"The West and Western manufacturers are paying a hefty price for their greed and stupidity"
Bolaji I agree with your assertion. Why would anyone blame China for tightening the price and supply of her mineral resources, The Chinese government is only protecting the interests of its people and the nation. At least China is not refusing access, is only restricting supply at a higher cost. So what's all the noise making for?
Kevin, You got it. The only dissention I have is on the issue of restriction on supply. China is restricting supply and has done this successfully so far because of two factors. One, it knows it will take time to restart alternate supply sources and, two, it knows the China rare earths price is still well below the foreign ones. Plus, as you noted, we are making the end products in China anyway so if Western mines are restarted we will have to add shipping costs to already expensive mining costs. So, what do we do? We complain to Congress and WTO and then we pay their price/continue to pay whatever they charge.
Wizzard-of-Rad-eee-ooo, Imagine if electricity could be stored and exported. You are right. We would be importing even this from China and we would be wailing if they shut off the spigot. Perhaps we are just crying wolf where there's none but lets all hope China remains our trading partner and abide by WTO rulings, otherwise there's a lot we get from them now that may vanish during an argument.
@Kevin: Good point about the steel industry and OPEC. I was also thinking of diamonds and De Beers. Anyone that controls a commodity (oil, diamonds) can control the production, export and price. The US arguably has oil reserves that we don't tap, or they are too expensive to tap. We also have sources of REEs, but they haven't been deemed as economically viable (read, too expensive). It is only when things start to get too expensive, or political pressure starts to get too intense, that the government reacts. The electronics industry has been rasing the alarm about REEs for awhile, but now we act? We were up in arms about oil prices, but as soon as gas crept down to $3-plus/gallon we forgot all about it. Like Wall Street, our needs are short-sighted and we do the same thing over and over again.
The US has strict and complex federal environmental laws, complex federal land use laws, complex federal labor laws, complex state, county and city laws, all of which change erratically and unpredictably in wording and enforcement, as well as a unionized work force. China has few laws that come from a single authority and workers that work and live almost as slaves.
So, any financially minded user of REEs will buy the cheaper materials from China. This means US mines will go out of business. Now that US mines are out of business hundreds of bureaucrats have nothing to do (great!) and tens of thousands of mine workers have no job (not so great!).
If we make the products in the US, you would add the cost of shipping to the cheap Chinese REEs, making them less attractive. But, as long as we make the products in China, locally procured REEs will probably always make more sense.
Being essentially the only supply of REEs, China can now set the price they wish, very much like OPEC sets the price they wish.
What to do? Pay that price and let US investors decide when the price has risen high enough to make resuming mining operations in the US financially viable.
I don't see a problem with China charging more for exported REEs, as long as they don't restrict supply (can't imagine why they would). After all, there are many countries with REEs and with a regulatory and employee protection environment somewhere between the US's and China's that will start mining if a profit can be made. If China restricts supply enough, the price will go up beyond the price they set and alternative supplies will be created even more quickly.
Shall we review the steel industry's recent history? The Japanese, with no iron on the island, made themselves the world supplier of steel and put the US steel industry in mothballs. Have we learned anything yet?
China itself is actually the biggest beneficiary of Wall St. and its short term policies. Thanks to Wall St hold on DC, the media and academia, for the last 25 years China has been playing the US for chumps and racking up a trade surplus of $ 350 billion per year since 1995 ( they import from the US only food grains & raw materials since Wall St. siphons off US technology to China for free ! ),
Its Wall St. demand for 20 % ROI or else that ran down the various established mines in Eagle Mountain & Sierra Nevada ( CA ) for REMs like Lithium, Yttrium and Neodimium and in the early 2000s sent the dismantled Beneficiation & Process equipment at scrap price to China.
China is now selectively applying environmental concerns and conserving its reserves to justify putting a hold on its production of REMs ( at Golmud using US equipment with ore mostly from the high-altitude dry lake beds of Tibet and XinKiang - forcibly occupied by China with phoney historical claims ).
Playing hardball is the only language that Neo-Imperialist China understands. If the US were to strategically target China and revive CoCOM controls ( done away with during Reagan's second term ) China will fold in 3 years.
But the paid FIFTH COLUMN-ists shilling for China within this country ( including on EBN Editorial blogs ) would do their darndest to prevent that.
Right On Bolaji. I've spent 20 years in the electric power industry serving oil-gas production and 20 years (yep still working) in SDR (software defined radio) in avionics and military.
My observations: 1. Changes in the Administration, Congress and political appointees to critical departments (energy, state, commerce) every 2-8 years, and the absense of consistent corporate tax rates (that don't expire) has resulted in shifting production of minerals and hydrocarbons offshore. 2. The lack of a national minerals and energy policy that is not politically driven (for 40 years) pushes corporations to 'cheaper' sources.
We can shift corn from a food source to making expensive ethonol, with gov't encouragment (subsidies), but we can't develop our own resources (decade by decade) involving minerals and petroleum.
There is about 3 days food in our stores and 2 weeks of energy in our pipelines. I'm thankful bulk electric power must be genreated the instant it is used: otherwise we would be importing that as well.
It takes decades to plan and execute domestic energy independence and a source of metals-minerals and I haven't seen anything to encouraging during the last 4.....
Barbara, We handed them the cards -- and then we whine because they won't share the way we prefer. It reminds me of a TV ad where this woman just had a breakthrough moment during which she realized she had been making a bad move for quite a while and then wondered what other "stupid" decisions she had taken in her life. What's China going to hammer us with next?
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.