Japan discovers large quantity of rare earth, hopes to break China’s chokehold on supply

[XiaoYaoZi]

Molycorp couldn't survive because China relaxed its export restrictions on rare earth resources, and Molycorp's cost of extraction is higher than China's. It's the same story with oil, where Saudi Arabia is flooding the market with oil to squeeze out the high-cost American fracking industry.

No one is going to cry about Molycorp. But China's ability to use rare earth metals as a weapon is checked by the threat of competition from the likes of Molycorp (or this new Japanese discovery).

It's just a common business war, China is the biggest producer and biggest consumer of rare earth in the world(the level of rare earth's consuming is 57% and escalating), so China has the pricing power of rare earth to hit competitors. This new Japanese discovery just is a little propaganda trick to leverage the price, it is unvaluable to exploit this undersea mine of rare earth unless the price is lifted by tens of times.

 

[Echo_419]

That's great but don't fish a kaiju man

 

[LeveragedBuyout]

It's just a common business war, China is the biggest producer and biggest consumer of rare earth in the world(the level of rare earth's consuming is 57% and escalating), so China has the pricing power of rare earth to hit competitors. This new Japanese discovery just is a little propaganda trick to leverage the price, it is valuable to exploit this mine of rare earth unless the price is lifted by tens of times.

That's what the Saudis said, until the US became the swing producer through its hydraulic fracturing innovation. China is faced with two choices: either continue to consume and export rare earths, or halt exports and reserve the rare earth consumption for itself only.

Besides violating WTO rules, the best China can hope to accomplish is a temporary disruption in the market, because there are several alternative sources available to develop. They are not developed right now because of the high costs, but there is no cost higher than non-availability, so the situation will change quickly if China cuts off exports.

Otherwise, I agree that this is simply competition in the marketplace. Or it would be, if rare earth mining companies were able to maximize profits by exporting to the highest payer (wherever they are in the world) instead of being used as a strategic weapon by the CCP to bolster other Chinese companies.

 

[kadamba-warrior]

Good news! Japan has just discovered a large amount of rare earth elements in the seabed around Minami-Tori-shima island. While this is a boon to the tech field and consumers alike, this news undoubtedly comes as a disappointment for China. Turns out, that near-monopoly on rare earth materials was short lived for everyone’s favorite communist state.

From televisions to airplanes, rare earth elements are required for most modern electronics. Unfortunately, rare earths aren’t distributed equally around the world. By the luck of the draw, China makes out like a bandit now that so many industries are in need of these elements. The US, EU, and Japan even battled with China last year in the World Trade Organization over China’s attempt at jacking up rare earth prices. Fortunately, Japan’s findings combined with increased mining activity in other countries are starting to ease China’s chokehold on the world’s supply.



Tokyo University’s Yasuhiro Kato assumed the finding was a mistake when he first saw the “astronomically high level of rare earth minerals” in the mud sample. That’s what makes this discovery noteworthy. Rare earth elements aren’t actually all that hard to find, but they’re usually found in very tiny amounts. Back in 2011, Japan found a large supply of rare earth elements under the Pacific Ocean, but in concentrations of about 2000 parts per million. However, this latest find is reportedly 20-to-30 times more concentrated than China‘s rare earth ore.

This deposit of rare earth is an estimated 6.8 million metric tons sitting a little over three and a half miles under the ocean. Japan is now tasked with finding an economical way of mining the ore. While the real results of this find are still years away, the threat of Japan taking over the rare earths market should be sufficient enough to keep China in check. Even with China estimating that it has less than a third of the world’s reserves of rare earth minerals, it controls over 90% of the market. With any luck, China’s lead will shrink significantly over the next few years.

Considering how important these elements are, relying on one country to supply the lion’s share is scary. Not only is competition good for keeping the price down, but having a single point of failure is incredibly dangerous. If something were to happen to China’s mining operations right now, we would be in dire straits. All eyes are now on Japan — waiting to see if it can pull this off.



@TaiShang @Peter C @Zsari @xunzi @Technogaianist @FairAndUnbiased @LeveragedBuyout



Japan discovers large quantity of rare earth, hopes to break China’s chokehold on supply | ExtremeTech

Awesome! Time to relaunch Japanese Electronics industry!

 

[XiaoYaoZi]

That's what the Saudis said, until the US became the swing producer through its hydraulic fracturing innovation. China is faced with two choices: either continue to consume and export rare earths, or halt exports and reserve the rare earth consumption for itself only.

Besides violating WTO rules, the best China can hope to accomplish is a temporary disruption in the market, because there are several alternative sources available to develop. They are not developed right now because of the high costs, but there is no cost higher than non-availability, so the situation will change quickly if China cuts off exports.

Otherwise, I agree that this is simply competition in the marketplace. Or it would be, if rare earth mining companies were able to maximize profits by exporting to the highest payer (wherever they are in the world) instead of being used as a strategic weapon by the CCP to bolster other Chinese companies.

It is a measure to game, no one expects it too much, just use it in need.

 

[Aepsilons]

It is a measure to game, no one expects it too much, just use it in need.

Too simplistic, friend. Please expound more on this theory , and give specific examples. Perhaps even data or graphs to support it. Otherwise, well you know. Heh.

 

[XiaoYaoZi]

Too simplistic, friend. Please expound more on this theory , and give specific examples. Perhaps even data or graphs to support it. Otherwise, well you know. Heh.

The volumes of rare earth China produce and consume both are larger than all the other countries do and will do in the world. For China a lower or higher price is just like moving the interest from left hand to right hand or vice versa. That is enough for all reasons.

 

[Aepsilons]

Besides violating WTO rules, the best China can hope to accomplish is a temporary disruption in the market, because there are several alternative sources available to develop. They are not developed right now because of the high costs, but there is no cost higher than non-availability, so the situation will change quickly if China cuts off exports.

I wonder what are some consequences that may be levied against her (China) for violating WTO rules? I'll have to do some research on the legal framework.

 

[Spectre]

I wonder what are some consequences that may be levied against her (China) for violating WTO rules? I'll have to do some research on the legal framework.

Best of Luck! Hint: WTO penalties are like a knife without blade.

 

[Jlaw]

That's what the Saudis said, until the US became the swing producer through its hydraulic fracturing innovation. China is faced with two choices: either continue to consume and export rare earths, or halt exports and reserve the rare earth consumption for itself only.

Besides violating WTO rules, the best China can hope to accomplish is a temporary disruption in the market, because there are several alternative sources available to develop. They are not developed right now because of the high costs, but there is no cost higher than non-availability, so the situation will change quickly if China cuts off exports.

Otherwise, I agree that this is simply competition in the marketplace. Or it would be, if rare earth mining companies were able to maximize profits by exporting to the highest payer (wherever they are in the world) instead of being used as a strategic weapon by the CCP to bolster other Chinese companies.

Strict environmental regulations will stop US and other developed nations to extract rare earth metals.

 

[LeveragedBuyout]

I wonder what are some consequences that may be levied against her (China) for violating WTO rules? I'll have to do some research on the legal framework.

There is a long dispute settlement process. If that doesn't work, then:

WTO | Disputes - Dispute Settlement CBT - The process - Stages in a typical WTO dispute settlement case - Countermeasures by the prevailing Member (suspension of obligations) - Page 1

If, within 20 days after the expiry of the reasonable period of time, the parties have not agreed on satisfactory compensation, the complainant may ask the DSB for permission to impose trade sanctions against the respondent that has failed to implement. Technically, this is called “suspending concessions or other obligations under the covered agreements” (Article 22.2 of the DSU).

Concessions are, for example, tariff reduction commitments which (WTO) Members have made in multilateral trade negotiations and are bound under Article II of GATT 1994. These bound concessions are just one form of WTO obligations. “Obligations” is the generic term in Article 22 (concessions or other obligations) used in this Guide for the sake of brevity (even though the most typical form practised so far is the suspension of concessions through the imposition of tariff surcharges). Suspending WTO obligations in relation to another Member requires a previous authorization of the DSB. The complainant is thus allowed to impose countermeasures that would otherwise be inconsistent with the WTO Agreement, in response to a violation or to non-violation nullification or impairment. This is informally also called “retaliation” or “sanctions”. Such suspension of obligations takes place on a discriminatory basis only against the Member that failed to implement.

In short: a trade war. And which country is most dependent on trade (exports) these days?

Strict environmental regulations will stop US and other developed nations to extract rare earth metals.

Indeed, that's why the costs of extraction in the US are higher, which relates back to my first point: it is the environmental lobby that is holding back American extraction of rare earth metals, not the lack of availability.

 

[Aepsilons]

In short: a trade war. And which country is most dependent on trade (exports) these days?

Now i see the importance of TPP, long term-wise.

 

[Armstrong]

Now i see the importance of TPP, long term-wise.

You just don't see the importance of communicating with your Pakistani brother !

No reply to any of my mentions !

 

[Aepsilons]

You just don't see the importance of communicating with your Pakistani brother !

No reply to any of my mentions !

Sup buddy! I didn't get any notifications!

 

[TheTruth]

Japan is now tasked with finding an economical way of mining the ore.

That is the clincher, eh?