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China Embargos Rare Earth Exports To Japan
Hugh Pickens writes "The NY Times reports that the Chinese government has placed a trade embargo on all exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles. China mines 93 percent of the world's rare earth minerals, and more than 99 percent of the world's supply of some of the most prized rare earths, which sell for several hundred dollars a pound. The embargo comes after a dispute over Japan's detention of a Chinese fishing trawler captain whose ship collided with two Japanese coast guard vessels as he tried to fish in waters controlled by Japan but long claimed by China. The Chinese embargo is likely to have immediate repercussions in Washington. The House Committee on Science and Technology is scheduled to review a detailed bill to subsidize the revival of the American rare earths industry and the House Armed Services Committee is scheduled to review the American military dependence on Chinese rare earth elements."
"And then World War 3 was fought over dirt."
"Don't you mean land, Grandpa?"
"No, dirt. But it was extra special expensive dirt. I shot me a lot of Chinese just to get a wheelbarrow full. It paid for your fancy university education. And your radiation pills."
So this is the reason Zen Magnets are out of stock?
MacArthur said if we didn't bomb China during the Korean War, we'd just end up fighting in Indochina next. Guess what? Indochina was the French Colonial name for Vietnam. Guess he was right. But seriously though, while nuking China isn't really feasible or productive, outsourcing production and relying too heavily on foreign sources of raw materials are generally bad ideas. Plus, its not like nearly every war in history has been fought over natural resources (to include territory) or anything...
We should probably note here that the Wall Street Journal printed all kinds of denials from the Chinese. http://online.wsj.com/article/SB10001424052748704062804575509640345070222.html Me, I'm just annoyed that we can't get a real industrial policy together to support a rare earth metals industry in the US. Got annoyed enough to write a piece for The Atlantic about it: http://www.theatlantic.com/technology/archive/2010/09/worried-about-chinas-monopoly-on-rare-elements-restart-american-production/63444/ One thing to watch out for on the rare earth metal tip is that the Department of Defense is releasing a report on their use for military purposes in the beginning of October. Will be interesting to see what they say.
It's possible to use a nuclear reactor to generate these rare metals. But, it's so expensive that nobody does. How much would neodymium have to cost, per kilogram, before it would be economical to use reactors to synthesize the element?
they'll be 5 dollars more expensive.
The Kruger Dunning explains most post on
In terms of natural resources, Japan is practically void of anything valuable. Lucky for the Japanese, China is still pissed over that whole "Rape of Nanking" deal.
Environmentalists would stop it dead. It involves mining and extraction.
pseudo capitalism is in the process of destroying China from within. As inflation increases, natural resources deplete, environmental catastrophes take their toll, grain shortages increase, and the water continues to run out, well, things will just progress in a predictable fashion. The US need only contain China, which they are successfully doing by forcing them to buy their debt by the billions. It's a stroke of genius actually.
This has just been the product of one of the stupidest cases of over-reactions of all time on all sides.
Japan's holding a Chinese fishing captain who was fishing off of waters claimed by both Japan and China. Japan refuses to release the captain, so China asks for an informal ban on rare earth exports to Japan for the rest of the month. Both sides are being driven to some completely meaningless conflict by hardliners. China's hardliners see no reason to back down because they want to flex their muscles. Japan's hardliners see no reason to back down because they think they can benefit politically in future elections. And all of this because they can't agree how to settle a case about a fishing boat.
My postings are informational and does not constitute legal advice. Act on it at your risk.
Ya we need to look in to this. Despite the name, Rare Earths aren't. There are plenty of them. Of course they have to be mined, refined, and all that shit. That is largely left to China simply because China pays people shit and has no safety or environmental standards. However as you accurately note, they are important, we need to be supplying ourselves.
1) Get investors
2) Buy the land in the US with REMs below
3) Start mining
Depending on who you know, step 2.5 should be asking the US gov for tariffs on rare earth metals coming from China, to help prop up the price in the US (otherwise, China will manipulate the export price to make it economically infeasible to mine in the US, and then raise prices once mining has stopped).
Helps when your government has total control over your ostensibly "capitalist" system. They recently levied some random bullshit charges against Toyota as well, a not so thinly veiled swipe at the Japanese government. Then there is Rio Tinot case where China made sure Rio Tinto didn't compete against a Chinese company by jailing their executives on a bullshit charge. They are also the same market that abhors protectionism and then is protectionist every chance they get. Even during the heyday of Japanese protectionism there were no where NEAR as bad as the Chinese. But of course, protectionism is bad, unless it benefits the Chinese, then its good.
Japan the US and the EU really should team up to take China to task for all the bullshit its pulling.
Monstar L
The fisherman story is a big piece of this story, but not all or even half of it. The real issue at stake has to do with some little tiny rock in the East China Sea. It was recognized as an island and part of Japan's soveriegn land by treaties with the US in WW2, but historically has been used by both China and Japan. The fact is, it doesn't really qualify as an island by the international legal definition; it's just a dead volcano with no active life or anything. Just a big rock.
However, if the Japanese can claim it as their territorial grounds, then what comes along with that is the 200 mile exclusive economic zone, and apparently that area has some of the best commercial fishing in East Asia as well as being suspected of having substantial undiscovered mineral and gas deposits. So while the talk about a fisherman is noteworthy, he's just a pawn, like this rare earth metals embargo is also a pawn, in this game over access to exploit those resources.
"relying too heavily on foreign sources of raw materials are generally bad ideas"
Erm and do what? Japan has a reallly really high GDP for a country with such a small landmass that is not particularly rich. What would they base their economy on?
Japan isn't self-sufficient in the food area either. I hear they get most of their food, especially rice, from China. I've heard some estimates that if the food they get from China were to disappear and weren't replaced, they'd be facing starvations in about a month (though I don't have a citation on that, so that may be wildly inaccurate). Not to mention that Japan is militarily defenseless against China, and even if China didn't feel like getting their hands dirty, they could always tell North Korea to start acting up at Japan. In other words, Japan doesn't really have a strong foothold to be poking China like this. I guess they have a lot of faith that China will agree to a diplomatic solution.
More likely though, the bureaucratic head of the Japanese coast guard was pissed off at another part of the bureaucracy and wanted them to lose face. Or maybe he just decided that the last decade-long recession to hit Japan was pretty nice, so he should do his best to make sure the current one lasts that long too by sabotaging manufacturing dependent on those rare earth exports.
... But not intentionally so... if you RTFA, and I did, you'll find that rare earths actually aren't really rare. So while China MINES 93 percent of the world's rare earths, and thus supplies 99% of it, most countries COULD also do this if they wanted to. In fact, the last mine in the US closed in 2002 because, according to the article, of a radiation leak... seems these rare earth's are usually found with radioactive thorium and uranium. So what has happened is that China positioned itself as a reliable supplier of rare earths, and did so cheaply. Although the article doesn't say this, my guess is that China probably doesn't take the same safety precautions with mines and the thorium, which the article did say was costly to dispose of.
What has happened here is that China, again, produces things in an environmentally unfriendly way (since they apparently don't care much about the cost of crapping on their own country), and thus does so with cheap labor, thus becoming the most economically viable producer. Only now do they start to flex that muscle they have built...
So the world has a few choices - they can continue to rely on China, and deal with politically induced supply disruptions, find other countries that are willing to cheaply crap on their own environments and buy from them, or produce such materials locally but at much higher cost.
Brawndo: It's what plants crave!
This is so damn typical. Congress passes a law that has negative consequences so they pass another law to try to fix the consequences. Congress is responsible for the decline of rare earth mines in the first place. For example, a good junk of the Mojave was home to several rare-earth mines that were put out of business when Senator Feinstein pushed through the Desert Wilderness Protection act.
Solar farms are out of luck when they try to site in the Mojave for the same reason - Feinstein has blocked off huge chunks of land.
Instead of subsidizing mining, perhaps repealing Senator Feinstein's handiwork would be a good place to start.
The Mt Weld mine in Australia is under construction. They claim to be able to supply 20% of global production. The Mountain Pass mine is to re-open next year as well.
I'll sure be happy when the figure out how to grow mass quantities of Fe16N2 crystals to make even stronger magnets so we can forget about rare-earth.
That was the turning point of my life--I went from negative zero to positive zero.
Oh how wrong you are
http://en.wikipedia.org/wiki/Trojan_War
This was covered in the Economist last week.
The US has some of the largest deposits of rare earths in the world. One big location is Mountain Pass, California. The mine there was closed in 2002, because it wasn't competitive with the China price. (Or with China's mining with a complete lack of environmental controls.)
The Mountain Pass mine is being reopened under new management. In a few years, this problem will be over.
The problem with rare-earth mining is that, since the materials are rare, the waste problem is huge. The early stages of extractoin are messy. Big acid lakes, things like that.
Speak for yourself.
I've fallen off your lawn, and I can't get up.
So, they're looking to subsidize the revival of the American rare earths industry?
It's not like it will evaporate out of the ground if we aren't mining it. There's no need to destroy the environment with unnecessary mining and waste money for digging's sake.
If the price goes up, we'll just start digging again. Just like every other mining cycle.
If the rare earth supply dries up, the open market price will rise and mining these domestically will happen because it's economically sensible to do so. There's no reason to subsidize anything, Congress. Just get out of the way and let the market work.
Because they're made out of silicon and gold, both of which are plentiful (we have enough gold already mined to last 100 years, if everyone would stop hoarding it in silly attempts to create yet another bubble.)
I thought this kind of embargo would cause all sorts of sanctions from WTO members, and that China wasn't supposed to do this as a signatory of various WTO trade agreements.
I'm getting a bit annoyed at China's constant attempts at having their pie and eating it. But I guess they can get away with this - after all, way too many countries have their balls squeezed by China.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
The bulk of the USA's titanium during the cold war came from Russia. They bought it through fake companies and then used it on the very spy planes that they used to spy on them. I always rather enjoyed that little bit of information.
Indeed, a thousand ships were launched when King Menelaus discovered that he had run out of condoms.
The greatest warrior on either side was Achilles, who was completely invulnerable everywhere except his heel. According to Homer, he slew Hector in a single blow with his unsheathed manhood.
We can thank the Trojan War for incredible advances in chemistry. Many important new developments were made in latex technology, due to the Greeks' need to properly protect the Trojan Horse.
Helen of Troy, ironically, and anachronistically, had syphilis.
You should continue to be worried.
There are a lot of things that *go into* electronics (components, among which ICs are the most profitable) or are used to *make* electronic components but you're right most of the *assembly* doesn't take place in Japan.
Nikon (not just cameras), Hitachi, Fujitsu, Renesas, NEC, Canon (again, not just cameras), Shimadzu, (a few off the top off my head - and I'm tired so I'm leaving off a bunch) most of the companies listed here. And a lot of them make things *in Japan*.
And then there's the specialty chemical companies.
China does have some dependencies on Japan as well, although admittedly that has shifted a lot the other way.
...the future crusty old bastards are already drinking the Kool-Aid.
I've heard some estimates that if the food they get from China were to disappear and weren't replaced, they'd be facing starvations in about a month (though I don't have a citation on that, so that may be wildly inaccurate).
Urban Japan, at least. In the smaller towns it's still quite common to farm your own rice. The smallish (population around 23,000) town I stayed in was surrounded by rice paddies. Apparently there were a couple of weeks when everything else in the town stopped as everyone went out to either plant or harvest rice. Pretty much every family owned at least one (smallish) field, which grew the majority of the rice that they ate. I'm sure India would love to sell them a lot more food, if China wanted to stop...
Not to mention that Japan is militarily defenseless against China, and even if China didn't feel like getting their hands dirty, they could always tell North Korea to start acting up at Japan
The USA has treaty obligations towards Japan that make declaring war on Japan equivalent to declaring war on the USA. Even North Korea isn't that stupid.
I am TheRaven on Soylent News
The world should simply accepte that there's a new Master and no longer is called USA.
That's not true... I'm constantly at war with myself.
"Was it a millionaire who said 'Imagine No Posessions?'" -- Elvis Costello
3 is supposed to be "profit!!" and you have no question marks. Are you a business major or something?
Wasabi.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
Japan isn't self-sufficient in the food area either. I hear they get most of their food, especially rice, from China. I've heard some estimates that if the food they get from China were to disappear and weren't replaced, they'd be facing starvations in about a month (though I don't have a citation on that, so that may be wildly inaccurate). Not to mention that Japan is militarily defenseless against China, and even if China didn't feel like getting their hands dirty, they could always tell North Korea to start acting up at Japan. In other words, Japan doesn't really have a strong foothold to be poking China like this. I guess they have a lot of faith that China will agree to a diplomatic solution.
More likely though, the bureaucratic head of the Japanese coast guard was pissed off at another part of the bureaucracy and wanted them to lose face. Or maybe he just decided that the last decade-long recession to hit Japan was pretty nice, so he should do his best to make sure the current one lasts that long too by sabotaging manufacturing dependent on those rare earth exports.
Japan grows about 10% more rice than it consumes. Read http://en.wikipedia.org/wiki/Rice#Production_and_export.
"I zero-index my hamsters" - Willtor (147206)
All rice sold in Japan is domestic. Japan buys rice from the US (due to a trade agreement), but dumps it (also known as "stockpiling", but it is *never* used and is generally not allowed to be sold). Last year there was a shortage of rice in south east Asia, so the Japanese asked for and got permission to sell some of their stockpile in Asia. Supermarkets label the origin of almost all food in Japan, so I can tell you that Chinese imports make up a large volume of non-staple foods. The vast majority of food imported from China (based on reading labels in the supermarket) is frozen vegetables, mushrooms, pickles and seaweed. If the Chinese were to stop exportation of food to Japan tomorrow, it would definitely have an impact, but not starvation.
Japan actually has a law on the books that disallows importation of staple foods into the country. It was put in place after WWII when many many people starved to death due to US blockades. Having said that, Japan is nowhere near self sufficient for food as lately they have relaxed their importation policies (due to heavy lobbying by the US).
This shouldn't be called an "embargo". They're not preventing anyone else from trading with Japan, only their own nationals, and only rare earths. It's a very very narrowly targetted export ban. The problem is, it can't be effective. Someone else buys a little more in China, sells it to someone else who sells it to someone else who sells it to someone in Japan. It's fungible.
I wouldn't be too sure of that mine reopening. If China's state run economy has proved one thing it's that the free-market unmanaged economies of the West will time and again fail to even comprehend the forces arrayed against them. Narrow minded "Market Based" thinking is exactly what got us into this single supplier problem and naively thinking it will get us out is well... naive.
Whatever you think the "free-market" will do to get us out of this mess, the Chinese economic mega-complex has already considered three moves in advance and is working to counter it. People don't seem to understand that China-Inc is essentially the world greatest ever hyper-corporation: millions of companies, thousands of major corporations, and hundreds of banks all working under one overall direction and policy. Just about every trick you'd expect a major-corporation to pull can and has been considered, strategised and implemented by the this acutely self aware market entity.
Before anyone begins, this isn't some kind of bigoted post. What's really going on here is that the Chinese Communist Party has developed(invented really) a state controlled, capitalism driven, centrally managed and wholly unified economy; and it's as powerful an apparatus as you'd expect. It's one of the biggest civil and economic developments in world history. And if you expect this electric dragon--a vast, powerful and above all self aware economy under the control of a central brain--to act like your traditionally lauded free market fungus-like economies--efficient, large or small, but hopelessly undirected and prone to bottom feeding-- you are mistaken from the very outset. The Communist Party does not wait for startups, demand, financiers, or any other "market forces" to act. They order entire economic sectors to be created, dismantled and transformed overnight. And it has made them the richest country in the world.
That's what the Japanese are facing here, and that's what the rest of the world is going to have to face up to as well. If you think a little mine in a mountain pass is going to change things, then you're just another free market crazy barking at the invisible hand of the moon.
May the Maths Be with you!
Food self sufficiency is sometimes a misleading statistic. Sometimes it's just cheaper to import. I am sure Japan could get that figure closer to 100% if they had to. Heck, I am sure China wasn't exporting them food during WW2.
If China embargoes food exports to Japan, I am sure many other countries would also willingly step into the breach. Argentina, Brazil, Russia, heck, USA are waiting in the wings.
And not to forget that Japan probably consumes much more food than it really needs to. Developed countries are surprisingly wasteful when it comes to food consumption. I think in the UK, about 30-40% of food is actually thrown away. In a crisis situation, with food prices rising, people will be less likely to waste it.
This is not a dispute over a fisherman. It is a territorial dispute over a very large chunk of water around a disputed island. It is also an opportunity for China to put pressure on Japan and indirectly on the US (which relies on Japanese to manufacture many critical industrial components, many military in nature that can no longer be manufactured in the US because the US is no longer economically competitive in many high-tech industrial technologies. China sees this as an opportunity to exert its growing economic influence at a time that the West is not economically or politically able to respond because it is bogged down in two land wars in Central Asia. They are sending a signal that they are now the dominant power in Asia and the rest of the world can expect them to be the dominant economy in the world in just 10-15 years time at current rates of growth. This will almost certainly happen sooner as the republicans who look as if they are about to come into power are determined to shrink the US government, which will almost certainly speed up the difference in infrastructure and military preparedness. If we get into it with Iran, expect the Chinese who rely heavily on Iranian oil to come into more direct conflict with the US, probably by igniting inflation in the US by pulling their underwriting of US debt instruments that are all that is propping up the US financial system presently.
If the China Japan situation escalates our treaty obligations will draw us into it. Its unclear how the US will fare being so dependent on middle eastern oil, which can be easily shut off at the Straits of Hormuz by the Iranians and its military highly dependent on satellites for its battlefield and tactical awareness. The strategic petroleum reserve won't last long in an all out draw down. To make matters worse, just a few well coordinated EMP generating blasts in space and the US military will be largely blind. No wonder DARPA is scrambling to counter the new maneuverable Chinese killer satellites with high altitude solar aircraft. My guess is the republicans will let Japan fall to the Chinese and go into a more conciliatory mode to keep the Chinese money needed for tax breaks for billionaires safe.
As of now, the Chinese government is denying that there is an embargo over Rare Earth exports.
http://english.cri.cn/6826/2010/09/24/1821s596078.htm
http://www.reuters.com/article/idUSTKB00705420100924
There might still be some element of truth to it, but all the reports are getting confusing.
Don't quote me on this.
...because, you see, a lot of people have become tired of the United States. It's very fashionable right now to hate the US and highlight everything that's wrong with the American agenda. Even in the relatively short span since the end of the Cold War, and due to some relatively severe foreign-policy bungling by the last administration, much of world opinion has focused gleefully on the failings of the US as the sole remaining superpower. Much is true.
However, any reasonable examination of a situation can only be assessed fairly when one considers the realistic alternative possibilities.
Now, with the growth of China, Asian powers may start to recognize that perhaps the (relatively) benign incompetence of the US isn't quite so bad. Every time China throws its weight around, one might be reminded that China doesn't really have much of a history of plurality, openness, liberality, or empathy. In fact, the only times that they haven't been expansive (within their understood natural frontiers), brutal, corrupt, and oppressive is when they've been too incompetent to manage their own massive domestic failings.
Perhaps the grass on the other side of the Pax Americana fence may not be that shimmering green that some seemed to think it was. Thanks China for doing your best to remind everyone.
-Styopa