News / Asia

    Manipulation of China's Rare Earth Minerals Supply Could Backfire

    A worker waters the site of a rare earth metals mine at Nancheng county, Jiangxi province December 29, 2010.
    A worker waters the site of a rare earth metals mine at Nancheng county, Jiangxi province December 29, 2010.

    Last week, China’s biggest producer of rare earths elements suspended production to try to boost prices for the 17 minerals essential for manufacturing modern technologies.  Although China currently has a near monopoly on these crucial resources, its dominance could soon be challenged as trade partners lose patience with the manipulation of the supply chain. 

    Former Chinese leader Deng Xiaoping declared in 1992 that “The Middle East has its oil, China has rare earths.”  Chinese companies have strongly pursued the rare earths mining business since and now account for about 95 percent of the world’s total rare earth supplies. The state-linked Baotou Group is responsible for more than 60 percent of that output.

    Last week, its management said it is suspending production to stabilize the market and balance supply and demand. The move followed a roughly 20 percent drop in rare earth prices in recent months.

    Risk list

    Andrew Bloodworth is the head of science at the British Geological Survey. His team recently compiled the 2011 international ‘Risk List’ of chemical elements.

    The list gives an indication of the threat to supplies of those elements and element groups necessary to drive global economic development.

    Bloodworth says although rare earths are available to be mined outside China, the key issue for mining businesses is the cost of separating the element from its ore.

    “The Chinese can do it more cheaply than anyone else, which has meant historically, the price of rare earths has fallen, which has put mines in other parts of the world out of business," Bloodworth said. "So, we’re in a situation now where we have a near monopoly situation in terms of supply and rising demand, and people are very concerned that China has dominance in these things.”

    Strategic manipulation

    China has history when it comes to manipulating rare earth prices by restricting supply, having implemented a similar moratorium in 2008.

    Beijing demonstrated it is willing to use its market dominance as a foreign policy pool when in October 2010, China halted shipments to Japan during a territorial dispute with Tokyo.

    That same month, the U.S. Department of Defense debated the national security implications of Chinese control of the rare earths market because key technologies including radar and smart bombs require the material.

    Weeks later, the U.S. Energy Department published its Critical Materials Strategy. This called for a strategic expansion of rare earth supplies and warned significant harm could be caused to the United States - which was once self-sufficient in rare earth production - if supplies to high-tech manufacturers were interrupted.

    Market reaction

    Unlike previous occasions when Beijing has manipulated supply, the world is now looking increasingly prepared to move away from its dependence on Chinese rare earths.

    Manufacturers, including Toyota and General Motors, are already developing processes that minimize the use of rare earths in vehicle design, says Matthew Fusarelli, head of research at AME.   

    “Rare earths generally have a very high degree of substitutability," Fusarelli said. "So electronics manufacturers can, over time, change their production processes to use rare earths more sparingly, if at all.”

    Andrew Bloodworth says it will not take many new suppliers to alter the dependence on China.

    “The amount we use compared to industrial metals is absolutely tiny," he explained. "Last year in the world we mined about 17, 18 million tons of copper. We mined about 130,-140,000 tons of rare earth. A couple of new mines will change the picture completely.”  

    Alternatives

    New mines are being planned in the United States, Russia and Australia. Other mines once moth-balled or not developed on concerns about viability are moving towards production.

    Among these is the Molycorp mine in Mountain Pass, California. This closed in 2002 when China swamped the market with cheap supplies.

    Molycorp directors say they have discovered several new rare earth deposits at the site and expect the old mine to be one of the world’s largest rare earth suppliers by 2014.    

    You May Like

    Multimedia Obama Calls on Americans to Help the Families of Its War Dead

    In last Memorial Day of his presidency, Obama lays wreath at the Tomb of the Unknown Soldier at Arlington National Cemetery

    The Strife of the Party: Will Trump Permanently Alter Republicans?

    While billionaire mogul's no-holds-barred style, high-energy delivery are what rocketed him to nomination, they also have created rift between party elites and his supporters

    China's Education Reforms Spark Protest

    Beijing is putting a quota system in place to increase the number of students from poor regions attending universities

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Chinese-Americans Heart Trump, Bucking National Trendi
    X
    May 27, 2016 5:57 AM
    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Chinese-Americans Heart Trump, Bucking National Trend

    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Reactions to Trump's Success Polarized Abroad

    What seemed impossible less than a year ago is now almost a certainty. New York real estate mogul Donald Trump has won the number of delegates needed to secure the Republican presidential nomination. The prospect has sparked as much controversy abroad as it has in the United States. Zlatica Hoke has more.
    Video

    Video Drawings by Children in Hiroshima Show Hope and Peace

    On Friday, President Barack Obama will visit Hiroshima, Japan, the first American president to do so while in office. In August 1945, the United States dropped an atomic bomb on the city to force Japan's surrender in World War II. Although their city lay in ruins, some Hiroshima schoolchildren drew pictures of hope and peace. The former students and their drawings are now part of a documentary called “Pictures from a Hiroshima Schoolyard.” VOA's Deborah Block has the story.
    Video

    Video Vietnamese Rapper Performs for Obama

    A prominent young Vietnamese artist told President Obama said she faced roadblocks as a woman rapper, and asked the president about government support for the arts. He asked her to rap, and he even offered to provide a base beat for her. Watch what happened.
    Video

    Video Roots Run Deep for Tunisia's Dwindling Jewish Community

    This week, hundreds of Jewish pilgrims are defying terrorist threats to celebrate an ancient religious festival on the Tunisian island of Djerba. The festivities cast a spotlight on North Africa's once-vibrant Jewish population that has all but died out in recent decades. Despite rising threats of militant Islam and the country's battered economy, one of the Arab world's last Jewish communities is staying put and nurturing a new generation. VOA’s Lisa Bryant reports.
    Video

    Video Meet Your New Co-Worker: The Robot

    Increasing numbers of robots are joining the workforce, as companies scale back and more processes become automated. The latest robots are flexible and collaborative, built to work alongside humans as opposed to replacing them. VOA’s Tina Trinh looks at the next generation of automated employees helping out their human colleagues.
    Video

    Video Wheelchair Technology in Tune With Times

    Technologies for the disabled, including wheelchair technology, are advancing just as quickly as everything else in the digital age. Two new advances in wheelchairs offer improved control and a more comfortable fit. VOA's George Putic reports.
    Video

    Video Baby Boxes Offer Safe Haven for Unwanted Children

    No one knows exactly how many babies are abandoned worldwide each year. The statistic is a difficult one to determine because it is illegal in most places. Therefore unwanted babies are often hidden and left to die. But as Erika Celeste reports from Woodburn, Indiana, a new program hopes to make surrendering infants safer for everyone.
    Video

    Video California Celebration Showcases Local Wines, Balloons

    Communities in the U.S. often hold festivals to show what makes them special. In California, for example, farmers near Fresno celebrate their figs and those around Gilmore showcase their garlic. Mike O'Sullivan reports that the wine-producing region of Temecula offers local vintages in an annual festival where rides on hot-air balloons add to the excitement.
    Video

    Video US Elementary School Offers Living Science Lessons

    Zero is not a good score on a test at school. But Discovery Elementary is proud of its “net zero” rating. Net zero describes a building in which the amount of energy provided by on-site renewable sources equals the amount of energy the building uses. As Faiza Elmasry tells us, the innovative features in the building turn the school into a teaching tool, where kids can't help but learn about science and sustainability. Faith Lapidus narrates.

    Special Report

    Adrift The Invisible African Diaspora