Sun Fan, a rare earth analyst for Goldstate Securities in the southern city of Shenzhen comments in a Associated Press interview, "The impact on the market supply will be substantial.  The dual measures of suspension and purchase will offer support for the rare earth prices and make the prices gradually pick up in the future."

Aside from raising prices higher, the pause in production will allow China to try to kick start its efforts to produce locally produce magnets.  When it comes to the production of the magnets used in the electric motors of hybrid and electric vehicles, typically the biggest profit is not realized at a commodity level, but at a magnet producer level.  Thus in the past foreign nations like the U.S. and Japan have pocketed the biggest profits.  China hopes to change that.

Neodymium
China hopes to supplant its U.S. and Asian rivals as the main producer of electric motor magnets, by choking resource supply to its foreign competitors. [Source: ThinkGeek]

China's Ministry of Land and Resources in September bragged that rare earth metals were the nation's "21st century treasure trove of new materials."  It argued that exports should be tightened, choking foreign supply and favoring Chinese manufacturers.

Source: AP



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RE: Tree hugging retards.
By priusone on 10/21/2011 12:39:57 PM , Rating: 2
Obviously I did a poor job at getting my point across. What I am referring to is the 'raping and pillaging' of our environment. At one point, we used our own natural resources to produce our goods. Sure, toxic mineral levels are still high a lot of former mining sights.

"This was a case of poor economic policy... policy makers should have had no problem keeping the mines open."

The problem is, responsible mining is expensive and time consuming, which is something that China doesn't have to worry about. Yes, it subsidies would have been nice, but mining as a whole is looked at negatively. Think nuclear power; "It's great, just not in my backyard."

"your willingness to shift blame on NIMBY/environmental types without solid evidence indicates that you are getting caught up in partisan ideologies and are poor at analyzing situations objectively."

I blame the environmentalists for making it easier to just close down mines and import material from China. I live in Oregon and I love going out and experiencing nature, but if it takes ripping apart a few dozen mountains to get to the rare earth minerals, I think Mother Earth should just take one for the team.


RE: Tree hugging retards.
By bupkus on 10/21/2011 12:52:56 PM , Rating: 2
The economic gain of letting mother nature "take it for the team" is the economic loss of destroying natural water supplies that support water biology that provides safe food harvests to feed the hungry.


RE: Tree hugging retards.
By ekv on 10/22/2011 6:01:03 AM , Rating: 2
I'm curious, what rare earth mines in the US are "destroying natural water supplies"? or, even in a broader context, what mines are near natural water supplies?

If perchance you were referring to Mountain Pass (CA), then I have to ask ... I take it you've never driven HWY 15?


RE: Tree hugging retards.
By TheEinstein on 10/24/2011 5:25:20 AM , Rating: 2
PriusOne I am running for office in Oregon, Portland to be exact....

We need not 'take one for the team' to still get at these materials, and other ores.

Oregon is one of the most beautiful States in the Union as I have driven in 47 of them proffessionally I can attest my opinion with clarity.

We can mine a location, then use reverse fill when the mine is 'used up' and then use renaturalization methods to restore the ecosystem.

Mining companies would see most of this as trivial if they can get the right costs... and I am supporting a system where companies bid on mining rights, and so long as they show intent to mine right away they can bid, and they must incorporate a guarantee (with fiscal and criminal penalties) of no contamination reaching humans (IE drinking water) and a full restoration of the area (within some allowances, after all if they remove large amounts of coal filling the mine would be impractible, but sealing it, and replanting the affected exterior areas would be neccessary)

I support NO subsidies on this what so ever.

The bid profits would goto our general fund and an appropriate monitoring power such as the BLM or such.

This, or other proposals I have, could easily provides tens of thousands of jobs. This example would include miners, mine staff, drivers (moving the ore to where it will be refined), refiners, the manufactore of required tools and equipment, and so forth.

We can balance real environmentalism (not this for profit crap, or for power over others crap) with smart economics.

I am Michael Harrington and I endorse this message.


RE: Tree hugging retards.
By priusone on 10/24/2011 1:10:27 PM , Rating: 2
Talk to Armadillo Mining in Grant's Pass. They have a sticker that says "Earth First! We'll Mine the Other Planets Later".

Look, the spotted Owl pretty much destroyed the town that I grew up in. Oh, wait, it wasn't that stupid owl, it was stupid people. Stupid people are happy with their pretty trees and pretty colors, but they do have destruction, which is what we do to the environment.

Take a stroll out some random BLM road down here in Douglas County. An ex-friend made the comment about how ugly logging makes the forest. We loaded up Google Maps and drove to a few of the clear-cuts that showed up on Satellite View. Sure, new trees had been planted about 7 years prior, and money from the sales of wood products had helped OUR economy, but alas, my ex-friend couldn't see past the 'poor environment'.

Yes. Mining is bad for the environment. Oregon has a naturally high occurring amount if Mercury in it's rocks, among other little nasty minerals. For as much as I would love to see mines opened up, Oregon jobs created, and the US being ever so SLIGHTLY less dependent on China, you can't make those tree hugging idiots see the light.

Then again, I've seen numerous log mills open up in the past few years, so who knows, hopefully I'm wrong.


RE: Tree hugging retards.
By TheEinstein on 10/24/2011 3:43:15 PM , Rating: 2
There has been a slight increase in logging though Conservatives like myself would like more.

The irony is that in the environmentalist effort to protect Old Growth by tying the spotted owl to it they have probably doomed the spotted owl to extinction.

A number of activists admitted years ago of placing dead spotted owls in old growth trees and in other owls nests to make their case. The sad truth is they live in about Christmas tree sized growth and the small amount of these now after two decades of growth and rhe fact a superior owl shares this habitat means the Spotted Owl is nose diving in numbers.

Logging responsibly could actually save that species.

I will look that mining company up. Thx for heads up!


"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad














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