The Economist (one of my favorite, unbiased resources, though the name is counterintuitive) recently hinted that China’s refusal to continue mining rare earth metals at previous levels is less due to a newly-found environmentalism than it is to a desire to control global supply chain logistics, and thus production, in some very profitable venues.
This supposition is supported by the fact that, in August of 2009, China's Ministry of Industry and Information Technology announced the suspension of some rare mineral exports, and a restriction on others that will eventually cripple the electronics industry if no new supplies are unearthed. A complete prohibition is expected by 2015.
Okay, maybe “hinted” is a poor choice of words. Suffice to say the tone of the Economist article makes it possible to believe that China has a financial motive behind its refusal to continue offering some rare earth minerals (lithium, neodymium, terbium, dysprosium) on the global marketplace.
Fortunately, uranium is not part of the problem. At this time, the U.S. gets much of its uranium from domestic mines, with processing also occurring in the U.S., so the 20 percent of domestic energy produced from nuclear power plants is not in danger. Contrary to popular belief, however, uranium is not essential to medical imaging, as these radioisotopes are more easily obtained from cyclotrons.
The issue of China restricting exports has gotten so hot that, in March, a consortium of scientists warned the U.S. Congress that China’s withholding of such minerals might cripple the country’s high-tech industries.
Citing the fact that, between 2005 and 2008, China supplied 91 percent of the rare earths the U.S. needed in manufacturing, the scientists further speculated that an ensuing lack of such elements would bring some U.S. industries to their knees, financially speaking.
A sad state of affairs, they noted, since before its reliance on China, the U.S. was a world leader in mining and exporting rare minerals. And, as CNET’s Green Tech blog writer, Martin LaMonica notes, recycling these rare earth minerals may be the only recourse (in the interim between no imports and ramped-up U.S. exploration and extraction).
Unfortunately, recycling of rare minerals in extremely difficult, both in terms of time and money, and the results are disappointing. Still, what is the U.S. to do but recapture whatever small quantities of indium it can, since 80 percent of the rare earth element has already been mined and used?
In June, Forbes suggested that the U.S. incursion into Afghanistan was motivated less by human rights concerns than by a desire to access that nation’s estimated $909 billion in untapped mineral resources, $7.4 billion of which are rare earth minerals.
On the heels of this, the Pentagon is expected to complete a report in September on security risks vis-à-vis the nation’s dependency on other nations for an adequate supply of these minerals, which are used in military equipment ranging from the M1A2 Abrams tank to Arleigh Burke-class destroyers, as well as lasers, radar, guided missile systems, and soldiers’ laptop hard-drives.
Even the UK’s Telegraph got in the act in June, calling China’s restriction of some 17 rare earth minerals a “stranglehold” on world economies, and speculating that the move is a two-pronged Chinese assault of the developed world which aims to simultaneously protect against foreign ownership of these resources and bring even more manufacturing to China.
If that were true, it would mean that China wants to dominate global manufacturing in the only industries (computers, cell phones, LED lighting, solar and wind energy and EVs) that currently make money on the international stage.
But what if – in our paranoia that China will become a mega-giant, controlling the globe’s economy – we are wrong, and China’s motives are, in fact, “green”?
That is certainly what any logical person might deduce on learning that, last month, China announced it would be closing 2,000 factories which government had called “highly polluting”, unsafe, or energy inefficient.
These include 762 cement factories, 279 paper mills, 175 steel mills, 192 coking plants and an unknown number of aluminum processing plants. The move won endorsement from Greenpeace China’s climate and energy campaign manager, Yung Ailun, who nonetheless described the initiative as a “band aid” on the nation’s pollution problem, which has grown apace with economic growth.
What Ailun was apparently too polite to say was that China’s pollution represents multinational corporate “outsourcing” of the end products of manufacturing cheap goods for Western consumption.
Also consider the fact that China has 123 rare earth mines, and 73 processing entities, which- having failed to work together on pricing and supply – have created an unfortunate scenario where extremely rare minerals are being sold at a fraction of their value on the open market. Where is the foreign exploitation here?
China’s restrictions on rare earth exports are also the only way to control the illegal mining that has run amok in the country, which is nearly as large as Canada but without the transportation and communications infrastructure to protect valuable resources.
Before we allow paranoia to run rampant, perhaps we should concede that China’s government may simply be working to protect its citizens as well as its industry. As one writer noted: “China has long seen commodities in terms of security of supply. It may yet persuade others to follow suit.”
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