ARPN readers know that one of the core tenets of the Resource Wars thesis is that the market for strategic and critical metals is never immune to government interventions. Witness today’s Bloomberg report: “China Said to Add 10,000 Tons to Rare Earths Stockpiles.”
“China may stockpile more medium-to-heavy rare earths this year such as terbium, lutetium and yttrium, which are used in applications ranging from lasers to nuclear reactors, said China Merchants’ Peng [Bo].
“China’s own industrial sector, in its rudimentary form, isn’t yet able to make full use of the country’s output, Peng said. The government is likely to hoard these elements for future use, she said.
“‘The mining and refining industry, hampered by a drastic slump in prices, sees the purchase as a life-saver,’ said Chen Huan, an analyst at Beijing Antaike Information Development Co. ‘Prices the government agreed to pay are much higher than the prevailing market price.’”
In March, the World Trade Organization ruled in favor of the U.S., Japan and EU’s contention that China’s Rare Earths export quotas were not justified. As a source within one of China’s state-owned enterprises told Bloomberg:
“‘China is facing imminent pressure to abolish the export quota, so stockpiling is part of the policy reaction to help prop up prices and keep more of the resources at home for future use.’”
As a follow-on, ARPN will share any U.S. Government reaction to this move – if in fact there is a reaction.