rare earths

For some time now, quiet talk in the corners of metals conferences has turned to the question of Chinese metals smuggling, with the rare earths as Exhibit A. How extensive is REE smuggling? Simon Moores of Industrial Minerals, writing from the Industrial Minerals Congress & Exhibition (IM21) in Budapest, Hungary reports that:

“Western consumers of rare earths are more reliant on illegal material than they may realise…. Vasili Nicoletopoulos, of Natural Resources GP, explained that smuggled rare earths account for 15% of light element supply to western consumers and up to 50% of heavy element output.”

Contrary to conventional assumptions that China’s command economy puts all control under the Politburo in Beijing, smuggling out of southern China — home to many of the ionic clay deposits that host the Heavy Rare Earths — is a serious concern. Paradoxically, efforts to rationalize rare earths production across China, coupled with tighter export controls, “incentivizes” smuggling. For rare earths or other critical metals, the tighter the formal control over the official market, the greater the reward – price-wise – for metals smuggled out and sold to waiting global buyers.

Once illicit metals are mainstreamed, the nature of global-sourcing and the geographic distribution of manufacturing value chains make it comparatively easy to fudge or otherwise ignore their provenance. (See the difficulties in policing DRC Congo’s “conflict metals.”) The economics for Chinese metals smugglers is a strong pull, too: no pesky government reporting with fees attached – of course, minus the graft one assumes is necessary to grease the exit of the metals from Chinese ports.

Then there’s the ultimate non-economic downside: serious time in a PRC prison for smugglers who get caught – or death at the hands of other smugglers who prefer to keep the illicit Rare Earths business to themselves. After all, there’s no limit to what people will do in a country where farmers get by on $800 USD GDP per capita while a single kilogram of Terbium fetches $4,000 USD.

That said, if, as Moores reports, as much as half of the world supply of Heavy Rare Earths owes its origins to the smuggling business, Beijing’s success in curtailing smuggling could cut global HREE supply in half — with little or no warning. Add that to the list of reasons it’s time for the U.S. to accelerate its own domestic development of these critical metals.

With the dust settling over the announcement of a new WTO case brought on by the U.S., Japan and the EU against China’s restrictive rare earths policies, American Resources expert Gareth Hatch has taken the time to dig (pun intended) a little deeper into the issue and its possible implications.

While many have talked about the case, few are actually familiar with the WTO’s mechanics. In his “initial analysis,” Hatch gives a detailed overview over the organization’s dispute process and how it would be applied in this case. Hatch further takes a look at various criticisms levied against the complainants, as well as China’s possible reactions, and outlines his view on possible outcomes of the dispute.

Read his full article “The WTO Rare Earths Trade Dispute: An Initial Analysis,” on the Technology Metals Research website. And, in case you’ve missed it, click here for American Resources principal Daniel McGroarty’s take.

Pennsylvania Senator Bob Casey (D) had a piece up on The Hill’s Congress Blog last week which highlighted China’s near-total rare earths supply monopoly and resulting challenges for our domestic industries. Among other things, it also called for increased domestic rare earths production. Writes Casey: While I hope to see quick action from China, we [...]

Dan McGroarty appeared on XM radio show PayneNation yesterday to discuss Rare Earths with Fox News contributor Charles Payne. Listen below.

Over the past few days, the announcement that the U.S., EU and Japan have decided to file a WTO case against China over its restrictive rare earths policies has caused quite a stir. American Resources Policy Network principal Daniel McGroarty offers his perspective in a column for Forbes. Having previously expressed skepticism over the WTO [...]

American Resources Policy Network leader appeared on CNBC’s Squawkbox yesterday to discuss rare earths and critical metals. Among other things, he said: “If you look at President Obama’s goal…of moving more quickly to…renewable energy sources…you’ve already touched on the fact that [they] require rare earths. The better way…than trying to sue China to force them [...]

The Rare Earths sector was rocked last week by news of a deal in which Molycorp — the U.S. industry leader ramping up new operations at the old Mountain Pass (California) Mine — tabled a $1.2 billion offer for Toronto-based Neo Materials, which produces a range of Rare Earths powders used in permanent magnets and [...]

In his latest RealClear World column, American Resources principal Daniel McGroarty takes on the latest book in the “Jason Bourne series” – the “Bourne Dominion.” No, you’re not on the wrong blog – this is not a book club. The plot of the book actually involves a group of terrorists set on destroying the only [...]

While the United States pours money into foreign mineral imports, other countries are recognizing the value of self-sufficiency: Japan has drafted a bill requiring consumers to recycle used electronics containing rare earth and critical metals. The federally-sponsored move illustrates the priority Japanese officials are giving to mineral policy, a focus that contrasts sharply with the [...]

Inquiring Congressional minds want to know — or at least the Congressional mind belonging to Rep. Hank Johnson (D-Ga.), co-chair (with Colorado Rep. Mike Coffman) of the newly-formed Rare Earths Caucus. During Defense Secretary Leon Panetta’s House Armed testimony this week, Cong. Johnson seized the opportunity to ask where things stood with the Pentagon’s report [...]