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Chinese price manipulation has taken its toll on the U.S. economy

Rare earth metals are an increasingly integral part of everything from automobiles to television sets.  But the precious metals are tightly controlled by China, with an excess of 95 percent of current suplly coming from Chinese-owned mines and refineries.  The degree of control has allowed China to manipulate prices, cutting back on demand to sell less material for the same amount of profit, any businessperson's dream.

I. New Private-Public Partnership Sets Aim on Chinese Mineral Hegemony

The problem is that it takes several years or more to bring rare earth metal mines and refineries online; and the capital costs of such facilities are very high.  It took China decades of clever planning to set itself in its current peachy position of rare earth hegemony.  Now the U.S. is racing to try to recover, before Chinese price manipulation deals too much of a blow to the U.S. economy.

The U.S. Department of Energy has committed a relatively large investment of $120M USD to establish an Energy Innovation Hub under the supervision of Ames Labs to research ways to expand domestic rare earth production and otherwise cut reliance on Chinese rare earth supplies.

Rare earth metals
The U.S. is investing deeply to try to cut its reliance on Chinese rare earth metal supplies.
[Image Source: Nelson Ching/Bloomberg]

The new lab, dubbed the Critical Materials Institute (CMI), will be a joint effort between a number of large domestic firms in the private sector, universities, and top government research labs.  

In addition to Ames Lab, other national labs involved include Idaho National Laboratory (INL), Lawrence Livermore National Laboratory (LLNL), and Oak Ridge National Laboratory (ORNL).  On the university side, major contributors will include Brown Univ., the Colorado School of Mines (CSM), Purdue Univ., Rutgers Univ., Univ. of California-Davis (UC Davis), Iowa State Univ. (IA State), and the Florida Industrial and Phosphate Research Institute.

Corporate partners include General Electric Comp. (GE), OLI Systems Inc., Spintek Filtration, Advanced Recovery, Inc., Cytec Industries, Inc. (CYT), Molycorp Inc. (MCP), and Simbol, Inc. (Simbol Minerals).

II. Attacking the Problem From All Angles

Among the research projects will be:
  • Improve rare earth recycling/reuse
  • Improve extraction processes
  • Develop rapid deployment mining techniques
  • Develop rare earth material substitutes
  • Study and optimize supply chains to minimize waste
Top targets for domestic rare earth production include neodymium -- used in neodymium iron boron (NeFeB) hard drive magnets and cell phone components -- and samarium -- used in samarium cobalt (SmCo) drive magnets.  Currently the U.S. has no domestic neodymium producers and only one domestic samarium producer.

Neodymium
The U.S. has no domestic producers of neodymium magnets. [Source: ThinkGeek]

The Government Accountability Office (GAO) in a 2011 research report [PDF] suggests that the U.S. rare earth supply chain, phased out in the 1980s at a time when the 17-element family looked non-critical, will take approximately 15 years to rebuild.  The new lab aims to assist in that slow and arduous recovery.

The U.S. also will continue to purse action against China before the World Trade Organization (WTO) where it has filed complaints about the Chinese price manipulation.

Sources: DOE, Ames Lab



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RE: @#$%ing idoits...
By bug77 on 1/10/2013 4:42:05 PM , Rating: -1
There's no need for subtleties such as dumping. There are environmentalists all over the world doing China's bidding and making sure other states close their operations willingly.


RE: @#$%ing idoits...
By StanO360 on 1/10/2013 5:01:16 PM , Rating: 2
They're not even addressing that part! That's like batteries, the EPA has been crushing US battery manufacturers for decades and then suddenly everyone is complaining why no US battery companies make new products!

Good luck getting permits for new mines and operations under the current regime. Sure they'll talk a good talk . . . until the Environmental Impact Report arrives.


RE: @#$%ing idoits...
By Treckin on 1/10/2013 5:26:42 PM , Rating: 4
More like battery producers were crushing batteries into local water supplies.

Look at the ridiculous instances of lead poisoning in Mexico as a result of the battery recycling programs there, and you'll have an idea why we kicked that load of toxic mess overseas.

If domestic industry had innovated and figured out cost-effective green and best-practices before causing birth defects and mental retardation in US townships all over the country, then we wouldn't have been forced to abolish it altogether. Sad, but not the fault of regulation.

Its actually the fault of financialization - as more and more corporations adopted a publicly traded, earnings-per-share based accounting methodology, the focus on reinvesting into the company to generate tangible growth transformed into an incentive to inflate earnings numbers to reap a quarterly profit from the market.

This trend is especially strong among executives, as their compensation is usually in stock options. As long as the market likes your earnings numbers, you can make money every month, despite the lack of ACTUAL growth (new jobs added, markets entered, factories opened, innovation created).

In fact the opposite is now true for most firms; the more people you can fire, manufacturing you can avoid/outsource/offshore, the more small towns you can close with a single factory closure, the better Wall Streen investment firms like your stock.

Its all effed up man.


RE: @#$%ing idoits...
By Spuke on 1/10/2013 7:21:43 PM , Rating: 2
quote:
Its all effed up man.
Yep, sometimes it takes a hammer over the head before "we" actually "get it". And I'm not just talking about corporations dumping toxins into water.


RE: @#$%ing idoits...
By Schadenfroh on 1/11/2013 6:28:11 AM , Rating: 2
The irony is that in order to make "green" electronics, we must wreak havoc with the environment via the nasty business of rare earth extraction.


RE: @#$%ing idoits...
By bug77 on 1/11/13, Rating: 0
RE: @#$%ing idoits...
By Mint on 1/13/2013 12:06:38 PM , Rating: 2
Except that it's not true.

The biggest rare earth consumer used to be NiMH batteries, using cerium, lanthanum, and neodymium. Lithium ion batteries don't need rare earths. Same thing with motors/generators. With modern electronics, induction motors lose most of the drawbacks of their complicated operation, and they don't need any rare earths since they have no permanent magnet.

China's control over rare earth supply is an overblown problem. There aren't a whole lot of truly critical uses without substitutions available.


RE: @#$%ing idoits...
By gn77b on 1/17/2013 6:03:40 AM , Rating: 2
Except that it's not true.

The automotive industry relies on motors that use rare-earth permanent magnets. And no, I don't mean hybrid cars only, but also motors used in electric steering systems. And it's not neodymium alone, but dysprosium too. Even if it's a secondary ingredient, "rumor" has it that growing prices are enough to push companies (or at least departments) out of business.
Also, I think that China's natural supplies are extinguishing but I can't vouch for it. The Wikipedia article on dysprosium mentions that the automotive industry is the principal consumer.

All the economic theories in the world amount to nothing if hard facts are ignored.

The above is based on direct experience, except where otherwise noted.


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