The last time China tried to throw its weight around in the rare earths market it all rather backfired. As I predicted it would at the time in fact:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] China’s Tried This Before Of CourseA reasonable conclusion therefore would be that China’s not going to try that again.
You know, maybe?
However, if it does all kick off then do understand the truly basic point here. Don’t go and buy rare earths. Last time around a bunch of spivs started selling them fraudulently as suitable retail investments. I’ve been offering expert evidence in a number of trials over the past few years and I’m not aware of one that hasn’t ended in convictions as yet….
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Rare Earths may not be rare, but there still remains the cost of ramping up alternative sources. It would be instructive to know:
1 - how easy it would be for other supply chains to supply the full deficit
2 - what the estimated increased cost would be
3 - what the downstream impact would be on finished goods...
Most manufacturing using rare earths is inside China anyway. Outside use is maybe 40,000 tonnes a year. Two big mine's worth and two processing plants. And we've one of each already.
Call it A $ billion to get a second processing pant up and running. Cheaper if government tells the enviros to bugger off and not delay planning.
Assume there's the political will, downstream effect is nothing.
If we assume actual disaster/war -style reactions, it's an entirely trivial problem.
Thank you for that informative and rapid response!
Factoring in modern thinking, however, I fear that:
1 - the media will portray this as an economic and environmental disaster
2 - the Greens will make a major effort to stop it
3 - the mining industry will fall in with these demands
and the result will be that we will keep buying from China at vastly increased prices which will fund a complete Chinese monopoly...
Well, yes, I take the point. And share the general view. Except in this particular case- because there's real private money involved - it didn't work out that way only 9 years ago.
It is probably impossible to fight a social madness. Sometimes I wonder if we should commission a second book in the series following Charlie Mackay's excellent book on Popular Delusions....
Up to a point. No doubt lower environmental standards in China allow them to produce many things more cheaply than would be possible in the West (although it's probably a rounding error in comparison to labour rates etc.) But if they tried to seriously screw us over on rare earth pricing, I think there'd soon be a reaction that would override the best efforts of the Greens (who can always be told that production in the West would cause less environmental damage, which is almost certainly true).
I have not found that Environmentalists actually follow or support environmental arguments. They follow their leaders, who are after absolute power, and are quite happy to argue that black is white so long as they can get it...
SJWs are happy to argue black is white as long as it doesn't directly affect them personally. Wait until they can't get earbuds for their iPhones ...
I suspect that it never will affect them personally. They don't seem to have any difficulty with flying everywhere while telling the proles to cut back on their annual holiday to Spain.
So I suspect that we will find that special provision will be made for iPhones 'for environmental purposes'. Do you recall the 'special shops' in the Soviet Union for the privileged?
"...Normal shops in the Soviet Union had a huge problem of goods supply and the goods presented were strongly uniform. And it was quite common to queue for a long time to buy the most basic things.
The beryozkas or currency stores, however, overflew with a wide variety of quality products, often from abroad, that had to be paid with dollars or special coupons. An example of such store was the Государственный универсальный магазин [Gosudarstvenny universalny magasin] or State universal store, now called Главный универсальный магазин [Glavny universalny magasin] or Main Universal Store on the Red Square in Moscow. Both the old and the contemporary names are abbreviated ГУМ [GUM].
The beryozkas were operated by government and exclusively meant for foreigners and their families, but Communist Party officials, high-ranking bureaucrats and other privileged Russians having foreign currency or special coupons could enter too. Writers like Bulgakov, who sometimes received foreign currency for the publication of their work abroad, were even bound under an obligation to spend their currency in the Torgsin and beryozka stores..."
https://www.masterandmargarita.eu/en/09context/berjozka.html