Rare earths: this is how we've done it

The growing brouhaha on China's "monopoly" of rare earth production!

But you have to ask yourself, Why did the US and others abandon production, because they didn't run out. 

Nasty business, rare earth mining, so best to go with a place not too fussy on environmental stuff.  China filled that void nicely, making production too cheap for the rest to keep up, hence the current "advantage."

Now, as China, with its minerals-in-the-ground mentality, considers future access, it starts exporting less and hoarding more.

Hence, the frightening future for the West:  we are denied!  China is ahead!  What are we to do?

Simplest thing, of course, is just to pony up the money for the US mine sitting dormant.  Last I heard it was half-a-billion.

Other route already covered in a WS CoreGap report:  Japan already working on electric motor that uses no rare earths.

But this FT piece points out the easiest route:  just use what you have that much more carefully.  How Amory Lovins.

So GE says they've been anticipating this moment for about a decade (What!  Our intell freaks out our defense specialists just this year and GE has been thinking this through for a decade!  Whew!), which, by my experience, is the norm.  About the time DC starts freaking, you can find industry already 7-10 years working the issue.  

This is really common right now in the US national security establishment: constantly finding new evidence of globally integrated production chains that link us to damn near anybody and then freaking out about the possibility of cut-off.  I remember this one scientist-cum-security expert at Oak Ridge going on about how we import so much of what goes into fertilizer, that it would be so easy for our enemies just to cut it off and then we'd be out of food!  Just like that!  Unfortunately (in this fantastic scenario where our entire crops fail), so would the entire cast of most likely enemies, but that was a detail he hadn't thought through.  Almost all of these scenarios read like Cleavon Little's sheriff character in "Blazing Saddles" when he's confronted by the angry mob and he pulls out he gun, puts it to his own head, and yells, "Nobody moves or the nigger gets it!" Naturally, everybody backs off, thinking the sheriff would do it--hard ass that he was!

But again, these are details only the naive types like myself bring up.

So the story on GE here is that they've been through this deal many times in the past with this or that element, and they have a protocol for making it work.  Example:

Behind the company's confident is experience with previous shortages of critical materials  In 2006, GE turned its attention to rhenium, a rare metal (but not one of the rare earths) used in engine turbine blades, after a rapid run up in prices.

Within three years GE had come up with new methods to recycle the metal grindings normally lost during manufacturing and new ways to recapture rhenium from used blades, and even developed non-rhenium alloys, that cut its usage in half.

When it comes to rare earths, GE is taking a similar approach . . . 

That's why it's GE and not some bankrupt footnote in biz history.

The rare earth fears we're watching blossom today:  expect to witness this dynamic over and over again on all sorts of materials/food/water/you name it.  And the answer will always be the same:  recycle, use more efficiently, develop slight mixed alternative or pure alternatives, etc.  And just like in "peak oil," the drivers will be the same:  a combination of rising price and emerging technologies.  Funny how that works, along with human ingenuity.

Comments

[Tom Wade]

Excellent rational analysis of this topic, that deserves to be picked up by WAPO or NYT for its logical calming effect.

[Andrew]

While I agree with you that the hubbub is undeservedly over the top, it is not without merit. In the short term at least, China will dominate and could force the hand of many western companies that dominate finished rare earth goods. Thats because only rare earth oxides are facing export restrictions - not finished products like magnets. This means that China could technically force companies to move production - a value-added aspect to manufacturing, which i'm sure your well aware, is a priority for the Chinese government - to China. Look at what happened to Magnequench, a GM subsidiary that made rare earth magnets. After a Chinese SOE bought out the company in the mid 1990's, it promised to keep production in America - a key reason why the company was allowed to be sold. As of 2008, however, only 15% of the companies original production remained in America while the rest was moved to a Tianjin factory that had been under construction shortly after the company was acquired.

The fact is this has been strategic policy of China's since the late 1970's, with policies being put in place over the course of the 1980's and culminating in Deng Xiaoping's famous quote comparing the Middle Easts' oil advantage to Chinese rare earths. Not knocking them for it, its great to have foresight. I wish American politicians had the strategic vision that executives at GE do. Nonetheless, in order to break China's current "advantage" in REE production, it will take, according to one prominent analyst, " hundreds of thousands of man hours." In the end, it will be a decade until sufficient production can come online, with the ground work for that already being laid, albeit belatedly.

I find it ironic, though, that China is doing something it chastises others for doing: monopolizing a strategic resource and pushing up the price. Funny how realpolitik thinking still dominates policy in such a globalized world...