Chinese giant halts rare earth shipments to hike prices

China's largest rare-earth producer, the state-owned Baotou Iron and Steel Group, is stopping rare earth shipments for a month in an attempt to drive up prices. There are 17 rare earth elements which - despite their label - are actually quite common in the Earth's crust until you want to extract them: you'll find they're so …

[peter_dtm]

oh goody

look for further increases in your gas & 'lecky bills as the cost of those useless wind turbines goes up as a result of the large rare earth magnets they all come equiped with.

A rise in the cost of a wind turbine will result in the rise in the subsidies we pay to have the useless machines planted in the country side.

More fuel poverty; as useless windturbines become more expensive

NB Usless is used in its engineering sense : not fit for purpose; or : does not work as claimed

[T J]

Er, Sarcasm?

Or did you change your medication recently?

[pompurin]

I thought the Japanese had found 'rare' earths in abundance at the bottom of the sea? I find it hard to believe that the rest of the world could be so naive in allowing one country (with a questionable reputation) to control 98% of the supply chain.

[Anonymous Coward]

Found it? Yes

Figured out how to economically mine it? No.

It isn't like oil where you stick a straw in and suck unfortunately.

[Goat Jam]

A variation of "The Tragedy Of The Commons"

What you have is a bunch of companies trying to produce products for the smallest possible price in an effort to keep their respecticve CEO bonus's at record levels.

To do this they cut costs in every manner possible, and this includes the purchasing of raw materials.

Then you have a large supplier of those raw materials who comes in and undercuts all the other suppliers, causing all the companies using the raw material to beat a path to their door in order to get access to the material at the cheapest possible price.

Because nobody is buying from any of the other suppliers they all go out of business.

Of course now that China has a monopoly they can go ahead and jack prices up.

Naive? Not really. It's more about companies being focused entirely on the short term status of their balance sheets, which is a disease that has infected almost the entire Western world these days.

Footnote;

Russia tried the exact same thing only in the international shipping market in the 80's. They almost succeeded in gaining a worldwide monopoly back then before the Berlin wall fell.

[tmTM]

Naive:(of a person or action) Showing a lack of experience, wisdom, or judgment.

Buying materials which by their definition are 'rare' from one source (with a dodgy reputation) allowing that one source to be a wolrdwide monopoly.

[Eduard Coli]

Silly Communists

The PRC is a major rare earth refiner because the process produces a lot of hazardous waste. This as we all know is expensive to dispose of properly in the West but in China it is dumped out the window, dumped into the local water supply, taken home in workers pockets, whatever is cheapest.

The party would like all of the capitalists dumping money into the PRC to stump up and give them their technology, er. move their production facilities in country. The PLA needs better night vision, communications, etc.

[metaspective]

Capitalist or communist?

Does anyone know if there's a Chinese version of Monopoly?

[Yag]

there is one...

But it's a single player game : the state.

[Destroy All Monsters]

Good for them

Now that "the West" has managed to throw a fat hook into the Lybian oil reserves, throwing out the Chinese, one would expect some tit-for-tat.

[Nigel R]

contracts?

So this is a bit like the 'leccy companies that get you to switch to them by offering a low price then try to ramp it afterwards.

Aren't any of the customers of the Chinese supplier protected by a purchase contract with a delivery schedule?

[Steve Brooks]

So, standard capitalist monopoly practice from China, who woulda thunk it. Drop prices so low that it drives other competitors out of business, then as soon as they are gone and no one can compete on supply, push prices through the roof. And who said the chinese were communists!

[Anonymous Coward]

The Chinese do NOT have control over the important part..

Sigh, I better make this into a template. Time again for a lesson in rare earth.

There are two classes of rare earth: light and (unsurprisingly) heavy. The materials that you find in lithium batteries and so on are HEAVY rare earth. The Chinese control > 90% of the LIGHT rare earth market - but have very little influence on the HEAVY rare earth.

Thus, no need to panic..

[Nigel 11]

Wrong!

In so many ways it's hard to know where to start.

Lithium Batteries contain (surprise) Lithium, not rare earths.

Batteries are electrochemical devices. The electrochemistry of all the Rare Earth elements is almost identical, which is why it took so long for chemists to work out how many such elements there are. NiMH batteries can utilize any rare earth or mixture thereof.

The physical-electronic properties of the rare earths are as spectacularly diverse as their chemistries are similar. For a good red phosphor, only Europium will do. For a magnet, you need Neodymium (or Samarium for a weaker but higher-temperature magnet). Other rare earth elements have other specialist uses.

[T J]

Hope this Backfires

Hope this Backfires on them and stimulates recycling of rare earths to boom.

[Andy Fletcher]

Doesn't this just mean what was no longer economically viable to do in the west, becomes economically viable again. Like how it's now apparently viable for the UK to be mining it's own coal. I'm not sure I see a downside with anything that reduces reliance on imports and increases employment here.

[Nigel 11]

Using their monopoly while they can

They know that the high price of REEs has stimulated the development of many new mines outside China. Most are still a couple of years from production. At that time the Chinese monopoly will be broken, and the price of REEs will plummet like that of many other commodities that were in short supply in the past.

The Chinese may then switch to trying to flood the market to depress prices and put the newcomers out of business. Methinks that would fail (and if they are smart they won't try). My reasoning is that there must be a lot of latent demand for REEs at a lower price. An IT example is the lead-acid battery in UPSs, with an annoying 3-ish year life. If NiMH batteries didn't cost 3x more, they'd use NiMH instead for an effective-infinite UPS battery life (and lighter weight as well).

Rare earths - despite the name - aren't particularly rare. It's just that until the 21st century, there wasn't much demand for them, and the Chinese built themselves a position as near-monopoly supplier (based on foresight, cheap labour, and a willingness to inflict severe environmental damage in the vicinity of their mines which wouldn't be allowed anywhere in the West).

[earl grey]

Lower prices for Chinese-mined rare earths

And a total disregard for human life and the environment. As already mentioned, they don't have a US-style EPA or OSHA to contend with; and i'm guessing their environmentalist has his hands full with their other messes; so this will continue for a while until the other countries put their mines into production and suddenly the prices will decrease and the availability will increase.

[mhenriday]

Rational monopoly capitalists

«Until then the Chinese can behave like any rational monopoly capitalist would and stick it to its customers with raised prices.» Do hope that the Chinese don't take their cue from those monopoly capitalists that arranged to bomb the shit out of a country in order to see to it that the major part of its oil production flows to France (35 %) and the UK, rather than to China according to the contracts signed with the previous regime. But of course, in polite society, that sort of manoeuvring is not referred to as the fruits of monopoly capitalism, but rather as «the responsibility to protect»....

Henri

[Yag]

Well actually, France went there...

...only for a live demonstration of the Rafale, as it was proposed for sale to Gaddhafi in 2007...

They had just overdone it, as usual :)

[Anonymous Coward]

China Market

Everybody pay close attention to this. Especially if you are in US Congress or business executive.

This is exactly why China cannot be allowed to get a foothold on the control of world markets; they cant be trusted to honor agreements with governments and corporations.

[Ed P]

There is an interesting side-effect of mining rare-earth elements - abundant thorium, nearly always found with them.

The Chinese are now putting a great deal of effort into liquid fluoride thorium reactors - LFTR - designs and expect to have them on-stream by 2020. They will then be self-sufficient in energy supplies for decades. The LFTR is a brilliantly simple, reliable and, most importantly, fail-safe reactor cycle, producing fewer "nasties" (long-lived isotopes) than PWRs, etc. The original concept goes back to the 1960s, when the emphasis was on nuclear weapons, so the LFTR was not developed - it does not produce plutonium.

The West needs to play catch-up ASAP, or China will soon control the world's energy supplies!