Political & Elections

Canuckguy · Veteran Member

RE: China Rare Earth Market Corner Redux

BigG · Guru

Surely the "magic of the marketplace" is a gonna smite them for their perdify!!!

Yah Boy!

And space unicorns will swoop down and fix our economic woes as soon as Republicans cut taxes to encourage even more investment...in China.

The surest way to win a war is not to let the opponet know there is one.

The Chinese have been greatly aided by the general cluelessness of US leadership, Democratic and Republican.

Canuckguy · Veteran Member

Looks like the screw is being tighten...

http://www.independent.co.uk/environment/rareearth-metal-prices-spike-as-china-stockpiles-supplies-2300303.html

US and Japan urged China not to use the elements as a trade weapon?

You must be kidding me, right?

BigG · Guru

The stuff (actually about a dozen different "stuffs") recycles readily. "Rare earths" is a misnomer. The various commercially important elements of the rare earth group are fairly common. The problem is extraction technology and radioactive waste from non-rare earth fractions of the ores.

The "installed base" needs to grow to meet demands. We are at least decades and maybe forever away from having mined enough for recycling to meet needs.

I am hoping the WSJ is excessively pessimistic with their ten year projection for new capacity to come on-line. The effectiveness of the Chinese strategy hinges on how labile capital really is. How fast can cash morph into mines and extraction facilities?
In a free market with no barriers to market entry, either temporal or technical, a "corner" could not exist. Unfortunately we have a real market that is suspectible to manipulation by an entity whose goal isn't profit but nation building.

The "corner" was originally established by cutting prices to force competitors to give up. Then, when China was the sole source, they jacked up prices. A government can pursue this sort of strategy for years or even decades. Private business needs a more immediate payout. It is a masterly example of a government expoliting or utilizing its long time horizon compared to private business to good effect, for it.

Since China can again prey on other producers by cutting price, many companies are reluctant to risk capital in competition with a government.

There is legislation pending in Congress to address various issues related to rare earth supply. Hopefully our Congress is smart enough to draft and pass effective legislation....but between the "free market" conservatives and the "never give business a break" liberals, I expect we are manipulated with a small hand tool, phillips or slot.

-- Edited by BigG on Sunday 13th of February 2011 08:14:15 PM

-- Edited by BigG on Sunday 13th of February 2011 08:20:02 PM

Canuckguy · Veteran Member

BigG wrote:

China's ambitions extend far, far beyond the South China Sea!

I am certain her ambitions extend beyond the South China Sea, and her small steps in the direction of establishing a blue water navy tells me as much. Some of my friends thought this is simply a toy for grown-ups who can afford it. I don't think so anymore. Attempting to protect and even to control the sea lanes for her great merchant fleets is the real goal.

This is a historical departure for China. Admiral Zheng He may have traveled beyond the Cape of Good Hope, but the inward looking empire soon lost interest and burned the great ships. This is really strange from a Western perspective. Why not exploit and conquer the known world when there is no opposition?

Maybe, like Britain before her, she will acquire an empire "in an absence of mind". LOL. First thing first though, control Taiwan to ensure South China Sea can not be blockaded by a hostile power, then expand outward to control her shipping lanes...it is not an either or.

You seem to know a lot about rare earth. Can that stuff be re-cycled? There is no doubt we are facing a competitor (I would not call her an enemy) the Soviet Union never was; and I hope our leadership is up to the challenge.

BigG · Guru

There is NO manufacture of high tech electrical equipment without the rare earth elements. Wind farms, hybrid vehicles, military electronics, etc. all use R.E.'s.

This is a so-far successful attempt to corner the manufacture of high tech electrical machinery.

There is no "comparative advantage" as advantageous as being the only source for a material needed in the manufacture of something.

Note two of the members of the standing committee of the Chinese Communist Party are PhD electrical engineers.

China's ambitions extend far, far beyond the South China Sea!

Canuckguy · Veteran Member

I think this is done to ensure there is a long term supply for their "star war" effort; controlling the market is only secondary in importance.

The Chinese military strategy is to neutralize the American military in the South China Sea. They are doing so by trying to neutralize the effectiveness of aircraft carriers and the satellite guidance system America needs to project power in the area. The prize is Taiwan.

I don't expect any direct conflict between the two, as there wasn't any between America and the Soviet Union. The Chinese ambition on Taiwan, however, will not change. Economically Taiwan is gradually being pulled into the Chinese orbit, and some sort of integration along the Hong Kong line, I believe, is inevitable.

BigG · Guru

China continues to exploit and manipulate the market.

http://www.breitbart.com/article.php?id=CNG.a1f3243ab58c6b6ab6455cbca4443759.a91&show_article=1

The "magic of the marketplace" does not seem to be a match for careful long term planning.

Perhaps market dynamics break down when one player is big and determined enough to skew the market.

Predation, pure and simple, with NO response from our own government.

Notice that part about the Chinese government consolidating its hold by nationalizing mines? and re-organizing processors?

Soon to come, more of the same.

he WSJ forgot samarium in M-1 tanks and lanthanum and cerium as catalysts.

-- Edited by BigG on Tuesday 8th of February 2011 02:20:02 PM

-- Edited by BigG on Tuesday 8th of February 2011 02:20:40 PM