World Metal War I
26/3/12 19:07![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
luvdovz.livejournal.com posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
talkpoliticsNo, this is not about headbanging! \m/ It's about the battle for the rarest of resources that's raging between the US, EU, Japan on one side and China on the other, and the re-shuffling of the world markets for rare earth elements, or "rare metals".
About 300 km south-west of Stockholm, beside the second biggest Swedish lake, Vättern, one could see the typical ecological idyll. The lake is famed for being among the cleanest fresh water basins in the world, many towns in the vicinity are getting their tap water directly from the lake with only some minor processing. The typical Swedish rural sight is everywhere: tidy farms with green meadows. That's the last place you'd expect to see a highly toxic radioactive mine, but it's exactly where Sweden is planning to build one. The plant at Norra Kärr will not only be fully operational very soon, but it's definitely among the projects of "national importance" for the "present and future generations" - according to the statement by the government.
The reason being that this is the only known deposit of rare earth elements in Europe that's economically viable for exploitation, and this resource was declared by EU to be of strategic importance for the development of the economy. Until recently Europe didn't have to dig for such metals because most of them were imported from China. But for several years China has imposed stricter quotas for exportation of some resources like these, and is artificially pumping up the prices. And this has made EU, US and Japan to issue a joint complaint at the WTO.
This nervous outburst from the developed countries against China has its explanation: in recent years the rare earth elements have become an important part of the production of almost all hi-tech, and the battle for control on the market will be only getting more acute.
The so-called "rare earth elements" are a group of 17 elements, whose extraction only accelerated in the mid 20th century. Despite the name, they're not really that rare - they can be found at least 200 times more often than gold for example. But the problem is that they're usually found in very low concentrations, so it's economically and ecologically not beneficial to try processing them (they usually come together with such nice radioactive elements like thorium). The whole process is very expensive and it involves large quantities of chemicals, or even the more dangerous thorium enrichment. That's why the production fell into a ditch after the advance of the eco-movement. In 1990 the US and another 14 countries were the only ones who extracted rare metals. And today about 95% of the whole production comes from China.
This process coincided with the sudden boom in their use. The rare metals are very good permanent magnets - much better and more stable than the electromagnets and much more powerful than any other metals, including iron. This makes them the favorite material for the producers of almost any sophisticated gadget - from ballistic missiles and electric cars to the night-sight glasses, smartphones, fridges and wind turbines. There's still no alternative for them in many sectors, and if it wasn't for the rare metals we wouldn't have things we're so used to - like flat-screen TVs. So the global consumption of these materials has doubled for the last decade, and their price has increased 17 times for the last 2 years alone.
What's still looking like a relatively tiny market (just about 140 thousand tonnes globally), is quickly turning into a vitally important sector. And China, where the ecological price of this production was being neglected for a long time, and who is now specialized in these materials, is in dire need of more rare earth elements so it could meet its needs for its swelling industry. And thus suddenly this has become the most important among the small sectors of the global mining industry.
So basically, China has become the Lord of the Rare Metals. Why the US, EU and Japan chose exactly last week to file their complaint at WTO, is still unclear. China's strategy to limit its export of rare elements has been aggressive ever since 2010, when they cut their export quotas by 40%. Using this trade as a political lever also dates back to that time - for instance after a border incident where Japan arrested several Chinese fishers, China shortly stopped most of the export for Japan. But probably the most annoying thing is the double prices - those in China are often a fraction of what the developed economies have to pay, and they're seeing in this an attempt of China to attract more hi-tech industries on its territory.
The WTO rules clearly say that when you're exporting something on the global market, everybody should have equal access to it. EU and USA believe that what China is doing is blackmail on these industries to move on its territory if they're to survive at all. Maybe the reason for the timing of the complaint is also that Obama has some political motives, like wanting to present himself as the savior-protector of US industry. It's election year after all, right? Well, in fact it's very likely that the US would prevail in this argument, but that's beside the point right now. The real problem is that the US might be unwilling to address the real problem with China, i.e. their anti-competitive behavior. Either because they don't have the guts to do it, or because they're already hostage to the Chinese industrial interests, or for political-financial reasons (China holding a large chunk of the US debt), or trade reasons (the US and China being like connected vessels, their economies strongly depending on each other). Either way, the situation doesn't look very nice.
But it'd be good if we tried to understand China's logic as well. For example a China Daily article accuses the US that instead of exploiting its own resources, it wants to consume those of China, despite the high ecological price. "Using national security as an excuse, the US declined to export high-tech products to China, many made from the rare earth metals exported from China. Similarly, does China also have a security problem in exporting its rare earth metals? It's a question worth thinking about", the Chinese minister of commerce Chen Deming was cited saying.
Apparently China is in a resource-hoarding mode right now. Like any other big country China naturally wants to be self-sufficient, resource-wise. I don't think the rest of the world could influence the second largest economy in the world that much even if it tried very hard, especially on its vitally strategic decisions about resources. This complaint only serves to demonstrate how the other players are feeling on the issue, but it won't be enough to change the Chinese policy in this respect. Because it's more a matter of priorities than diplomacy. And China's domestic consumption of such materials is already increasing by 20% a year, and that's only the beginning. Given their "clean energy" policy (China planning to produce 100 GW through wind power by 2015), such resources would be direly needed in the future.
Which leads us back to the (still) clean lake Vättern. With these galloping prices breaking newer records, the extraction of these resources will be getting extremely beneficial for countries like Sweden, USA and Australia. The first two mines outside of China will be giving 25% of the world production in the next few years. The real question is what to do next.
2011 was dismal for this industry because of the crisis and the double tragedy in Japan. So the Chinese quota was met without a problem, and even some quantities remained in reserve. But the demand for these metals will soon recover to its previous levels and will keep increasing. Global Mining Finance predicts that in 2012 the supply won't be able to exceed the demand any more. What's more, there are concerns of a possible "rare earth bubble" popping very soon. New urgent projects are about to be started in Brazil, South Africa and India, but some time will be needed before they get a real role on the market. And in other places like Congo for the time being there are no candidates, for ethical reasons - the revenue from the mining industry there is used to fund local cut-throats, and even the boldest investor would think twice before bringing any quantities of enriched nuclear material in the middle of Africa.
One of the possible alternatives (Japan being the pioneer in that field) is recycling old waste and extracting the metals from there, but that too is not having a big market effect yet. The good news is that at least for now there's no deficit of lighter rare elements. But there's already a problem with the heavier (and more important) rare metals, even China already has a shortage. The big question is where to get more of that stuff. Even the new mines that are opening now are mostly of lighter elements. So, China won't have real competition in that respect any time soon. And given its desire to attract more hi-tech companies, their domination on the market will continue to be used very actively, and China will continue its unimpeded inroads in mineral-rich regions like Africa. Which is bad news for the remaining players. But that's only a fraction of the whole scene on which the Metal Wars of the future will be played out. And it seems they're just getting started.
About 300 km south-west of Stockholm, beside the second biggest Swedish lake, Vättern, one could see the typical ecological idyll. The lake is famed for being among the cleanest fresh water basins in the world, many towns in the vicinity are getting their tap water directly from the lake with only some minor processing. The typical Swedish rural sight is everywhere: tidy farms with green meadows. That's the last place you'd expect to see a highly toxic radioactive mine, but it's exactly where Sweden is planning to build one. The plant at Norra Kärr will not only be fully operational very soon, but it's definitely among the projects of "national importance" for the "present and future generations" - according to the statement by the government.
The reason being that this is the only known deposit of rare earth elements in Europe that's economically viable for exploitation, and this resource was declared by EU to be of strategic importance for the development of the economy. Until recently Europe didn't have to dig for such metals because most of them were imported from China. But for several years China has imposed stricter quotas for exportation of some resources like these, and is artificially pumping up the prices. And this has made EU, US and Japan to issue a joint complaint at the WTO.
This nervous outburst from the developed countries against China has its explanation: in recent years the rare earth elements have become an important part of the production of almost all hi-tech, and the battle for control on the market will be only getting more acute.
The so-called "rare earth elements" are a group of 17 elements, whose extraction only accelerated in the mid 20th century. Despite the name, they're not really that rare - they can be found at least 200 times more often than gold for example. But the problem is that they're usually found in very low concentrations, so it's economically and ecologically not beneficial to try processing them (they usually come together with such nice radioactive elements like thorium). The whole process is very expensive and it involves large quantities of chemicals, or even the more dangerous thorium enrichment. That's why the production fell into a ditch after the advance of the eco-movement. In 1990 the US and another 14 countries were the only ones who extracted rare metals. And today about 95% of the whole production comes from China.
This process coincided with the sudden boom in their use. The rare metals are very good permanent magnets - much better and more stable than the electromagnets and much more powerful than any other metals, including iron. This makes them the favorite material for the producers of almost any sophisticated gadget - from ballistic missiles and electric cars to the night-sight glasses, smartphones, fridges and wind turbines. There's still no alternative for them in many sectors, and if it wasn't for the rare metals we wouldn't have things we're so used to - like flat-screen TVs. So the global consumption of these materials has doubled for the last decade, and their price has increased 17 times for the last 2 years alone.
What's still looking like a relatively tiny market (just about 140 thousand tonnes globally), is quickly turning into a vitally important sector. And China, where the ecological price of this production was being neglected for a long time, and who is now specialized in these materials, is in dire need of more rare earth elements so it could meet its needs for its swelling industry. And thus suddenly this has become the most important among the small sectors of the global mining industry.
So basically, China has become the Lord of the Rare Metals. Why the US, EU and Japan chose exactly last week to file their complaint at WTO, is still unclear. China's strategy to limit its export of rare elements has been aggressive ever since 2010, when they cut their export quotas by 40%. Using this trade as a political lever also dates back to that time - for instance after a border incident where Japan arrested several Chinese fishers, China shortly stopped most of the export for Japan. But probably the most annoying thing is the double prices - those in China are often a fraction of what the developed economies have to pay, and they're seeing in this an attempt of China to attract more hi-tech industries on its territory.
The WTO rules clearly say that when you're exporting something on the global market, everybody should have equal access to it. EU and USA believe that what China is doing is blackmail on these industries to move on its territory if they're to survive at all. Maybe the reason for the timing of the complaint is also that Obama has some political motives, like wanting to present himself as the savior-protector of US industry. It's election year after all, right? Well, in fact it's very likely that the US would prevail in this argument, but that's beside the point right now. The real problem is that the US might be unwilling to address the real problem with China, i.e. their anti-competitive behavior. Either because they don't have the guts to do it, or because they're already hostage to the Chinese industrial interests, or for political-financial reasons (China holding a large chunk of the US debt), or trade reasons (the US and China being like connected vessels, their economies strongly depending on each other). Either way, the situation doesn't look very nice.
But it'd be good if we tried to understand China's logic as well. For example a China Daily article accuses the US that instead of exploiting its own resources, it wants to consume those of China, despite the high ecological price. "Using national security as an excuse, the US declined to export high-tech products to China, many made from the rare earth metals exported from China. Similarly, does China also have a security problem in exporting its rare earth metals? It's a question worth thinking about", the Chinese minister of commerce Chen Deming was cited saying.
Apparently China is in a resource-hoarding mode right now. Like any other big country China naturally wants to be self-sufficient, resource-wise. I don't think the rest of the world could influence the second largest economy in the world that much even if it tried very hard, especially on its vitally strategic decisions about resources. This complaint only serves to demonstrate how the other players are feeling on the issue, but it won't be enough to change the Chinese policy in this respect. Because it's more a matter of priorities than diplomacy. And China's domestic consumption of such materials is already increasing by 20% a year, and that's only the beginning. Given their "clean energy" policy (China planning to produce 100 GW through wind power by 2015), such resources would be direly needed in the future.
Which leads us back to the (still) clean lake Vättern. With these galloping prices breaking newer records, the extraction of these resources will be getting extremely beneficial for countries like Sweden, USA and Australia. The first two mines outside of China will be giving 25% of the world production in the next few years. The real question is what to do next.
2011 was dismal for this industry because of the crisis and the double tragedy in Japan. So the Chinese quota was met without a problem, and even some quantities remained in reserve. But the demand for these metals will soon recover to its previous levels and will keep increasing. Global Mining Finance predicts that in 2012 the supply won't be able to exceed the demand any more. What's more, there are concerns of a possible "rare earth bubble" popping very soon. New urgent projects are about to be started in Brazil, South Africa and India, but some time will be needed before they get a real role on the market. And in other places like Congo for the time being there are no candidates, for ethical reasons - the revenue from the mining industry there is used to fund local cut-throats, and even the boldest investor would think twice before bringing any quantities of enriched nuclear material in the middle of Africa.
One of the possible alternatives (Japan being the pioneer in that field) is recycling old waste and extracting the metals from there, but that too is not having a big market effect yet. The good news is that at least for now there's no deficit of lighter rare elements. But there's already a problem with the heavier (and more important) rare metals, even China already has a shortage. The big question is where to get more of that stuff. Even the new mines that are opening now are mostly of lighter elements. So, China won't have real competition in that respect any time soon. And given its desire to attract more hi-tech companies, their domination on the market will continue to be used very actively, and China will continue its unimpeded inroads in mineral-rich regions like Africa. Which is bad news for the remaining players. But that's only a fraction of the whole scene on which the Metal Wars of the future will be played out. And it seems they're just getting started.
(no subject)
Date: 26/3/12 17:40 (UTC)"The mine, once the world's dominant producer of rare earth elements, was closed in large part due to competition from REEs imported from China"
(no subject)
Date: 26/3/12 17:51 (UTC)(no subject)
Date: 26/3/12 17:54 (UTC)(no subject)
Date: 26/3/12 19:21 (UTC)The geopolitical and economical echo of this scramble for resources is yet to be heard. And it's going to be loud. And it definitely won't be in the West's favor.
(no subject)
Date: 26/3/12 20:01 (UTC)their oil interestsfreedom & democracy around the world, the Chinese were doing their thing quietly, methodically, and preparing for whatever the future would throw at them. Who's gonna cry in the end will be seen sooner or later, and something tells me it won't be the Chinese.(no subject)
Date: 26/3/12 20:03 (UTC)Space.
(no subject)
Date: 26/3/12 20:06 (UTC)(no subject)
Date: 26/3/12 20:06 (UTC)(no subject)
Date: 26/3/12 21:31 (UTC)(no subject)
Date: 26/3/12 20:21 (UTC)(no subject)
Date: 26/3/12 20:57 (UTC)(no subject)
Date: 26/3/12 20:46 (UTC)I know there are things people need (like flat screen tvs and smart phones I guess--is there a sustainable alternative?--but we can do without ballistic missiles and more automobiles thank you very much), but it angers me that yet another remnant of vibrant human/nature harmony is going to be destroyed so they can keep up in world competitive markets, etc.
How long till there are practically no natural spaces left? Oh and by the way, eventually these taps of rare earth, if exploited enough, will run out, so what then? Maybe they could get out of their stupor and start looking into space development again? But even there, I doubt they can be trusted to conduct that without surrounding the Earth is some kind of space junk layer if they treat space like just another mine. Oh and then by the way, private companies would want in on that action and the government would probably be all too happy to allow them to contract with them to mine the stuff. So now outerspace (at least the resource rich parts), becomes privatized. Fucking joy. The next frontier taken from us before we can even freely settle.
Also: China's moving into Africa to secure more of the stuff.
U.S. needs more of the stuff too and doesn't want China to be dominant in the market.
Kony 2012 comes out (see its major financial contributors) and get people talking about the U.S.sending in more military "support" to Africa to help catch the psycho.
Future prediction: U.S. will find some way to justify going into Africa (part of the War On Terror), and the end result will be securing those resources before China acquires them all?
(no subject)
Date: 26/3/12 20:59 (UTC)(no subject)
Date: 27/3/12 02:11 (UTC)it's in their culture (not a generalized statement, just my general observation)
(no subject)
Date: 27/3/12 06:15 (UTC)(no subject)
Date: 26/3/12 22:47 (UTC)(no subject)
Date: 27/3/12 09:43 (UTC)(no subject)
Date: 27/3/12 02:09 (UTC)(no subject)
Date: 27/3/12 06:25 (UTC)(no subject)
Date: 27/3/12 16:32 (UTC)