Rare Earth Ruckus - Are we at the mercy of China's mercantilist mandarins?

Reason ^ | November 23, 2010 | Ronald Bailey

[neverdem]

Earlier this year, the world was jolted when China apparently cut supplies of rare earth metals to Japan. In addition, China has announced that it is dramatically tightening its export quotas on the metals. This is big news because China produces 97 percent of the world’s supply of the 17 rare earth metals. Rare earth metals are used in everything from wind turbines to oil refineries, Priuses to iPhones, and flat screen TVs to smart bombs.

Rare earth metals are chemically similar and include cerium, neodymium, europium, and samarium. Despite the name, most rare earth metals actually are similar in abundance as more familiar elements such as copper, nickel, or zinc. However, economically exploitable rare earth ores are uncommon and they generally occur together as hard to refine mixtures. Over the past half century technologists have found many uses for these metals, one of the more important being the production of lightweight permanent magnets.

Up until the 1990s, the United States dominated the production of rare earth metals, chiefly from the Mountain Pass mine in southern California. In 1992 then-Chinese leader Deng Xiaoping, allegedly declared, "There is oil in the Middle East; there is rare earth in China." Subsequently, China began ramping up its rare earth metals mining and production, flooding the market with the metals and undercutting the price of U.S. production. U.S. Geological Survey composite price data notes that rare earths sold in real dollars for just over $11,000 per ton in 1990 falling to a low of just over $3,000 per ton in 2006. In the face of Chinese competition, the Mountain Pass mine ceased operations in 2002 when its environmental operating permit expired after a series of spills of mine tailings that contained traces of radioactive uranium and thorium.

Since the early 1990s, world demand for...

[Quix]

Most orientals are great at getting opponents over barrels.

The Chinese are artists at it.

[slowhandluke]

The sane action would be (and would have been) to simply tax any imported rare-earth minerals or products made with them that didn't come from a mine up to EPA standards. And charge that mine for the cost of EPA monitoring. This gets us much closer to an even market.

Having EPA rules that only affect US mines and wells without any penalty for importing from dirty mines elsewhere is simply economic suicide - but I do think that was the primary intent. It's so silly that I have to ascribe it to malignity.

[slowhandluke]

Free trade does have a downside

We have a mockery of free-trade with China. They get to sell us rare earths from dirty mines, but the EPA won't settle on any rules that allow mining here.

They can sell whatever they want here, but we can't sell there unless we hand over blueprints for both product and factory.

Free-trade works between free-traders. It doesn't work if it's a one-way street.

[GOPJ]

Thanks for the ping.

[GOPJ]

Astronomers think there might be a considerable amount of rare earth metals in the asteroid belt. Of course, it seems that the US is no longer enterprising enough to go get them...

On the bright side, we're able to provide 'counseling and emotional support" for the criminal and homeless.../s

[PGalt]

Thanks for the ping; post; links; thread. Very interesting.