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Comment by hristov | Hacker News Reader

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.

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BTW I meant "the free market".

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.

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.

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