Rarefied problems
China Loses Its Grip on Rare Earth Monopoly

A few short years ago, China controlled virtually all of the world’s supply of most of the so-called rare earth minerals that are increasingly important for modern technologies like batteries and speakers and cars. This came to a dramatic head in 2010 when China used its monopoly to turn the screws on Japan, with whom it was having a maritime border dispute (plus ça change…). But, it seems, no more. From the recent Council on Foreign Relations report on this phenomenon:

Despite its relatively small size, the rare earths market managed to attract plenty of interest outside China prior to the 2010 supply scares. Motivated by expected increases in demand, investors in the United States, Japan, and Australia were already opening rare earth mines and building new processing capabilities by 2010, and other investors were moving ahead on mines around the world in places like Canada, South Africa, and Kazakhstan. The major investments made by Molycorp in the United States and Lynas in Australia and Malaysia started delivering non-Chinese rare earths to global markets by 2013.

When rare earth prices surged in 2010, even more potential entrants swarmed. Hundreds of companies around the world started raising money for new mining projects.

In part because the international community was spooked by the 2010 incident, the market reacted to the threat of China’s sole control of the rare earth supply. Now, alternative production sources, coupled with technologies developed specifically to minimize the use of these minerals, are eating away at China’s strategic monopoly.

Hand-wringing over China’s rise has become background noise in the West, but it is important to remember that market forces do tend to act to keep economic power balanced and that market actors will look for creative ways around problems. The combination of need and cleverness in either economics or engineering often ends up yielding solutions.

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  • Jacksonian_Libertarian

    Monopolies including the Government Monopoly all suffer from a disease caused by the lack of the “Feedback of Competition”. It is the “Feedback of Competition” that forces continuous improvements in Quality, Service, and Price in free markets. The Hand Wringing over China’s rise is mostly unfounded, as China has a communist party run Government Monopoly which owns much of the economy (this means it’s badly managed). People ignore the fact that the only reason for the rise of China was the foreign investors that came in and built state of the art factories to take advantage of China’s cheap labor. Now that China’s labor is no longer cheap, the factories are dated, and China’s belligerence has raised the risk of investing, foreign investment has crashed. China’s economy will now decay as the “Feedback of Competition” that came with the foreign investors leaves with them.

    • Corlyss

      That ain’t the only disease they suffer from. Rent-seeking is the inevitable result as well.

  • Corlyss

    Gosh! How did the EPA mess up so badly in eliminating another source of US prosperity? I thought they had all the rare earth mines closed down.

  • Sibir_RUS

    Daniel McGroarty. USA
    “How Long Can the U.S. Rely on Russian Titanium?”
    After all, titanium is critical for jetliner fuselage skins like Boeing’s 787 Dreamliner. Not noted in the news reports is that titanium is also must-have metal for advanced military aircraft like Boeing’s F/A-18 Super Hornet. A RAND study notes that the F/A-18 contains “21 percent titanium in its airframe structure.” And that’s just a fraction of the titanium needed for the U.S. defense industrial base, as it takes far more titanium to construct a modern fighter aircraft than is contained in the final product. Defense contractors call it the “buy-to-fly ratio”: how much titanium must be bought versus how much is ultimately built into the aircraft. The titanium Material Buy Weight for a single F-35 Joint Strike Fighter is 30,000 pounds, or 15 tons.
    But the statistic that says most about Boeing and United Technology’s Russian titanium stockpiling is this one: The U.S. is import-dependent for 79 percent of the titanium it consumes each year. Are there other sources for titanium if Putin decides to “counter-sanction” the U.S. and cut off exports?

  • Sibir_RUS

    Percentage of Titanium in the Structural Weight of Selected Military Aircraft (Page 30)

  • Sibir_RUS

    Aircraft-carrier ‘killers’ to be repaired in Russia
    MOSCOW, March 5 2013 (RIA Novosti) – The Russian Navy will refit, modernize and recommission two Sierra class (Project 945) titanium-hull nuclear-powered attack submarines by 2017, the Zvezdochka shipyard said on Tuesday. The Sierra class has a light and strong titanium pressure hull, enabling these boats to dive to depths of up to 550 meters (1800 feet) and enhancing their survivability, as well as having a low magnetic signature.
    Main destination: tracking of strategic submarines and aircraft carrier battle groups of the probable enemy and guaranteed their destruction at the beginning of the conflict
    Armament: Sierra I & II:
    4 × 25.6 in (650 mm) torpedo tubes
    4 × 21 in (530 mm) torpedo tubes
    • SS-N-21 Sampson SLCM (200 kt)
    • SS-N-15 Starfish anti submarine weapon: 200 kt depth charge or 90 kg HE Type 40 torpedo
    • SS-N-16 Stallion, 200 kt depth charge or 90 kg HE Type 40 torpedo
    Minelaying configuration: 42 mines instead of torpedoes

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