China: Trade embargo on Rare Earth minerals/metals - What damage could this do to the West?

reply to post by curioustype


Can you imagine the negative effects on China if the Obama Administration repeals the tax incentives for corporations doing business in other countries. This is China's preemptive strike.

reply to post by Witness2008


Recent reports quoted Chinese officials as 'warning' the US government that they would lose any trade war - or currrency war - with China...

Also, we don't yet really appear to KNOW that China is restricting supply, concrete evidence doesn't appear to have come to light, but there certainly has been some top level movement around the issue...from both sides...and it does appear to be a fairly key weakness (until alternative sources get fully online in the West) for the West should the trade/currency/military sabre rattling continue to escalate into tangible events.

Attempting to readjust quickly, and both invest in fresh mines/supplies AND compensate for any shortfalls affecting productivity/sales from such a strategic hit must be the LAST thing western economies, and corporations would need AMIDST an already perilous outlook for their economic recoveries AND a trade/currency engagement with China...?

thats okay, Afganistan is rife with minerals. "things that make you go hmmm."

www.nytimes.com...

reply to post by tonypazzo


OK, BUT -

1. China IS in Afghanistan brokering (very successfully last I heard) deals with the native population for exclusive extraction deals for their mineral deposits...?

2. If the West did come to rely on Afghanistan for REEs (I don't think it will as there appear to be other sources too...Titanium Oxide processing for example) please don't let another politician/corporation tell me that the move to 'green' technologies and away from oil will do anything to relieve the West from dependence on ethically and strategically problematic foreign supply chains!

3. That will do nothing to alleviate any short term loss of supply/shock, as any alternative mines are billed as taking years to get online in the scale needed to match China's current output?

reply to post by curioustype


The underlying machinations of all of this makes me dizzy. For me it comes down to the fact that the Chinese economy is built on supplying the West with cheap goods that have a life expectancy of a few weeks. China does export goods that should be valued and are but the vast majority of the trade is lop-sided and eventual landfill.

China purchased our debt, and mistakenly devastated their environment, altered their own geography (Three Gorges) in the hopes that we would sleep in the same bed with her...China bent over and took it at both ends.

The west propped up China knowing they could use her or take her down. The Maoist mentality still dictates.

I don't suppose anyone will come back to this thread, but, I just read a fresh article on Bloomberg news and found it interesting in relation to this thread? Although weeks ago there were official press releases from both Chinese and US sides indicating this issue was either history, or a non-issue, or resolved, and yet...today, we see this:

Senate May Pass Measure on China's Yuan, Lawmakers Say
By Mark Drajem - Dec 6, 2010 9:59 PM GMT

The U.S. Senate may join the House and pass a measure meant to push China to raise the value of its currency, 30 lawmakers said in a letter today to China’s Vice Premier Wang Qishan.

The senators said they want China to allow “its currency to appreciate meaningfully” before President Hu Jintao visits Washington next month. The bipartisan group of lawmakers also urged Wang to deal with U.S. concerns about trade in green- energy goods, beef, protection of copyrighted items and government procurement at a meeting in Washington this month.

deal with U.S. concerns about trade in green- energy goods

Are you thinking what I'm thinking? [i.e. that "concerns about trade in green - energy goods" = the REE issue covered earlier...?]

Looks like aforementioned summit/deadline could be a fairly crucial watershed moment for a number of BIG issues...?

(not that I'm certain we'll hear about it too fast)

reply to post by tonypazzo


Ok it's been a while since I last posted on this thread, and - hey look - it was started back in Sep 2009!

Well, there was something I read in the news today that made me sit up and think in regards to this thread again:

US set to challenge China rare earth export restriction, BBC News, 13 March 2012

The US is set to file a case against China at the World Trade Organization challenging its restrictions on rare earth exports.

The European Union and Japan are expected to support the US in its case.

China produces more than 95% of the world's rare earth metals, and any restriction on exports from Beijing is likely to have a bearing on global prices.

There have also been concerns that Beijing has implemented these quotas in a bid to ensure that prices of these elements remain low within China, a move that critics say gives its manufacturers an unfair advantage.

However, China has denied these allegations, saying that it had enforced these quotas to ensure there was no environmental damage caused due to excessive mining.

OK, so here we are again, three years later...and on it goes!

Now, when I first started this thread, it was in the wake of Obama (and other Western leaders) pledging that one of the ways they would turn around our failing economies would be through setting and delivering highly ambitious targets for growth of high-tech and alternative energy industries and manufacturing/export sectors in our economies. All of which do somewhat rely on access to REEs at competitive and viable prices.

So here we are, 2012, and as I see it, this elephant in the room of REE availability is still somewhat getting in the way of that.

If you take a moment to re-read this thread, you may see that in 2009/2010, we were debating things like:

1. Well maybe that's why we're in Afghanistan - to secure favour in deals to extract the massive REEs there?

2. Well maybe the West will open up it's own alternative mines, and swallow the bitter pill of the heavy environmental (and therefore political) cost of such operations to obtain it's own REEs?

3. Maybe China will buckle to the pressure, economical and political, and see it our way?

I too was thinking that maybe we were actually going to somehow beat off competition (most prominently from China by the way - I will provide reports to back that up later) to secure favour to access Afghanistan's REEs, until yesterday. In the wake of yesterday's shocking events in Afghanistan, I really do feel that the US coallition's reputation, and ability to compete with the likes of China for such large scale deals may have been irreparably damaged?

I think that may have been the straw that broke the camel's back? As I say, we know that even back in 2009, China were in Afghanistan and were seen by some as being more likely to secure access for mining, because of their different approach - i.e. to focus strictly on business, remain detached from any military involvement - and all of the PR/diplomatic trappings that go with that - ignore human rights issues, and go with the flow of that nation, supplying simply commercial and infrastructure deals in return.

It struck me as interesting, that the very day after the latest US personnel/Afghanistan civilian shootings in Afghanistan, which have been seen by many as completely undermining the West's relations with that nation, the very day after, we see this fresh story of a united return to focus on diplomatic pressure to attempt to secure REEs from the Chinese?

Could it be that this is some kind of sign from the West that they recognise that they just served China the game for REEs in Afghanistan on a plate? If not totally, enough to scupper the notion that they could have found a quick and easy (i.e. no vast open cast mines in my back yard) alternative to Chinese mines?

As we left it on this thread, it seems efforts were being made to start up Western REE mines. However, re-reading the thread, it is not clear that all of the key REEs were accounted for in those mines mentioned. Also, it was clear thet increasing their productivity to a level that eliminated this issue of competitively priced alternative sources would take some years - clearly we aren't there yet if the West feels the need for this action on China now.

Ditto with regards the mention of new ways to 'synthetically' manufacture the REEs in the West - it doesn't look like it's here yet. Is it the Chinese who will reap the benefits of the West's latest PR disaster in Afghanistan, has this incident pushed the West's plans to gain access to alternative REE mines back a few more years?

And, why should the Chinese release such a key strategic asset at such a crucial point in their own development?

Link to post recording Obama's statement of intent on smart and alternative energy industry development:

link to post

Just read this re: US/China/Afghanistan - very interesting:

While US Bleeds in Afghanistan, China Invests

Using the US presence as blanket for security, China is busing laying the early foundations for investments and important political ties in Afghanistan, which leaves one question to ask: what will China’s role in Afghanistan be once the US completes its withdrawal in 2014? That answer can be answered from simply observing China’s decade-long march to regional dominance. China has been a keen spectator in the US’s military situation, its economic problems, the political toll they have taken domestically, and the fracturing relationships between the countries it has most invested in: Iraq, Pakistan and Afghanistan.

When US troops leave, China will have only two options – to leave Afghanistan or to find a way to defend their huge Afghan investments, such as the Aynak copper project, from Taliban insurgents.

In the Aynak deal, China must remain for 30 years for mining operations. It has also pledged to build rail and road connections to transport minerals to China.

Last year, the Afghan authorities and the State-owned Metallurgical Corp of China (MCC) signed a $7 billion (Dh25.7 bn) deal to build a rail line from the border with Pakistan up through Kabul and the Aynak copper deposit south of Kabul and then up to the Uzbek border.

What will be the fate of this project after the withdrawal of US troops? Under what conditions is it logical for China to make more huge investments in Afghanistan?

It is hard to believe that resource-hungry China will just walk away from these projects. And to defend its projects, China is unlikely to rely solely on Afghan forces, which are still not fully reliable.

It is highly likely, then, that China will come to replace the US in fighting the Taliban in Afghanistan. Pakistan would continue to play a front line role against Islamist extremists as China’s strategic ally, while the Shanghai Cooperation Organization (SCO) could assume the role now played by Nato. In all this Pakistan will be China’s vital strategic partner.

So, I'll bet that yesterday the US government was fielding some pretty caustic phone calls from Afghanistan/China, and can you see us obtaining greater access to Afghanistan REEs in the wake of yesterday and the planned pull-out?

reply to post by curioustype


Dear ATS Readers, Writers, Vloggers,

Hi curioustype, and thanks for posting this.

This is some the "cold war" stuff that has been ongoing with China.. none of it good... causing more tensions.

The European Union, United States and Japan formally asked the World Trade Organization on Tuesday to settle a dispute with China over Beijing's restriction on exports of raw materials, including rare earth elements critical to major industries.

www.newsdaily.com...

Don't know if China will play or not.. they have already lost one ruling on this topic... REE's.. the lifeblood of a modern military, and gadgit economy...

All of this will turn to no good in the end...

Pravdaseeker

Those rare earth minerals aren't as rare as people think. There's a lot of them sitting in the discarded ores and overburden of old mines around the USA. They are usually crystalline in nature and don't even need digging. It's no wonder that China bought the piles from the local Iron mine. If people could understand to open their eyes they would see these things.

Those rare earth minerals they have in their country belong to them and they have a right to do whatever they want with them. I understand that they are an industrialized country and need these for the stability of their industry. They would be fools to sell them to others. They sell inexpensive products, we can buy parts from them if we need to and build the rest ourselves. What's wrong with that?

In our country we let businesses sell our metals to everyone else and don't produce much anymore. Our government makes a few pennies on the dollar and our people suffer with toxic mine sites. This is not wise. Think about it, where is the profit going, sure it supplies jobs but can't it supply even more jobs if done rationally?

Just thought I might delve back and see if we may breath a little life back into this old thread, as it now seems this issue is rearing it's ugly head again, and this time does sound like it may have some teeth.

Don't say we didn't warn you!

I was just reading this article, in the Telegraph online:

Beijing hints at bond attack on Japan

Although it doesn't make the headline, the possibility of REEs being cited as a possible weapon is right there:

Separately, the Hong Kong Economic Journal reported that China is drawing up plans to cut off Japan’s supplies of rare earth metals needed for hi-tech industry.

The warnings came as anti-Japanese protests spread to 85 cities across China, forcing Japanese companies to shutter factories and suspend operations.

Fitch Ratings threatened to downgrade a clutch of Japanese exporters if the clash drags on. It warned that Nissan is heavily at risk with 26p of its global car sales in China, followed by Honda with 20pc. Sharp and Panasonic both have major exposure. Japan’s exports to China were $74bn in the first half of this year. Bilateral trade reached $345bn last year.

Sabre-rattling or actual harm?

Either way - is the rest of the world ready for REE containment, and if they are willing to aim at Japan like this over a few islands, what of others if we interfere with their oil and gas interests in the Gulf?

Just a thought. Any takers for a bit of healthy discussion?

Looks like our roads won't be dominated with electric cars for some time yet is my bet...well, maybe Chinese ones?