The Battle Over Rare Earth Metals | Hacker News Reader

The Battle Over Rare Earth Metals

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32 pointsdskhatri11 comments

Sigh, yet another article touting the free market and asking for large government subsidies at the same time.

It is rather contradictory -- in the beginning it says how rare earth metals are so incredibly valuable and only China has them, and in the end it says well California has a lot of them too but the big mine in California had to shut down because prices were too low. So give us money now.

If the metals are really so valuable, and if prices skyrocket, then the mine in California should reopen. It is possible that the Chinese were dumping the stuff below cost in order to close the California mine, but in that case we should address the issue with existing anti dumping legislation and not with subsidies.

At $205 a pound I don't see how these metals can be so rare.

Nevertheless, I suggest it would be wise for the USA to maintain its own stockpile of REs, much as we have a strategic petroleum reserve. While the dollar can still buy something, go buy a million ounces of Terbium and put it on an empty :-) shelf in Fort Knox. That may drive the price up enough to stimulate domestic production. Even if not, it would provide a cushion against the day China embargoes exports. There's a lag between (say) the time you reopen the California mine and fabricated metals are created; the strategic reserve would be used during that interval.

The point behind stockpiling is not to raise the price. I don't see this as a subsidy any more than I see education funding as a subsidy. The USA is trying to ensure an adequate future supply: metals in the one case and capable workers in another.

This is not to imply there's an equivalence between people and essential materials. The obligation to children today is clearly greater than the obligation to have materials tomorrow. But you really should have both.

BTW I meant "the free market".

Sadly, no.

The first point: this is a necessary input to many manufacturing processes on which the US relies. At this point, China has pricing and volume control over these resources. This is, and should be, a matter of some concern.

Second -- did you even bother to read the article? It sounds like China -- and let's not kid ourselves, every large Chinese corporation is an extension of the government and controlled by the government -- seems to have been selling such ores below cost, possibly as a strategic move to end US production. While we could certainly restart production, there are immense lead times to such things.

Finally, given the evident pricing volatility, this could well be a place where private investment fails to produce the the socially optimal outcome.

Here's a presentation to Congress by Molycorp, the company referenced in the article as the owner of the Californian mine (the largest rare-earth metal mine outside China): http://www.molycorp.com/pdf/MMCEMARCH09.pdf

Two observations from the presentation:

a) it is an interesting example of how to lobby for government funding, and

b) looking at the hybrid vehicle supply chain figure, it is startling how dependent the future of clean energy is on magnets which are made from rare-earth metals: magnets play a big role conversion of mechanical energy to electrical energy - wind, hydro, wave turbines require magnets, and vice versa (permanent magnet motors for hybrids, electric vehicles etc.)

The article makes note that rare earth metals have a huge application in green energy, and that 95% of the world's rare metals are in China. It's ironic that, of all countries, China would have a monopoly on natural resources that can help reduce pollution. Especially after the recent events at the Copenhagen climate summit. I hope that altruism can prevail over selfishness.

It's not ironic, it's a blessing. What better place for rare earth metals that help reduce pollution than in the most populated place and next to the other one.

And referring to the altruism quote, do you really think if those rare earth metals were in the u.s. they'd be shared with China?

Copenhagen was a joke from the get go. It's all about powerful compan... I mean countries taking more resources from poor countries, restricting their people's desire to grow and live a good life while putting few restrictions -- and none that would be followed -- on those countries that have had good lives for decades already.

I wasn't saying that Copenhagen was an example of how the US is great and China is bad. But it seems that right now the US is more aligned (selfishly) with cutting pollution then China is. It is directly against China's immediate interest to cut pollution. If roles were reversed the US would behave in a very similar fashion.

It's ironic because, in all the world, I can't think of a place where cutting pollution is more against a countries best interest then in China.

China has the largest population in the world and would need to be many times more "green" then the US to make a positive impact. As it stands now, being green does not lend itself to fast economic growth. Any restriction on Chinese pollution would necessarily result in it's people suffering the consequences of slower growth.

I hope that altruism can prevail all around, but I have little faith that it will.

Actually, 95% of all REEs are not in China -- 95% of REE production is in China.

And the reason for this is that mining and processing REE causes a lot of pollution whose cleanup costs shut down mines elsewhere in the world while in China it was all just dumped to the nearest river.

The NYTimes piece linked to in this article is a shorter read, although it focuses on the environmental impact of mining the rare-earth metals :

http://www.nytimes.com/2009/12/26/business/global/26rare.htm...

There are a number of other metals that might not technically be 'rare earth metals' but they fall into the same category. Very strategic and rarely found in mineable deposits. I'm thinking specifically of gallium and indium both of which are used in solar panels. Indium is also an important component in flat panel displays.

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