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Thursday, October 21, 2010

Rare Earths and the not so Free Market

I wanted to call your attention to the growing controversy over export restrictions on rare earths from China.

I’ve been on about this topic for about 2 years and it seems that China has finally realized the political and economic clout that arises from being the sole supplier (or at least damn close) of vital minerals that keep the modern economy operating. China has over the last couple of years become increasingly reluctant to export rare earths and several other vital metals required for alloying high end specialty steel. In some cases this was just pure industrial self interest but more and more its starting to look like a political tool to punish other nations who offend them.

Here is just a sampling of what some of these vital elements facing embargo are used for

Lanthanum – a cracking agent used to increase refinery yields by up to 10%

Cerium – a catalyst used for pollution control and more efficient combustion

Neodymium- permanent magnets in wind mills and hybrid car’s brakes, computers, cell phones, cd players etc.

Europium- computer/TV screens and florescent lighting

Yttrium – fuel efficiency, microwave communication, lasers

Erbium- fibre optics

Dysprosium- smaller faster electronics

While not rare earths and not totally concentrated in China’s control, Indium and Gallium vital for Photovoltics could also be restricted tightening the external market and giving China another price edge. This is not just idle speculation but the logical extension of the existing trend since China is already defending both tariffs and limits on magnesium and manganese exports at the WTO to maintain their edge in steel alloy production.

It’s well known that our current government didn’t see a recession, a credit crisis or a 50 billion dollar deficit staring them right in face. They didn’t see that people cared about prorogation, the census, the gun registry and torture. They certainly didn’t see how playing chicken with the UAE would turn out anymore than they realized how their Conservative policies would tarnish Canada’s international standing. This Government has absolutely no credibility in forecasting the future and there is no reason to believe they will notice the coming threat of international industrial blackmail or take it seriously.

In fact this issue has being brewing for some time yet almost no one has been taking it seriously except the Green Party of Canada which passed a policy this year at convention calling for an audit of supply/demand for industrial minerals in Canada and the creation of a strategic reserve for “at risk” materials. It matches nicely with the strategic oil reserves we want and clearly shows that our long term vision is a hell of lot more focused on real issues and solutions than the day to day posturing we get in the HOC. This however is more than just a simple I told you so issue but one that will greatly impact our economy so partisanship aside I hope someone else also speaks up on this issue.

Canada is a very mineral rich country and there is no reason that we shouldn’t have a stable supply of minerals needed for modern technology, especially green power generation and pollution control. It might come down to building up reserves (as the GPC proposes) to ride out short term supply glitches or it may require bolder steps such as the nationalization of a vital resource but the fact is we cannot be reliant on a suppliers who don’t believe in the free market or international trade rules.

We are entering an era of resource depletion where water, energy, specific minerals and even food may be in short supply; surely we need a discussion on this issue.Recommend this Post


Offroad Artist said...

This is right on the money. Another angle on this, as I posted back a few days when China pulled this stunt on Japan, is how this incident translates out into the potash discussion. We see that China will take extreme trade action at the drop of a hat. We might also anticipate that BHP could easily be outbid by a Chinese buyer or even get bought themselves down the road. No possible good can come out of selling out potash.

nitroglycol said...

I've heard the prospect of a Chinese buyer outbidding BHP mentioned elsewhere too. This situation, as well as the rare earths, bears close watching.

Incidentally, the triflate salts of many rare earths are promising catalysts for valuable syntheses under much more environmentally benign conditions than the standard methods (for instance, in water rather than in organic solvents).

Sudbury Steve said...

Thanks for continuing to post about rare earth metals, and the need for a strategic reserve. We here in Sudbury understand the role that minerals play in society. The Green Party has a lot to offer those concerned about resource depletion, although we have a hard time getting the message out that this includes the depletion of minerals as well as fossil fuels, water, etc.

Keep up the great work!

DVD said...
This comment has been removed by a blog administrator.
DVD said...

Great Post GAB.

I have been talking to a few people about this but frankly it is very (Too)technical for most people. As a Chem Eng I generally follow how this can happen but do not understand how it has happened in this particular case. In other words, how have the Chinese cornered the market? You would think these elements would occur in more than one country in the world. Do we not have a good supply of these in Canada? We do have other massive natural and mineral resources.

Canadian silver bug/Green Assassin Brigade said...

DVD, there are deposits in other parts of the world but because the Chinese developed so much at once and used cheap labour to drive down the prices most other countries stopped mining for them.

Some mines are moth balled and could be reopened but such things take time and money.. Rare earth plants are big, costly endevors because of the low yeild per tonne. One Canadain outfit Avalon just projected that a plant for one of their potential mines could cost 360+ million and of course would take quite some time to build.

DVD said...

I am not an expert in this area but I thought that significant mineral deposits often happened in similar areas ... i.e. I remember taking a tour in Sudbury and getting the Comet landing story.

I would think that some of those byproducts could be further refined to get at these elements.

Either way obviously a big investment that has to be planned and prioritized.

GAB said...

beyond my competancy, I'd love to go back and take a geology degree but alas no time.

What do know is that different mineral formations are layed down differnt ways, magna bubles like the sudbury asteroid punture story, volcanoes, condensation of mineral rich vapor like in quartz veins, some things are deposited in mineral salts like lithium.
Others like indium are trace elements found in zinc deposits.

I don't know the particulars for rare earths but you don't get rich veins, its spread out quite thin requiring big operations, lots of equipment, caustic chemicals and energy,.

boyari2 said...

All I know for sure is that ignorance is a terrible abdication of responsibility and accountability:

And just in case you think that I am just full of hot air, I PROVIDE THE PROOF HERE.

I would love to hear from you.