back to article China's doomed attempt to hold the world to ransom

The Chinese government is trying to corner the rare earths market and that isn't good news for the tech business. Those with good memories of Chemistry O Level will know what the rare earths are: the funny little line of elements from Lanthanum to Lutetium at the bottom of the periodic table, along with Yttrium and Scandium, …

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  1. spegru
    Thumb Up

    Searching for a comment .......

    but the best I thought of was simply: AMEN

    And the same presumably applies to any resource!

  2. Ciaran 1
    FAIL

    Silver all over again?

    It's not the first time they've tried to corner the market in a metal. Last time it turned out nasty and shameful for all involved.

  3. Kenny Millar
    Jobs Halo

    Rare earths

    Great article Tim, what a refreshing change to normal sarcasm and Fanbouy bating we see so often on El reg.

    1. Anonymous Coward
      Anonymous Coward

      @Kenny Millar

      Well, yeah, it was a good article. But boring. Needs more humour. This is the Reg.

    2. BeefEater

      Some baiting

      Another fast growing consumer of these materials is the maufacture of motors and generators for use in Renewable Generation.

      It is expected that virtually all the new ranges of Wind Turbines will use Permanent Magnet Generators (PMG), because otherwise they would not be ecomonic.

      China is possibly the largest constructor of Wind Farms and is moving into the construction of the generators themselves. Maybe we won't be allowed to build them for our own needs!

      1. Ken Hagan Gold badge
        Joke

        Re: Needs more humour

        You missed the picture caption, then? Or was it just too deadpan for your tastes?

  4. Anonymous Coward
    Grenade

    Yeah, so?

    All this will do is to make the deposits elsewhere like Australia, Russia, Brasil, Vietnam commercially viable. In fact there are reserves everywhere where you have OLD plates. OLD means really old - 300M years at least. Simply, for the time being noone is looking either. The ones discovered so far were discovered by chance with people looking for other stuff.

    All these reserves outside China are untapped now because starting the exploitation and building the infrastructure costs a lot of money. However, if China persists in this as as a method of making sure that all production moves to China as well they are definitely going to see some competition. While China produces 95%+ it holds less than 65% of the reserves so they do not really "hold a gun to our technological head".

  5. Gordon 10 Silver badge
    Thumb Up

    Excellent Article - but

    Reminds me of my undergrad days looking at the spectra emitted by Rare Earth Ions.

    However the author does miss a subltety though - All China has to do is manipulate the prices to cause enough market uncertainty to make it un-economic to set up another mine.

    IE Jack up prices using export taxes, until a foreign mine gets funding, then just as investors have committed, reduce the prices again. Mine becomes un-economical, cancels opening, investors lose their money. Repeat until enough fear is created that they corner the market.

    It may still fail eventually in the face of breakthroughs from the likes of the author but it could be sucessfully implemented for years/decades before failing.

    1. Sir Runcible Spoon

      Sir

      Uneconmically viable or not, you don't expect the western governments to sit by and watch whilst China does this do you? I can't see the Americans taking this lying down 'from the reds' :)

      1. Mike Flugennock
        Grenade

        You can't...?

        I don't see why not. The USA has not only taken everything China does lying down, but has actually been _helping_ the sonsofbitches -- even after Tianenmen Square. Don't hold your breath.

    2. Petey
      Thumb Down

      Nice Comment - but

      It's not just about prices, it's about restricting the AMOUNT that will be exported, regardless of price. It's not a case of what China has to do, they're already doing what they want.

      What WE need is an alternative source!

    3. Anonymous Coward
      Thumb Down

      Then again...

      ...they're not operating in a vacuum, are they? Do it just once and I bet we'll see targeted import tariffs slapped on rare earths from China just about anywhere to prevent prices dropping too low again. The rest of world are not going to take blatant exploitation of a monopoly lying down.

      1. Jonathan Richards 1 Silver badge
        IT Angle

        Lying down for the monopoly, or just bending over

        > The rest of the world [is] not going to take blatant exploitation of a monopoly lying down

        Ho, no, naturally not. This is why Microsoft (R) is always in court and has such a hard time maintaining its monopoly.

    4. Peter Kay

      You're forgetting government intervention

      What Runcible Spoon said, basically. Beyond the relatively short term it only needs to be supported by a government either directly or covertly to render China's strategy useless - or at least to limit the effects to a very long payback period.

      That's one subtle strategy - the less subtle, cheaper and more widely used one, is to apply export/import duties that hurt China or its suppliers. China is a large country with many resources, but along with most other countries it clearly has its limits - witness its trawl round various parts of Africa and elsewhere for natural resource.

      Of course this is entirely pragmatic - Britain has recently completed a Nordic gas pipeline in part to enhance supply, but almost certainly also so that we can't be held to ransom by the Russians..

  6. Steve Evans

    Interesting...

    Except I have to point out one thing... As you say "Technology moves on"...

    CRT Phosphors Granddad!!!

    1. Hairy Scary
      Happy

      @ Steve Evans

      Oh but what about phosphors for the up and coming laser TV sets sonny!!!

      As you say " Technology moves on".

      http://www.reghardware.co.uk/2010/01/13/prysm_launches_laser_telly/

      1. Dale Richards
        Happy

        Or...

        If you want to be slightly less "up and coming" about it - what about phosphors for plasma displays?

  7. Robert Carnegie Silver badge

    Taxes are two way

    If China uses an on-off tax strategy to undermine foreign production of rare earths and also foreign manufacture of rare earth goods, it looks as though - if trade treaties allow - other potential producer nations can just tax Chinese rare earths themselves and open profitable mines and waste extraction and recycling schemes.

    Another thing that changes... the article mentions the importance of rare earths in cathode ray tube displays. I think we won't be worrying about CRTs so much in future. Rare earths are also used in mantles, the luminous component, for gas lighting. Again not so much nowadays.

  8. Stan 2
    Thumb Up

    Nice one

    Great article.

  9. Anonymous Coward
    Thumb Up

    Nice read...

    ...a rather technical subject well laid out and easy to read, I like it!

    But let's not forget Unobtanium shall we, there's always that, just in case ;)

    1. Luther Blissett

      Exactly

      Proves the writer's point. Just a few years ago Dilithium was all the rage. How fantasy moves along... it takes all the running one can do just to stay in the same place.

      Talking of very heavy metal, though, I know this amazing Swedish

  10. gray_
    Thumb Up

    Excellent article!

    Excellent article. As a previous commentator mentioned perhaps a dash more biting humour would have been nice, but it's intelligent, interesting, relevant and well written. A world away from the tabloid garbage we've been seeing recently on El-Reg, like the inspired report a few days ago of "fat people falling through floor".

  11. Mike Richards Silver badge

    Not holding the World to ransom

    It's just common sense economic policy. China needs to keep its economy growing and is aware that the next lot of cheap manufacturing countries are following along behind. Moving up the manufacturing ecosystem to produce finished objects is good practice.

    As for China being left behind when the next technological leap occurs. I doubt it; their R&D (especially in rare earths) is second to none.

    Oh and because it's China, I wouldn't be surprised if their mining groups end up being the ones who eventually get the contracts to extract rare earths elsewhere in the World. They'd only be following the example of Sinopec which has been tying up exclusive development contracts for oil and gas in the Middle East and Central Asia.

  12. Sean Timarco Baggaley
    Stop

    @Robert Carnegie:

    CRTs aren't just for TVs.

  13. Lars Silver badge
    Unhappy

    Well

    China is doing what the "west" has been doing since the beginning.

    Hardly surprising. Surprising perhaps that the "west" has its pants down screwing around with all sort of short money gain and no long time planning.

  14. MinionZero
    Unhappy

    Here we go again...

    ... another country playing the corner the market chess move.

    This looks like a repeat of the 20th century oil industry. Oil prices have always acted like effectively a tax on all businesses that needed oil/fuel etc. Now the new 21st century industry tax so to speak, is doing the same trick with rare earth elements, to allow one country to control and corner the market and so force cash out of other countries. :(

    On a plus point, I wonder if this will fuel a growth in making recycling of old electronics more profitable. That would be some good to come out of this. :)

  15. LinkOfHyrule
    Thumb Up

    Another Thumbs up

    'Tis a subject that I know nothing about so I can't say if it's top notch stuff or not, but it was well written!

    As for those moaning about the lack of humour, re-read the article aloud and whenever the words "rare earths" come up, replace them in an over the top voice as "Mystical and magical rare earths!!!!"

  16. Colin Critch
    Thumb Up

    Should I keep all these old hard disks then

    Great Article!

    Will this mean that we will be recovering more rare earth stuff from discarded ipods, window phones and old hard disks?

    1. Anonymous Coward
      Thumb Up

      Recycling

      That's actually a good point.

      How recyclable are these materials and could it become cost-effective to do so?

  17. Sarah Bee (Written by Reg staff)

    Re: Excellent article!

    What do you mean, 'recently'? We have a long and proud tradition of tabloid garbage.

    Seriously, though, it's always been a broad church here and will continue to be.

  18. Anonymous Coward
    Unhappy

    OIL

    Reminds me of the Middle East & Oil ....

  19. Version 1.0 Silver badge
    Thumb Up

    Excellent

    Good Article - this of course, is the reason that I come back to El Reg time and time again.

    One minor point - my recollection is that the RL02 drives in the PDP11's weighed considerably more than 20kgs... 5Mb of storage on 14 inches of rust aluminum ... you could almost see the bits with a naked eye.

  20. Ian Ferguson
    Thumb Up

    Great article

    Thanks Tim for writing it and thanks Reg for commissioning it. More like this from industry specialists plz.

  21. jai

    top article

    and very easily and interestingly explains the science bit so those of us without brains the size of small moons can understand.

  22. Robert Carnegie Silver badge

    Seriously

    What else are CRTs for - in the year 2010?

    Okay... maybe some places in the world are still buying CRTs. I still -use- a CRT widescreen TV and a couple of monitors.

    1. Steve Roper
      Boffin

      CRTs...

      Know what an oscilloscope is? Yes, we still use them, because this is one instance where an analogue readout hasn't been trumped by digital.

  23. Anonymous Coward
    Anonymous Coward

    Indeed

    A good article, I'll even click those pesky ads on this one.

  24. codemonkey
    Happy

    Good info

    Thanks for an interesting read. :) Even if i've no half clue as to what you're really on about, it's handy to know that somone has a handle on these things :) Cheers.

  25. Peter Kay

    Yet another thanks for a thought provoking article

    Well worth thinking about, although it's not so much of a surprise that the inventive little beasties that the human race are tend not to want to be dictated to by someone else..

  26. Mike Flugennock
    Thumb Up

    Great article, Tim!

    Bravo, Time! Here I am, nearly thirty-five years after graduating from high school, finally getting my head wrapped around the Rare Earth elements, their properties and importance in modern technology.

    That stuff went totally over my head back in junior-year Chemistry. After an entire year of Chemistry, I came out of it still knowing no more about Rare Earth other than it being the name of a really good band.

  27. Ed Deckard
    Stop

    OK, see, this isn't "cornering" rare earths...

    The Chinese have no need to monopolize a resource they've already got a lock on (at current prices) - this is an attempt at using their existing (effective) rare earth monopoly to create better-paid, skills-intensive jobs in high-tech manufacturing rather than getting stuck with the low-added-value stuff (like, uh, mining) while other guys do the really profitable jobs.

    This strategy of forcing your foreign clients to buy finished products instead of cheap raw material near the bottom of the industrial chain isn't exactly exclusive to the Chinese, either - Japan does it for such relatively pedestrian stuff as fancy steels.

    Will the strategy work?

    Maybe. As the author pointed out, people in other countries could start mining the stuff if the price made it worth their while; on the other hand, the Chinese could ensure they'd remain the most competitive by simply not raising the price of the raw stuff and providing a labor pool at significantly lower cost than your Western worker. Which, you know, is what they're famous for.

    The only things I can think of that would make this not work would be if a) capital costs for setting up a new factory in China outweighed the benefits or b) our lords and masters got around to slapping a reasonable import duty on Chinese products.

    (By the way, (b) just isn't going to happen, boys and girls).

    The author is also right that we don't know how tech is going to evolve. Rare-earth stuff could be completely obsolete five years down the line - or the stuff could be 10 times more valuable as new products that use it evolve. What won't change is that highly-skilled jobs will be more valuable than low-skilled jobs, and the Chinese are doing their best to ensure they get their fair share of the skilled ones. I just wish we could say the same.

  28. asdf
    FAIL

    yeah for Pocahontas I mean Avatar

    As someone mention earlier haven't I seen this movie 10+ years ago?

    http://failblog.org/2010/01/10/avatar-plot-fail/

  29. John Savard Silver badge

    Lighter Flints

    I remember reading that the flints used in cigarette lighters are made of "misch metal". This is what you get when you process rare earth ore into metal without bothering to do the difficult step of separating the different rare earth elements.

    Does all our misch metal also come from Chinese mines, for the same environmental reasons? If not, maybe the real issue is that the difficult process of separating the elements is more cheaply done in China, or that the separation, not the mining, has the environmental problems.

  30. Trevor Pott o_O Gold badge

    Rare earths

    Heh. My girlfriend's dad is the geologist in charge of a new mine opening up here in Canada. Tantalum, rare earths, etc.

    Please China...restrict exports more! Pretty please?

  31. Tim Worstal

    Sorta

    "Does all our misch metal also come from Chinese mines, for the same environmental reasons? If not, maybe the real issue is that the difficult process of separating the elements is more cheaply done in China, or that the separation, not the mining, has the environmental problems."

    You're right about mischmetal. Mostly from the same source and comes in cobble plate (looks a bit like a bar of Dairy Milk actually).

    However, the extraction. Oddly, we all pay a premium for individual rare earths (whether oxides, other salts or metals) which are processed outside China rather than inside. May all be made from the same ore but purities are usually better (and perhaps more importantly, more consistent) with ores processed outside rather than inside China.

    They're getting better at it, certainly, but back a decade we would usually compare (and price equivalently) a so called 99.9% Chinese product with a 99.0% processed elsewhere, a 99.99% from China with a 99.9% etc (and of course, the more purified the more expensive in general).

    Somebody like Magnaquench, one of the major producers of the NdFeB magnets that the windmills use for example, tends to buy in mixed rare earths from China (ie, the ore very simply treated) and then do all of the separation and processing themselves, right from separating the Nd from the others through to making the metal and then the magnets.

  32. Tim Worstal
    Jobs Horns

    Well, yes

    "On a plus point, I wonder if this will fuel a growth in making recycling of old electronics more profitable."

    Quite.

    "One minor point - my recollection is that the RL02 drives in the PDP11's weighed considerably more than 20kgs"

    Apologies, it's a few years since I bought any for the scrap metal value. If you should happen to know of any warehouses full of them just waiting to be exploited do let me know.....

    As to CRTs and phospohors. Yes, but don't forget that compact fluorescent light bulbs also rely upon rare earth phosphors. Terbium I think is the major one.....and halogens rely upon scandium.

  33. JT13
    Thumb Up

    Excellent!

    Bravo! Excellent article. Even some of the comments have merit.

  34. Anonymous Coward
    Anonymous Coward

    Good article!

    a rare treat from The Register.

  35. Anonymous Coward
    Big Brother

    Aluminium making process?

    "I spent a considerable chunk of change checking whether they could be extracted from the waste of the aluminium-making process..."

    So, instead of selling said waste to water authorities as "Fluoride" (since it's so toxic it can't be disposed of anywhere) it might be put to good use. How will the global elite thin our population now?

  36. Anonymous Coward
    Thumb Up

    Thanks.

    Nice article. Interesting, informative and at least seems reasonably objective (for the Reg). Only criticism is the apparent discounting of environmental concerns. Ca is a world leader in env policy. They are still way behind the curve in terms of what needs to be done, but time and again they are proven to take the right approach and others follow. If a rare earth mine is struggling to get an env permit there, it is because it isn't a clean business. But v little of the mining business is in any way 'ethical'. From mountaintop removal to the tar-sands stripmines, to cyanide used to work with gold, arsenic in waste water and so on, the damage is massive and long-lasting. Perhaps the entire mining industry needs to clean up its act if it is to get permission outside China and LDCs. Would like to hear more about the by-products and collateral damage of the rare earth industry specifically. If every product we buy relies on it, then perhaps we should exactly what else our lust for gadgets does to the environment.

  37. Anonymous Coward
    Paris Hilton

    On the other hand ...

    Isn't it a case of China going to those countries narked off by the West or western governments with a bit of a grievance and saying "Hey dude don't worry. Here is a lot of dosh and an investment portfolio. Sign the dotted line an we haz all yoor minerererals?"

  38. Pablo

    Wait...

    I thought all manufacturing was done in China anyway.

  39. john41
    Thumb Up

    Really interesting article

    Well explained and lucidly written - thank you El Reg!

  40. Arthur 1

    Fantastic article

    Glad to see real writing on El Reg now and then. Major kudos.

    "But v little of the mining business is in any way 'ethical'. From mountaintop removal to the tar-sands stripmines, to cyanide used to work with gold, arsenic in waste water and so on, the damage is massive and long-lasting"

    Get better sources. Most of this anti-mining stuff is horrible FUD.

  41. JasGarnier

    False premise?

    Likely all China is doing is exchanging their toxic dollars for useful stuff before the dollar implodes - which will happen unless the US gets it's budget sorted and they show no willingness to do that so far, despite Chinas warnings to them. No conspiracy to control metals needs to be invented. It's just sensible self-preservation from the worlds biggest dollar holder. If only our own economic leaders were as smart - or at least less stupid.

  42. Sam Therapy
    Thumb Up

    Excellent article!

    Thoroughly enjoyable and well written.

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