China Restricts Rare Earth Exports -

[Clueless_Academic]

As we navigate the early stages of this "Secondary Depression" I get the feeling that China (perhaps within BRIC framework) is now positioning itself to emerge as the new 'World Leader'; like a Phoenix rising from the ashes of the Post Anglo-Saxon World.

Looks like the new 'Buzz' word for 21st century will be 'Scarcity' - i.e. we are living in a new age of finite resources which (perhaps?) cannot support the carrying capacity of the planet ?? Strategically, the most compact, readily usable, form of energy is in the form of hydrocarbons, notably from crude oil derivatives, which became the driver of 20th century population & economic growth.

However, some authorities within the oil industry, such as the UK Energy Research Council, believe that the era of cheap oil is drawing to an end - By extrapolation of peak oil theory they concluded this may occur within the next decade! (see - www.telegraph.co.uk/earth/earthnews/6269455/Era-of-cheap-easy-oil-is-over-warns-study.html).

Peak Oil Theory or 'Hubbert Peak Theory (named after Marion King Hubbert, Ph.D, a noted geologist at the Shell Research Labs), asserts that the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline. Historical analysis of producing regions such as the North Sea show Hubberts work is valid and regions do indeed show a production decline which roughly follows a 'bell shaped' curve.

Indeed, Hubberts idea has been applied to numerous commodities ranging from natural Gas and coal to uranium with similar outcomes showing that each commodity will eventually become exhausted following in a similar fashion to Hubberts bell shaped curve.

Hence, we are living in a world of scarcity -

Thus, in order to maintain competitivness within the Global Economy after this depression, major World Powers need to emerge with strategic comodities, especially energy sources, intact.

If Government 'Think Tanks' envisage a post oil economy in the future then they will now have to take steps now to secure their stake in new energy sources to maintain GDP output.

According to the article below, "China controls 97 percent of production of the materials, known as rare earth elements, giving it “market power” over the U.S.".

Perhaps the Chinese BRIC alliance have strategic intent and indeed the pieces on the 'Chessboard' are being carefully positioned . . . . . ?

Remember, whoever controls the gold makes the rules. Confucious had a version of the Golden Rule: Do unto your inferiors as you would have your superiors do unto you.!!!

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China Defends Control of Rare Earth Exports as Move to Protect Environment

By Bloomberg News - Aug 29, 2010 4:56 AM GMT+0100

www.bloomberg.com/news/2010-08-29/china-defends-control-of-rare-earth-exports-as-move-to-protect-environment.html

China defended its controls on exports of rare earth after Japanese officials raised concerns about supplies of the raw materials used in the manufacture of products from cell phones to radar.

Restrictions on the rare earth industry will help protect the environment, the state-run Xinhua News Agency cited Chen Deming, China’s commerce minister, as saying yesterday at a media briefing during China-Japan economic talks in Beijing.

China cut its export quotas for rare earth by 72 percent for the second half of this year, according to data from the Ministry of Commerce on July 8. Shipments will be capped at 7,976 metric tons, down from 28,417 tons for the same period a year ago.

Japanese officials told their counterparts that the lower quotas could have a major affect on global industry, and demanded early action on easing them, said Satoru Sato, press secretary for visiting Foreign Minister Katsuya Okada. Japan urged China to make ample supplies of rare earths available, Nikkei English News reported earlier today.

The U.S. Trade Representative is also targeting the restrictions for a potential trade case. The U.S. has asked business groups and labor unions to provide evidence that China is hoarding these elements for a case that might be filed at the World Trade Organization.

‘Limits Inevitable’

“Chinese officials said the export limits were inevitable and that they don’t expect any problems with the WTO,” Japan’s Sato said.

China controls 97 percent of production of the materials, known as rare earth elements, giving it “market power” over the U.S., the Government Accountability Office said in a report in April. China restricts exports of the elements through quotas and export taxes of as much as 25 percent, the GAO said.

In order to protect the environment, China had no choice but to take such measures, Chen said, according to Xinhua. The restriction policy will also have an adverse impact on the Chinese market, where parts for Japanese products are assembled, Chen added.

‘Minimize Pollution’

“China’s policy to restrict its rare earths mining and exports is out of concern for the environment and to minimize pollution,” Liu Aisheng, director of the Chinese Society of Rare Earths, said in an interview with Bloomberg News in June. “It also encourages the domestic industry to effectively use its own resources and discourages exports of raw materials, such as ore and mixed ore, without much processing.”

Rare earths are a group of 17 chemically similar metallic elements, including lanthanum, cerium, neodymium and europium. The U.S. was self-sufficient in the materials until the mid- 1980s, when lower labor and regulatory costs helped China’s climb to dominance, the U.S. Geological Survey said in a report.

--Feiwen Rong. With reporting by Xiao Yu in and Toru Fujioka in Beijing, and Masaki Kondo in Tokyo. Editors: Paul Tighe, Jim McDonald

[interestrateripoff]

Restrict or choke the market of supply to push up prices?

Trade wars got to love em...

[feral]

Restrict or choke the market of supply to push up prices?

Trade wars got to love em...

Some useful information form Business Insider (Jun '10') about the China restriction and Molycorp an US rare earths mining company who have recently had an IPO. Also some useful charts re: the types of rare earth metals.

http://www.businessinsider.com/chinese-rare-earth-restrictions-2010-6

[Errol]

Restrict or choke the market of supply to push up prices?

I see no reason why they should sell their valuable resources for anything less than the very highest price they can get.

The job of the Chinese officials is to do what is best for China - not what is best for the EU, US or the world.

[Ruffneck]

are solar panels really sustainable if you need rare earths to build them?

[SarahBell]

. we are living in a new age of finite resources

Didn't Rich Dad, Poor Dad tell is there's an infinte amount of everything?

[Gigantic Purple Slug]

are solar panels really sustainable if you need rare earths to build them?

You don't use rare earths in solar panel manufacture. Or at least if you do, not in significant quantities.

Rare earths are used in motors and generators. ie wind turbines. Motors/generators need magnets. Rare earths make the strongest permanent magnets.

[interestrateripoff]

I see no reason why they should sell their valuable resources for anything less than the very highest price they can get.

The job of the Chinese officials is to do what is best for China - not what is best for the EU, US or the world.

Not a very Marxist point of view is it?

[Ruffneck]

You don't use rare earths in solar panel manufacture. Or at least if you do, not in significant quantities.

Rare earths are used in motors and generators. ie wind turbines. Motors/generators need magnets. Rare earths make the strongest permanent magnets.

Renewable energy world cites them as "central to the functionality of solar cells"

http://www.renewableenergyworld.com/rea/news/article/2010/08/rare-earth-resources-increase-chinese-clout?cmpid=rss

Rare-Earth Resources Increase Chinese Clout

by Stephen Lacey, Editor

Published: August 19, 2010

China -- Over the past 5 years, China has emerged as a world-leading producer of solar and wind technologies. Due to its insatiable appetite for energy, the country is quickly becoming a top installer of renewables as well.

China is still consuming coal and oil at astonishing rates, however. On average, the country installs a new coal-fired facility every two weeks. Some experts believe that this will set China back and negate the progress it has made in the development of renewables.

Even so, China will continue to be a leader in the export of wind and solar technologies.

There's another factor that could increase China's role as a central figure in the renewables space: Its control of 95% of the rare earth resources like Indium, Gallium and Lithium. These are central to the functionality of solar cells (CIGS and CdTe) and battery technologies for automotive and power storage applications.

[RichB]

Not a very Marxist point of view is it?

Is if it allows you to force the others to adopt marxist sociopolitical structures...

[Snugglybear]

Not a very Marxist point of view is it?

Chinese Communism has always been more about China than Marxism.

[Gigantic Purple Slug]

Renewable energy world cites them as "central to the functionality of solar cells"

http://www.renewableenergyworld.com/rea/news/article/2010/08/rare-earth-resources-increase-chinese-clout?cmpid=rss

http://en.wikipedia.org/wiki/Rare_earth_element

Indium, Gallium and Lithium are not rare earths.

Let's take lithium for example :

http://en.wikipedia.org/wiki/Lithium

Which has Chile down as the worlds dominate location of reserves at approx., 14x Chinas.

Who do you want to believe ?

[Olebrum]

Didn't Rich Dad, Poor Dad tell is there's an infinte amount of everything?

We just need it and the market will magically provide it. The market is wonderful like that.

[SarahBell]

We just need it and the market will magically provide it. The market is wonderful like that.

yup

Houses. Build them and they will sell.

[RufflesTheGuineaPig]

We just need it and the market will magically provide it. The market is wonderful like that.

2 men, alone in a sealed lead box.

One turns to the other and says "I'm hungry I want a sandwich".

Other replies "don't worry, it's a free market, someone will make a sandwich and sell it to you".

[Gigantic Purple Slug]

2 men, alone in a sealed lead box.

One turns to the other and says "I'm hungry I want a sandwich".

Other replies "don't worry, it's a free market, someone will make a sandwich and sell it to you".

Haven't seen you for ages.

When's my gas supply going to run out ?

[Tiger Woods?]

“China’s policy to restrict its rare earths mining and exports is out of concern for the environment and to minimize pollution,” Liu Aisheng, director of the Chinese Society of Rare Earths, said in an interview with Bloomberg News in June. “It also encourages the domestic industry to effectively use its own resources and discourages exports of raw materials, such as ore and mixed ore, without much processing.”

And yet Australia willingly supplies them with commodities at whatever price we can get.

[@contradevian]

I see no reason why they should sell their valuable resources for anything less than the very highest price they can get.

The job of the Chinese officials is to do what is best for China - not what is best for the EU, US or the world.

Could be good news as alternative materials will be more actively developed.

[anonguest]

"The U.S. was self-sufficient in the materials until the mid- 1980s, when lower labor and regulatory costs helped China’s climb to dominance, the U.S. Geological Survey said in a report. "

SO.... the way I read this is that there isnt actually a shortage of this stuff. It's just that, once again, we have another example of teh U.S having planty of the stuff BUT it is too expensive to produce because of LOWER LABOUR and REGULATORY COSTS (for the latter read: "too much government").

when the price rises sufficiently, Americans will once again produce this stuff within their own borders.

Alternatively, Government could actually recognise it is the cause of these higher costs and try to remove these barriers. But that might be a radical thought too far for government mandarins to grasp..........

[pilchardthecat]

If scarcity is the big theme, and the Chinese push the west, it will only end one way.

You can beat scarcity by either;

a - more stuff

b - fewer people

We'll get b.

[thod]

I see no reason why they should sell their valuable resources for anything less than the very highest price they can get.

The job of the Chinese officials is to do what is best for China - not what is best for the EU, US or the world.

The whole point of the export restrictions is that they cannot get the 'very highest price'. They cannot export them and so must sell them internally in China meaning these minerals are cheap in China and expensive abroad. The objective of this is to force those industries that use these minerals to relocate to China, and these are hi-tech industries. Yet the Chinese economy cannot function without huge imports of oil and Australian iron ore. They would object to the WTO if the Australians passed laws to smelt the ore themselves, selling the finished steel to China.

They should not even be in the WTO since they are so protectionist. If you manufacture cars you cannot decide to sell your cars to China. Every car imported attracts a hefty tariff. This forces anyone that wants to sell there to set up in China. But they cannot set up in China because China demands they take a 50% local partner. Even this is not enough. You will not be allowed in unless you agree to transfer your very best technology to China too. You will not be allowed to build a factory to produce 'dated' products. Once there you will find that the 'local partner' sets up an alternative production company using the tech he has learned from you. The orders coming into your Chinese factory are routed to the new competitor your 'partner' has set up meaning you make no money. Government rules and purchasing favours the local company. Your partner knows how much you bid on every contract so can always undercut you. As most Western companies are finding you cannot make money in China because the game is rigged. The Chinese have the single objective of obtaining whatever trade secrets you have so they can put you out of business. They are not interested in a partnership at all.

Much has been written about the huge Chinese dollar reserves and how they could be vulnerable to default and inflation. What these people miss is that is all part of the plan and they know they will lose these reserves. The objective is the industrialisation of China, not reserves. When the collapse comes, China will be left holding all the factories. It will have all the engineers and expertise. America will have no factories and no skills, as with Europe. This means China emerges from the end game as the clear world leader. Accountancy numbers do not matter, real productive capacity and skills do. So let them default, so long as China ends up with everything of value.

The very least we should do is adopt a 'do as you would be done by' attitude and slap import tariffs on their products in the same manner they do to Western companies.

[MrPin]

I see no reason why they should sell their valuable resources for anything less than the very highest price they can get.

The job of the Chinese officials is to do what is best for China - not what is best for the EU, US or the world.

And take a bung! And not get caught!

[ken_ichikawa]

America will have no factories and no skills, as with Europe. This means China emerges from the end game as the clear world leader. Accountancy numbers do not matter, real productive capacity and skills do. So let them default, so long as China ends up with everything of value.

The very least we should do is adopt a 'do as you would be done by' attitude and slap import tariffs on their products in the same manner they do to Western companies.

I.e. the results of a catastrophic global war without the fighting.

[@contradevian]

The whole point of the export restrictions is that they cannot get the 'very highest price'. They cannot export them and so must sell them internally in China meaning these minerals are cheap in China and expensive abroad. The objective of this is to force those industries that use these minerals to relocate to China, and these are hi-tech industries. Yet the Chinese economy cannot function without huge imports of oil and Australian iron ore. They would object to the WTO if the Australians passed laws to smelt the ore themselves, selling the finished steel to China.

They should not even be in the WTO since they are so protectionist. If you manufacture cars you cannot decide to sell your cars to China. Every car imported attracts a hefty tariff. This forces anyone that wants to sell there to set up in China. But they cannot set up in China because China demands they take a 50% local partner. Even this is not enough. You will not be allowed in unless you agree to transfer your very best technology to China too. You will not be allowed to build a factory to produce 'dated' products. Once there you will find that the 'local partner' sets up an alternative production company using the tech he has learned from you. The orders coming into your Chinese factory are routed to the new competitor your 'partner' has set up meaning you make no money. Government rules and purchasing favours the local company. Your partner knows how much you bid on every contract so can always undercut you. As most Western companies are finding you cannot make money in China because the game is rigged. The Chinese have the single objective of obtaining whatever trade secrets you have so they can put you out of business. They are not interested in a partnership at all.

Much has been written about the huge Chinese dollar reserves and how they could be vulnerable to default and inflation. What these people miss is that is all part of the plan and they know they will lose these reserves. The objective is the industrialisation of China, not reserves. When the collapse comes, China will be left holding all the factories. It will have all the engineers and expertise. America will have no factories and no skills, as with Europe. This means China emerges from the end game as the clear world leader. Accountancy numbers do not matter, real productive capacity and skills do. So let them default, so long as China ends up with everything of value.

The very least we should do is adopt a 'do as you would be done by' attitude and slap import tariffs on their products in the same manner they do to Western companies.

Interesting post, so why do multinationals continue to invest in China, if their IP and factories are stolen? I can only assume those that run the corporates are as stupid and as corrupt (as in "in on the deal") as the banksters? I'm waiting for the moment "doh, we never thought of that!"

Made me laugh this morning. On BBC News they were complaining about fake brands and "where do they come from?" From the very factories producing the real stuff no doubt!

[ken_ichikawa]

Interesting post, so why do multinationals continue to invest in China, if their IP and factories are stolen? I can only assume those that run the corporates are as stupid and as corrupt (as in "in on the deal") as the banksters? I'm waiting for the moment "doh, we never thought of that!"

Made me laugh this morning. On BBC News they were complaining about fake brands and "where do they come from?" From the very factories producing the real stuff no doubt!

It is because many corporates are very very short sighted. It is also safer to have the money and a fat bonus now than a bigger bonus in the future. If it works they get both, if it doesn't then they get the bonuses now.