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Chinese Rare Earths Producer Suspends Output
concealment writes "State-owned Baotou Steel Rare Earth (Group) Hi-tech Co. said in a statement released through the Shanghai Stock Exchange that it suspended production Tuesday to promote 'healthy development' of rare earths prices. It gave no indication when production would resume and phone calls to the company on Thursday were not answered. Beijing is tightening control over rare earths mining and exports to capture more of the profits that flow to Western makers of lightweight batteries and other products made of rare earths. China has about 30 percent of rare earths deposits but accounts for more than 90 percent of production. Beijing alarmed global manufacturers by imposing export quotas in 2009. It also is trying to force Chinese rare earths miners and processors to consolidate into a handful of government-controlled groups."
China is finally flexing its grip on the tech industry, more to come certainly.
Unix, an obscure operating system developed by bored researchers in an attempt to get a better game playing experience.
Start putting tariffs on anything made with Chinese rare earths. Since China is a net exporter, they have the most to lose playing these games.
Time to consider buying Molycorp. (ticker: MCP). They are, I think, the sole US company involved in the space. Apparently the news hasn't caught onto this story yet but I made a bunch of $$$$ last year with this one. Just something to keep an eye on.
They're capitalists, with all the dirty trappings and failings of western businessmen, only without the whole problem of human rights.
Someone probably needs to remind these people that artificially manipulating prices like this can get burned badly in the end.
Two solutions exist for America - first, repeal all free-trade agreements. Second, the perennial favorite: bomb em!
China has about 30 percent of rare earths deposits but accounts for more than 90 percent of production.
It sounds like we should consider mining from the other 70 percent.
He's promoting healthy development of his stock's price.
They feared that it could be used to suppress protest or support unpopular rule.
This is what happens when you outsource production of a key component of a critical technology. Quoth the fine article,
The United States, Canada, Australia and other countries also have rare earths but most mining stopped in the 1990s as lower-cost Chinese ores came on the market.
In other words, it sounds like we set ourselves up for this by going for the quick buck.
Il n'y a pas de Planet B.
... And this strategy never works. Even in a cartel it rarely works because to make money output has to resume and to make maximum profit, the price has to be at the level that clears the market.
Good luck to you china, I wonder how long before they can no longer stand their fast.
Liberty.
Um, no. We are not in Afganistan for the minerals. Sending valuable peolpe and equipment into a mine in a country where explosives-enthusiastic people want you dead is just insane.
Seriously, if you get a bonus check at your job, for $10k and you go to invest it are you going to be remotely tempted to chip in on a "New Long Term Afgani Business Venture?"
Because if that appeals I can connect you to a very well known Nigean Prince with even better offers.
America exports the worlds supply of helium, hasnt produced a millilitre more for over 2 decades, and keeps the price artificially low.
OPEC sets quotas and prices for global oil supplies, and can suspend or restrict production whenever they feel the need.
American agricultural conglomerates like ADM and General Mills collude to set the price at which they will accept corn from farmers. too much corn does not drive the price of it down, instead its maintained by dumping cheap corn as an export, or siloing it for next year.
how has china in any way changed how capitalism has worked for the past 270 years? The only thing thats generated outrage is chinas willingness to take an aggressively competitive position in the global economy, instead of a subservient one. If you dont like it, consider pushing for more organized labor.
Good people go to bed earlier.
nebraska has this starting soon http://www.quantumrareearth.com/ bought from molycorp which never developed it
This is the free market at its best. This company doesn't owe anyone anything and by driving up prices they are simply doing what is best for their own rational self interest.
This is the part where I laugh and do the I-told-you-so dance.
This is why you don't let china become the only producer in any industry. /huge/ in to solar and they want to squeeze out the competition.
This is really why solar companies in the US are dropping like flies. China is
No, they're central planners,with all the dirty trappings of a centralized power structure.
Thank you! Thank you for NOT saying they're "Communists"! For the rest of you:
Capitalism is an economic system.
Communism is a political system; NOT an economic system.
isn't one of the reasons we are still in Afghanistan that they have an imperial C4ton of rare earth minerals in the mountains??
Any person using FTFY or editing my postings agrees to a US$50.00 charge
We should prepare ourselves for the future in which everything will have to be recycled.
Ezekiel 23:20
Step 2. Watch as almost everyone else gets out of the business because they can't profit at your price, leaving you with 90% of the market.
Step 3. Now try to increase profits. When you realize you can't raise prices because the other 10% undercut you and make most of the profit, cut off production entirely.
Step 4. Watch as the other 10% raise prices (to the level you wished you got) and make a profit at your expense. Then watch as they expand, cutting your original market share from 90% to 70%.
excitingthingstodo.blogspot.com
China could have written a BACKDOOR into the rare earth elements they export and will ROOT YOUR PHONE!!!!
Really.
Why the fuck should china care about a "trade war" when the USA and Australia have both decided already to impose sanctions in a trade war? What is supposed to happen here? China says "Oh no, if we stop exporting rare earths, the USA and Australia may block purchases of our network kit. Even more, we mean!".
Looks like it's time for a nice little invasion...
Now maybe my Molycorp stock will go back up! :D
I beg to differ, OPEC has run successfully as a cartel for quite some time.
Yes, they all more or less cheat, but not too much. In the end, they still drive the prices.
Possibly, but I think the Chinese already bought the rights to those deposits.
http://www.examiner.com/article/we-re-fighting-to-protect-china-s-economic-interests-afghanistan
it suspended production Tuesday to promote 'healthy development' of rare earths prices
If you want to promote "healthy development" of prices, raise the prices. If you go too high, you'll know when people stop buying from you or start developing relationships with a third-party.
Perhaps this will promote some laws/rules around this sort of behavior. It's similar to cartel or price-fixing behavior when you've got a cornered market like this.
However, it's not like this is the only market where this happens. While the petroleum market is a bit more diverse, supplies are still choked in order to drive up prices etc.
No. Or rather, they do have minerals, but that's not why we're there and we're not getting the minerals. We're leaving by 2014 without the contracts.
Tic-Tac-Toe, Global Thermonuclear War, and relationships all have the same winning move.
I guess by "promote healthy pricing" they mean guarantee that every other major country will start their own mining operation and eventually all but put them out of business. I think they really meant they're greedy assholes driving the price up but my proposed end result is more realistic.
Looks like Silicon Valley could have a new gold rush on its hands, "Thars Neodynium in those hills.."
Go look it up. Their name is not very good. No they aren't abundant like silicon, aluminium, or iron, but they are not these extremely rare elements that you can't find many of. They are fairly plentiful.
So if China wants to price things up too much there really isn't a good reason not to go after them in other locations.
Afghanistan has something like $4 TRILLION of minerals with lots of those rare earths. the russians discovered them first but we are going to get them.
Afghanistan has moderately good sources of lithium (evaporite deposits in dry lake beds). This article is about rare earths. Lithium is not a rare earth.
They may have some rare earth ores as well, but probably no more so than any other location of similar geology.
its not an accident we got out of Iraq and are still in Afghanistan
Yes it is; the idea that we're in Afghanistan to raid the mineral wealth just doesn't hold up; spending a trillion dollars on a war to capture access to a mineral resource of value at most a few trillion dollars, where you'd have to build the mining and transport infrastructure from scratch, just doesn't make sense unless it has a spectacularly high profit margin, and probably not even then. The comment from Marc Ambinder, in the Atlantic, is that "the Pentagon is probably trying to bolster Americans' support for the flagging Afghanistan campaign" by publicizing Afghan mineral wealth-- but it wasn't the reason we went there in the first place.
link: Sorry, Trillions in Unmined Mineral Wealth Is Not a Reason to Keep Occupying Afghanistan
Hey libtards, that Romney plan is looking pretty good now, isn't it? Let's see what you think about foreign policy when your iPhone costs $1500 and buying a new electric vehicle is on par with buying a decent-sized house. But I guess you'll just borrow that money right back from China, so the world keeps on spinning.
You sir have learned the lesson from Age of Empires well. Always go out an mine the remote resources first - then when they run out and people are fighting, you'll have plenty of supply back home.
Unfortunately in the US, we export coal (for example) while offering subsidies to those companies.
According to Wired, that mine dates back to the 1980s.
And remind them that artificiall manipulating prices like this can get burned[sic] badly in the end.
These guys also make cerium, right?
What are the little kids supposed to eat now?
They own a big portion of the American, debt, and now they are defining pricing for THEIR product (which is not OIL).
I applaud them, but also at some point, am very concerned, this new business model (thanks to the oil industry precedent) is what is driving
so many back into poverty!! I know not everyone should have a computer, but it is nice to know most households have one....
The fact is, with MS pushing bigger software junk that makes you need better machines each time, we have no choice but to get the latest pc box....
with the price going up for all components, we are back to paying about 1000$ for a decent box....thats sad!!!
BTW it was my understanding America used to be the major provider over a decade ago and we simply stopped. Shows this was a bad idea.
Not if your intention is to let the competition use up their supply while ensuring your own in the the future.
... the decline in rare earth supply will cause companies to innovate, and they'll find ways to not use rare earths. Like... well.... like this Hitachi motor without rare earth metals: http://www.zdnet.com/hitachi-introduces-motor-without-rare-earth-2062304468/
"I'm so moist I'm sticking to the leather." -Kermit the Frog on The Late Late Show
I was really looking forward to hearing "One World" in Chinese http://www.discogs.com/Rare-Earth-One-World/master/142807
My understanding is that there is plenty of magnets to produce from the US, but it was severely impacted by environmental legislation. If China manages to restrict supplies, I would expect prices to go up and production should be profitable in the US (even with additional environment regulations). If the price goes up, then alternative production will resume.
In addition to investment in mining, other activities will become more valuable: R&D in producing substitutes, recycling methods, improved efficiency (making products work with less of this material as it becomes more expensive).
These comments are mine; I do not speak for my employer.
Driving up costs of imports from China will cut the profits of the many donors, and they will not take it quietly. There are also many practical reasons and it would have a similar effect on the economy as suddenly slapping an extra cost on fuel. It was a bad idea around 1200AD when what was left of the Roman empire (Constantinople/Byzantium) did the same thing to their main trading partner (Venice) and it's still a bad idea.
There's too much going on to be able to even find "imports that degrade locally derived businesses" which don't also help other "locally derived businesses".
I may be biased, but I think the environmental damages of mining rare earths is the real cause.
China somehow artificially lowered the rare earths' prices because a) their people didn't realize the real cost and b) they wanted to become the major provider on the planet in order to capture more cash inflow and foreign investments. Now, with their economy catching up with other developed countries, they found out it's time to stop the sacrifices they made in order to sustain their economy growth. They may have broken some rules since they are a member of WTO. But I don't see it too evil. By the end of the day, everybody has to save his/her own arse.
Having that said, why did the US outsource those mining jobs? Isn't capitalism all about competitions? Get your hands dirty, get back to your jobs, and stay competitive in order to maintain as a global economy leader. More funding, research, and create more jobs for the American people!
It's funny that you are using US steel as an example, because that one is a textbook example of multiple industries being killed off by thoughtless use of tariffs and outright import bans. To elaborate on this, some decades back tariffs and bans on importation of general purpose steel were put in place to protect the US steel industry, which was functioning well at the time but did not want to be undercut by low quality imports. Without the threat of competition US steelmakers had no need to innovate and had the ability to increase prices. Eventually they got to the point where other countries could undercut US low quality general purpose steel with higher quality specially steels even after paying the tariffs - hence the "dumping" of steels with added nickel to make them stronger than general purpose steel and get around the ban. Making steel does not need many worker hours per ton so China should have had zero advantage, but a protected steel industry had gone to sleep and not only failed to improve, but also increased costs.
That was the direct effect. The indirect effect was the migration of industries that were heavy users of steel out of the USA so they would not be stung by the markup on steel prices from the cosy little club of US steelmakers (that was the start of the offshore outsourcing of manufacturing the USA is suffering so much from now). Eventually that protected little club found that their greed had backfired and they had very few customers. The only ones that thrived were innovating, making high strength steels, and able to compete effectively on a level playing field in an international market. I was in the steel industry briefly in the early 1990s (not in the USA and we could not sell our stuff to the USA), so got to see the how bad it had become.
Sugar is the other US textbook case of overprotecting an industry and the industry thinking that it's survival was thus assured and that they could charge whatever they wanted - hence you guys drinking corn syrup in your coke and mucking up your kids livers at twice the rate than if they were drinking sucrose in their coke.
In short, protecting industries can really suck in the long term and the protected industries can get to the point where they are welfare addicts that have no hope of survival without a government propping them up.
The problem is the unbelievable low price.
If the price is too low then the mine process is carried in a very destructive way. Because if you want to make profit you can't spend more on the processing. Then most of the rare earths are wasted to get the profitable one. And the ground and environment is left damaged because profit is too low to separate money to recover them. That's the problem China face.
The Rare Earths didn't contribute much to China's GDP but cost way too much of the environment, which may affect local resident decades or even centuries. That makes mine the Rare Earths negative profit in long term. So that is the concern of the CN government. Not the market at all.
Would this not mostly just hurt Chinese interests? What, 90% of the electronics are made in china anyway? So assuming everyone pays the same, Chinese companies would be most hit by this change as I see it, as their bottom line would be going up...