Rare earths get rarer

8/8/2011 2:42 PM EDT

These shortages will create short term pain but will force poeple to use more widely available materials in the future so I am convinced we will recover from this problem...Kris

8/8/2011 3:16 PM EDT

As the increase in demand and hike in price, the potential profit is like higher. By supply and demand model, there will be more suppliers in the future. Whether the price will go down as the model describes is another story. I agree with Iniewski, we will recover from this problem until we hit the real wall, a real shortage of supply.

8/8/2011 4:04 PM EDT

The irony about rare earths is that they are not really that rare (n the Earth's crust)), but rather that there are just not very many mines open. As more mines do open (outside China) the problem will also be mitigated by alternative materials, like the nitirdes mentions here, which can be synthesized in the lab without the need for any mining at all. In the short term, however, China will probably convince many manufacturers to move operations there.

8/8/2011 4:10 PM EDT

Good point Colin...this might be ultimately a plot to force many corporations to open operations in China...Kris

8/8/2011 4:28 PM EDT

Back in 1886, Hyacinth Secretan and the Copper Syndicate tried to corner the market on copper, all the rage at the dawn of electricity. In the end, all he did was encourage switching to other materials, and make the reclaimation of copper profitable -- at which point the market collapsed and his syndicate was sitting on more copper than it could pay for. I suspect that the same is in the offing for the Peoples Republic of China. Ironic if it leads to the revolution that finally overthrows the provably defunct centrally planned economy.

8/8/2011 5:23 PM EDT

When it comes to phosphors needed in lighting, I may suggest that a better way to create white light, at least for LEDs, is to mix the three primary colors. You get a more useful white light, more easily adjustable, could even be made user adjustable, and no need for any phosphors.

Of course, it goes without saying, any reliance on an individual country for a needed raw material will lead to artificial price hikes and shortages. It's entirely up to the rest of us to mitigate the problem, I think.

8/8/2011 6:47 PM EDT

America plays Monopoly, China plays chess.

8/8/2011 7:15 PM EDT

This is no new news. China has been flexing its rare-earth bully card for years. What is a greater concern is why the US was so willing to sell out its domestic production for a song, and then complain that China was hording.

8/8/2011 10:52 PM EDT

Does it surprise anyone, that once the Chinese have acquired a supply monopoly (under-cutting prices, so other rare-earth suppliers shut down), they now capitalise on it to boost their domestic phosphor, LED and fluorescent manufacturing industry?!

It has been obvious to me for years that China's long-term plan was to become the world's manufacturer by price cutting, than later milk that dependence for profit and influence. Now no-one can afford to anger China.

8/8/2011 11:37 PM EDT

Let is be and it will force us to recycle even the rarest things on earth. That is not a bad thing to happen

8/9/2011 10:18 AM EDT

Recycling is very good in principle...but how efficient is the system of rare metal recovery considering that they are usually used in small quantities on per unit basis? anyone attempting to do so? Kris

8/9/2011 12:54 PM EDT

When the alternate suppliers are just about to get their rare earth operations going China will remove restrictions on exports and the price will go down again and the new operations outside China will again go out of business.

Smart businessmen. Would you do it any other way?

8/9/2011 1:00 PM EDT

I agree @Nick1000...regardless how you feel about this situation (see some post above) you have to admit that China is exploiting this game effectively...apparently the system of state controlled economy can have its advantages over free markets...Kris

8/9/2011 1:12 PM EDT

US has tons of mines that have been closed for a number of reasons, not the least being EPA mandated. if you look up rare earths on Wiki, you see that the US was the largest producer to the mid 80's. China can cause short term problems but in the long term, the US has alternatives.

8/9/2011 1:24 PM EDT

There can be no technical spolution to Chinese manipulation / restriction of REM supply. Any new technology developed within the US aor the West will be promptly siphoned off to China by our own Corp.s who are in the bed w/ China.

Over the last 3 decades we have created a Frankensteins' MONSTER and that is CHINA. The rewards of Outsourcing to China has been totally asymmetric. The common consumer in the West has gotten at most a 10 % savings at Wal Mart but this has come at the expense of 10 % unemployment and collateral costs to the general public Govt.s at least 3x of Trade Deficit w/ China and its growing power and resource consumption.

Only Wall St. and large investors have benefited from China's growth at the expense of the economies of the US, Japan and the developed countries of Europe. They have

1. outsourced most manufacturing to China, invested in China,
2. transferred to China manufacturing and other technologies developed within the US at Govt. and taxpayer expense,
3. had the best US universities open their doors to Chinese Grad students who have infiltrated US industries and those who return home take back a few hard disks worth of US know how and diminsih US compettiveness

The net cost to US econmy from trading with China has been a Trade Deficit of US $ 300 billion per year but when you add to it the cost of unemeployment here, reduced tax base. higher oil & raw material prices, siphoning off of US know how by US Corp.s, China's own Cyber crimes & IP theft, larger US defense expenditure etc., Chinese influence on US investors and therefore politicians it is at least 3X of the Trade Deficit.

So over the last 20 years the US public has lost to China at least US $ 15 trillion, a no. in excess of the current US deficit o $ 14 trillion. Compared to that the $2 trillion or so that the US Corp..s and Hedge Funds have accumulated from China Trade is peanuts .

8/9/2011 6:00 PM EDT

Hey, folks! Phosphors for LEDs and fluorescent lighting doesn't account for all of rare earth demand. There are a variety of technology-intensive uses for rare earths. Rare earth magnets, for example, are important in automobiles, microwave technologies, and elsewhere.

8/10/2011 10:41 AM EDT

This all seems like much ado about nothing. Agreed that China is now on an upward path and using any tools it can get to dominate world trade. This does sound a little familiar.
However, as was briefly mentioned in the comments, there are risks in so doing that generally shift the playing field. In the case of phosphors, there are nitrides and silicates, which might have been left undeveloped had greed not intervened. In the case of rare earth magnets, the impetus has been re-established for use of switch reluctance motors (to replace BLDC in many applications), III-V semiconductor direct oscillators and amplifiers (to replace magnetrons and similar amplifier/oscillator schemes), and others. Necessity is the mother of invention, and a need is often established by shortages. So lets spend productive time schemeing and implementing inventive solutions, and avoid wasted time whining when the easy solution is "restricted".

8/10/2011 10:48 AM EDT

There's nothing rare here...You are l00% correct here..."It's all about short term profits."

8/11/2011 3:17 AM EDT

Very few Businesses make it to 100. Why is that ?
Short Term,does that = short sighted, and POOR planning for the future!

How many companies have made it to 100 ? In the world I wonder if they are really slim pickens.

8/11/2011 4:52 PM EDT

Except, Chipmonk, we do not have a centrally planned economy. That's the main point in all of this. Unless you want the government to get involved in dealings between businesses too, or unless you want the government to fine Walmart for every Chinese-made product they stock (would come close to emptying their stores), or unless you want the govt to throw every consumer in jail for buying Chinese-made products, there's not much that the govt can or would do.

Individuals seem perfectly happy with this state of affairs. Else, they would change their own buying habits.

There's no doubt in my mind that open trade with other countries tends to reign in our own standard of living, while increasing that of poorer countries. Reigning in our standard of living is the unintended consequence of US consumers always "looking for the best deal." No sense pointing the finger at anyone else, ESPECIALLY not at China.

8/11/2011 7:34 PM EDT

Hi Bert,

The USA is a centrally planned economy -- that is of the whole point of environmental laws. Environmental laws have almost nothing to do with the environment but are instead all about central planning. It's how the government rewards political donors. Try building anything in the Silicon Valley without a political connection - it's harder to do here than in China. Worse, try cutting down a tree on your property that you planted a few years back in the bay area and you'll learn a few things about central planning. Ever wonder why our economy performs just like every centrally planned economies. A massive amount of the fed stimulus and bailouts were central planning.