Rare Earths are Paper Tigers

At Foreign Policy, rare-earth trader Tim Worstall questions the strategic value of China’s current position as the minerals’ dominant supplier, following the apparent suspension and rapid resumption of shipments to Japan:

Now that the specter of a monopoly being exercised for political ends has been raised, there will be sufficient political will to break that monopoly.

Two important facts about rare earths help explain why: They’re not earths, and they’re not rare. China has reached its dominant supplier position through good old-fashioned industrial aggression, not innate geographical superiority. Cheap labor, little environmental scrutiny, and a willingness to sell at low cost have made other producers give up …. If Beijing wants to raise its prices and start using supplies as geopolitical bargaining chips, so what? The rest of the world will simply roll up its sleeves and ramp up production, and the monopoly will be broken.

Worstall notes that, while countries like Australia and the US have plenty of ore in the ground, processing it with current methods would involve “a level of pollution they’ve been all too happy to outsource to China.” But Japan is already seeking to reduce its dependence on Chinese supplies by stimulating extraction elsewhere, as The Globe And Mail reports. Until cleaner refinement techniques are discovered, others might similarly opt to cultivate more diverse foreign suppliers rather than exploiting domestic reserves.

October 6, 2010, 9:43 PM
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Categories: Economy, Sci-Tech