By Jo Nova
Means, motive, and opportunity. It looks for all the world like China used dirty tactics to corner the rare earth processing plants of the world.
Michael Kern argues that for the last twenty years, every time a Western rare earth mining operation looked like it was about to build its own processing plant, Chinese producers would flood the market and crash the price of the metal. The investment case would evaporate and the company would go out of business.
This kind of predatory capitalism is all very well until the nice guys realize what’s going on and ban your products from their defense contracts, back their own start ups, and those companies develop their own processing techniques, which is what is starting to occur in the US now.
China was treating rare earths as a strategic weapon, while the West assumed the free market was free, and was hooked on the cheaper stuff.
All’s fair in love and war, but dirty tricks have their own price.
How China Killed Every Rare Earth Competitor Before It Could Get Started
By Michael Kern, Oilprice
The West handed its rare earth processing capability to China roughly 40 years ago. The last major U.S. rare earth mine, Mountain Pass in California, closed in 2002, unable to compete with Chinese production costs. By 2010, China controlled approximately 90-95% of global rare earth production and an even larger share of the processing and refining that turns raw material into usable metals and magnets.
China was able to control the price because it not only controlled 90% of global rare earth production, but it also controls the Asian Metal Index (AMI).
Even if the western company survived the price crash, they were often dependent on Chinese technology that only Chinese operators could maintain, and the CCP sometimes withdrew support leaving the western company with something they couldn’t use.
The Crisis That Should Have Changed Everything
The most dramatic chapter of this story came in 2010, when a territorial dispute between China and Japan over the Senkaku Islands triggered what many consider the first open weaponization of rare earth supply.
In September 2010, China unofficially halted rare earth shipments to Japan. Within months, rare earth prices spiked dramatically, with the prices of some oxides increasing more than tenfold. The price of dysprosium oxide alone surged from roughly $90 per kilogram in early 2009 to over $2,300 per kilogram by mid-2011.
What followed was a gold rush.
Then China did what it usually does. After the initial panic subsided and prices peaked, China eased its restrictions and flooded the market with supply. Prices collapsed just as quickly as they had risen. Dysprosium oxide, which had peaked above $2,300, fell back below $200 per kilogram by 2016. One by one, the Western projects that had launched during the boom ran out of money, ran out of investors, or simply couldn’t compete. Molycorp, the company behind the Mountain Pass revival, filed for bankruptcy in 2015.
Read it all. It’s a long article describing how things are changing. On January 1 next year, the US defense procurement rules will ban all Chinese origin rare earth materials. That means price-wars can’t shake out the US suppliers. The US government is also going to financially back key suppliers. One company called REalloy has developed its own processing pathway. It is expected to produce 525 tonnes per year of neodymium-praseodymium metal by early next year.
Dirty tricks may help in the short term, but in the long run, it takes a long time to win back the trust.
Note that “rare” earth metals are not so rare.
The rarest ones are about as rare as gold and the least rare one, cerium, is about as rare as copper.
They are however rarely found concentrated in rich deposits and they are chemically similar to each other making them expensive and difficult to separate.
Three of the richest and most important deposits are Bayan Obo in China, Mountain Pass in USA and Mt Weld in Australia.
The Australian operation is taxpayer subsidised despite being one of the richest deposits in the world. https://www.reuters.com/business/energy/lynas-rare-earths-gets-14-mln-australian-govt-grant-develop-project-2023-06-21/
There is also an agreement with the US Government to sell them product. https://www.afr.com/companies/mining/lynas-rare-earths-texas-refinery-wins-lifeline-from-pentagon-deal-20260316-p5oasj
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Yep
Rare earths aren’t rare, but the mining and processing facilities are, and it’s no small task to rebuild the infrastructure once it is gone. It takes about a decade to get everything up and running from scratch.
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A decade?
In the UK you would be very lucky to get a spade in the ground in ten years.
Planning, approvals, studies, surveys etc., etc.
Even for a railway – which we’ve been building since at least 1803 [Surrey Iron Railway] – see HS2 and weep.
And that’s before the protestors get their steam up!
Auto
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And processing, smelting, refining rare earths is extremely hazardous, polluting. That’s why the woke gullible Western world sent it all to China because the CCP have no Environmental Protection Authority E.P.A like Australia’s EPA that has cameras pointing at every industrial smoke stack in the country and heavily fines the companies when to much smog comes out, lol….Oh, and because China do 90% of the processing with total disregard for their environment, vast areas of land and majority of rivers and groundwater are heavily polluted with extremely nasty chemicals….bwahaha
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Innovation can compete with rare earth suppliers.
Magnets can be replaced with doped graphene.
Its low cost compared to neo.
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As I understand it, doped graphene magnets are about 1000 times weaker than neodymium ones (for exceptional samples) and there are limts to how much they can be doped before the structure falls apart so are unlikely to replace neodymium.
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Dope with deuterium and get appropriate results.
The main problem is make sure you have graphene not graphen oxide.
Going to need to test graphene with expensive raman spectroscope.
You soon find out that nearly all suppliers supply GO not graphene.
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If you get a very low oxide graphene its easy to coat a copper wire and reduce the resistance by 90%+. Now you have a practical superconductor at a very low cost.
Easily manufactured for anything electric from semi-conductors to HVDC.
All for the sake of a raman spectroscope owned by industry not a university.
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Small addition. The biggest REE deposits are Olympic Dam here in Australia and Kvanefjeld in Greenland. Remember Greenland?
You don’t hear about Oly Dam for REE because it already is a top three producer of copper, gold and uranium. If they bothered to extract the REE the price would crash, so it’s a Catch 22 problem.
Oly Dam is 8.8 billion tonnes at 1% REE, so about 88 million tonnes of REE. Far far far bigger than any other deposit on the planet.
Kvanefjeld is 1 billion tonnes also at 1% REE, but is upgradable to a very rich concentrate. It isn’t being mined because Greenland’s pint sized Parliament refused to allow mining.
China has a lock on refining because it takes 120 separate and individual solvent extraction stages to purify the 17 elements. That takes a lot of chemical engineers to control all the steps. China has a lot of cheap chemical engineers, whereas we only have a lot of cheap gender studies graduates.
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Why fund chemical engineers to transmute metals when you can fund transgender studies? Priorities god dammit, l say. Pseudo-social studies should always take precedence over scientific endeavours which may actually enhance a country’s prosperity.
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Estimates (US Dept. of Energy) are that direct drive bird choppers use 0.6 to 1.0 tonnes of rare earth metals per MW, geared ones somewhat less.
Rare earths are an ideal companion product for the renewables scam because they use vast quantities in the bird chopper magnets. They are also used in modern electronics but only in small quantities.
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“The West handed its rare earth processing capability to China roughly 40 years ago.”
Unfortunately, news at the time involved the explosion of the Space Shuttle Challenger, The Libyan bombing and, the Philippines were having a revolution. More: the Iran-Contra Affair, Cary Grant died. Ronald Reagan, then US President, was beginning (date unknown) to be affected by mental decline.
It appears that, mostly, issues of “rare earths” went unnoticed.
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I want to be mad at the ChiComs for their various shenanigans to steal markets and industries from the west, but we have no one to blame but ourselves. We have known since day one that they violated every trading treaty and business norm they could and let them get away with it.
From undercutting industries by using state subsidies to sell below cost, to industrial espionage to steal intellectual property and create cheap knock offs, to flooding markets with products to knock domestic manufacturers out of business, to using slave labor and lack of regulation to keep costs down, to locking competitors out of their domestic market (or forcing them to sell a part of their Chinese business to the state) and generally operating as mercantilists while pretending to be free traders.
If you invite someone into your house and allow him to repeatedly punch you in the face without doing anything about it and keep inviting him back, then you deserve what you get. China was just acting in it’s own interests and never faced any negative feedback on their behavior, so they kept doing it. If it ain’t broke, don’t fix it.
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And TRUMP waa the first and still the only one in a position of power to recognise that.
Most Western politicians and especially many Australian ones simp for the Chicomms. In fact, it’s common for retired politicians to establish business dealings with them, if not even before they leave office.
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Been a fairly long list of them too David.
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“The Australian operation is taxpayer subsidised despite being one of the richest deposits in the world.”
and..
“From undercutting industries by using state subsidies to sell below cost, to industrial espionage to steal intellectual property and create cheap knock offs, to flooding markets with products to knock domestic manufacturers out of business, to using slave labor and lack of regulation to keep costs down,”
..are both perfectly normal parts of ‘capitalism’ as practiced by our Govts and major industries together. You go into business expecting those to occur, or you will fail rapidly. Even a ‘sale’ at your supermarket is part of the same thing.
Locking people out of your market and subsidising operations makes your product more expensive and unable to compete internationally. It costs your population more to buy and makes them poorer in other areas. I hope they measure the cost of ‘strategic security’ carefully, instead of burying it a politicians always do!
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A full 30+ percent of Australia’s exports go to China; they are keeping you whingers afloat. This level of ingratitude only comes from a sense of entitlement.
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Pretty naive comment aspnaz.
All our exports are dug up, unprocessed, and exported with zero value adding. So the Chicoms can sell it profitably back to us in processed and manufacture goods, meaning Aus$ dollars going offshore, reducing our wealth for China’s gain. Meanwhile our economic basis and standing in the world is consistently diminishing.
If, as you say, that ‘those bitches are keeping us afloat‘ then I should expect to be very ungrateful for that.
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“All our exports are dug up, unprocessed, and exported with zero value adding. So the Chicoms can sell it profitably back to us in processed and manufacture goods, meaning Aus$ dollars going offshore, reducing our wealth for China’s gain.”
Don’t forget the Chinese are buying those ores from us, pouring money INTO Australia. Then they sell us the goods and take the same money back.
..and yet the options? It will have to be some country with cheap labour, because it we tried to add value in Aussie the ore product would cost so much no-one would buy it. If we made the products in Aussie no-one could afford them!
China will grow and prosper, floating us up alongside them, until either it is cheaper for us to use robots instead of manpower, or the next third-world country gets a high enough level of technology with a low enough level of wages to take over from China. China is just the Korea of the 80s, or the Japanese of the 60s.
Rather that than the Middle-East of the 50s that gave the Arabs immense riches for something they had a monopoly on, at least China has to compete!
I’m grateful for the Chinese, my life would be much poorer without the products in this house that they made.
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Sure we get the cheap fridges that break after 5 years, and then when we complain about the organ harvesting or the slave labor, the lies, the broken trade agreements, and the bioweapons, the CCP quietly lets our government know it will ban exports of some key mineral or component, and we have to suck it up.
China will not grow and prosper in the long run — like any communist economy — it will waste money and human manpower in a giant quagmire of appalling conditions and mismanagement and human suffering.
There is a price for cheap fridges and cheap EVs.
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There is a price for cheap fridges and cheap EVs. Is there? So why do you keep buying them? Without China most of you wouldn’t be able to afford a fridge.
As for all the slavery, appalling conditions, communism, reds under the beds crap, maybe go visit China, have a look first hand; their doors are open.
And if China still troubles you, then you can stop buying Chinese and go without; at least you will feel good about yourself in your abstinence.
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I don’t. Where a product is made is a consideration of mine when I buy.
There are quality risks with the cheap Chinese made products (generalisation) and “affordability” can be misleading when a lower cost item has a short life.
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Are you also grateful for the banning of our coal, lobster, barley and wine exports ?. For the live firing off our coast and mapping of our undersea cables ?. The sonar attacks on our navy divers, the releasing of chaf into our aircraft engines, the continuous cyber attacks, intellectual property theft and interference in our political system ?. And not to forget releasing COVID onto the entire globe ?.
And, if you think you’re sitting pretty with your new taxpayer subsidised Chinese EV and home solar battery system, just remember that all of these devices are controlled by a Chinese server and can be switched off before you get a chance to respond to this comment.
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So they can turn that dirt into appliances, but you can’t, surely that makes them better than you, so be grateful that at least someone can make your life better. The alternative is going down the river and washing your undies on a rock.
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Australia is a quarry and a very lucky country.
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I don’t like the idea of govts trying to pick winners, whether it’s rare earths or anything else, but I’m sure that dealing with China is a brand new game.
Special rules have to develop just for China and we should quickly start to understand this and adjust our game ASAP. But it will take some time to adjust before we begin to see some returns on the investments.
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Well done China…Australia needs China….more than America…who are only good for wars.
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That’s why we need America.
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Let me guess. You are young, woke and have never studied history?
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Chinese bot?
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JG is correct, so I must be a bot too.
Anyway, hubots are the future.
https://www.scmp.com/economy/global-economy/article/3352781/humanoids-robots-drive-next-chapter-chinas-manufacturing-dominance-morgan-stanley?module=top_story&pgtype=homepage
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I commented above on aspnaz’s comment on China, that was naive, but this one is retarded. As DM notes, clearly you don’t know history.
Get yourself educated.
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“Retarded” is a politically incorrect term.
Say “you sound vaccinated” instead.
It’s politically correct and annoys them more. 😆
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“you sound multiply vaccinated” is even better.
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More than that, Australia needs China because any country wanting to maintain its standard of living needs to ally themselves with economies on the up, not economies heading down. Australia’s debt is getting serious, as is all the graft/incompetence well documented on these pages by Jo Nova et al. The USA is further along the path, more corrupt and more openly so as their economy heads down. China is not allowing the western elites to take over the Chinese industrial base, it is keeping them out via capital controls, so we watch as they desperately search for value in a failing western environment while all the wealth is being generated in the east. China wants to be friends with Australia, they are wanting to be trading partners with Australia, but Australians are paranoid, through what I assume are insecurities related to race and isolation, indulging in a hate fest against the Chinese. It is a shame, a positive attitude would go a long way to create business links between the two.
Kegland.com.au, which is an Aussia company and a very competent one, is a company I use that has its products manufactured in China. Their cooperation with China has resulted in them becoming one of the top home brew equipment manufacturers in the world. I live in China and I buy their stuff over here, it is good stuff and the profits are going to Australia.
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“I live in China ”
Right!! Tell us what its like and how accurate are the views expressed on here. How much slave labour do you see each day? How many people are snatched off the street in front of you and ‘disappeared’? Do they all hate the Govt (well, more-so than here if that’s possible) and will overthrow them at the slightest chance? Are they building orbital space stations with peasant workers on a bowl of rice a day?
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It is brilliant. Vibrant, young, hustle and bustle everywhere, new tech stuff appearing all the time, good food, good craft beer (not castrated by alcohol laws like the beer your big breweries churn out in Aussie, and it only costs between 30 and 40 RMB a pint in a bar), etc etc and all for a lot less than you are paying to live. But you wouldn’t like it; you pay for everything electronically (QR codes) so no cash, you sit at your table in a restaurant and order online, you have to have an ID card, you have to register your phone, there are cameras everywhere, the government reads all your online stuff, the place is spotless, you almost never see a policeman, there is effectively no crime, there is no pollution (all public vehicles and works vehicles, so taxis, road sweepers, buses, ambulances, etc etc have to be electric, no exceptions), and it is open 24 hrs. You would not recognise the hospitals, they are super efficient and you are guided around the hospitals using your mobile. You would hate it, it is the modern, happening world, not like residential Australia.
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Perhaps the quickest way to throw a spanner in the Chinese works is to stop buying their EVs and unreliable toxic W & S rubbish.
All OECD countries should immediately stop all subsidies and let the buyer pay the full cost of these unreliable disasters.
At least the slaves in western China could see some relief as well. But the OECD countries must return to reliable BASELOAD energy like coal, gas, nuclear etc by the 2030s.
At least we should begin to save our environments and Aussies should stop killing Koalas and other animals just to install more toxic, unreliable W & S rubbish.
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Chinese companies make cash from importing EVs to Australia to harvest taxpayer subsidies in the form of carbon credits.
https://www.afr.com/policy/energy-and-climate/close-byd-carbon-credit-loophole-for-evs-uptake-sake-20251103-p5n79m
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Yep, and Chinese EVs going out all over the world are being sold in export markets cheaper than they are in China.
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And consider that dealers have what are called floor plans of manufacturer’s various models in the showroom and yard that they want to move quickly because of the holding costs and as time goes by year of manufacture impacts on resale value and therefore even sold new but close to next year after manufacture future resale value is diminished.
Now consider the reported hundreds of one brand EV various models in open yard storage from Queensland to New South Wales to Victoria since 2024 reported. And the condition in the open air unwashed and standing idle. And then the holding costs.
Also in China production economies of scale reduce or increase manufacturing unit costs, so the more they produce the lower the cost, and then CCP government export and other incentives, China needs foreign monies as well as economic prosperity manufacturing industry can provide, and jobs, after all controlling a billion plus population is difficult to police and with jobs it is easier to control people
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Of course the Chinese start with the advantage of an undervalued currency – centrally controlled. As far as consumerism is concerned in the west it has been great for the average citizen to procure relatively cheap items.
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So then ….. battery cars? They ‘run’ on electric motors.
There’s no ‘simple’ way to explain the principles involved here, so I’ll try to make it as simple as possible.
An electrical generator (or alternator) converts a mechanical energy into electrical energy, (power output) and an electrical motor converts electrical energy into mechanical energy.
So ….. very basically, a generator needs to be driven by an engine or turbine, and an electrical motor needs a big source of electricity to create the interaction between magnetic forces to create the driving force, the torque of the shaft. (and see how easy it was right there to almost shrug off what is really a most complex theoretical explanation)
Okay, put that theory away now. (and any real electrician would probably shred me right about now)
An electric motor in a battery car (or more correctly, an electric vehicle) has powerful magnets to provide the force to move the vehicle. Those magnets can be made up from a small(ish) variety of metals. The most powerful magnets are made from those rare earths.
A typical electric vehicle (and here, the same applies for the electric motors in hybrid cars as well) contains around 2 Kilograms of rare earth metals.
Now scale that up for the number of EVs and Hybrids there are ….. just in Australia even.
And wind turbines. (the magnets in the generators)
And other generators.
Here’s a link to an Australian site with an explainer on rare earths. (Australian Strategic Minerals)
Tony.
PostScript – For all you electrical trained people out there, go easy on me for the oversimplification of the explanation. For so many times, I’ve watched people’s eyes glaze over as I attempt to even begin to try and explain electrical theory.
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Hybrid technology is better than pure EV for most Australian driving conditions however hybrid cannot compete with ICV for a lot of heavier duty activities.
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I don’t think there’s any doubt what the Chinese did and I’m glad that at least the US have woken up. Thanks again DJT. The virus came from Channa, climate change alarmism was aided by the CCP, they steal intellectual rights and play dirty when it comes to export products. Because, their “companies” are just part of the CCP anyway. It’s a totally unfair playing field, particularly when you throw in low labour costs. The Chinese have been doing commerce for thousands of years, they’re good at it.
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It is not unfair at all, it is a predictable result of a first-world economy dealing with a third-world country.
By the time China are as mature as the West they will probably cripple themselves with health and safety laws, unionised wages, endless paperwork for bureaurats to get anything done and woke social laws for DEI.
Japan’s moribund economy is a fine example of a cheap country in the 1960s developing into a mature economy by 2000.
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You assume it will “mature”.
Why would the Chinese Communists ever cripple themselves with health and safety laws? They can just cancel anyone who complains by crushing their social credit scores, or jail anyone who looks like starting a revolution.
As long as we in the West are happy to buy from slave factories, why would it end? It’s not like the Chinese people have any rights …
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Rights are rewarded to party members including the right to practise free enterprise ventures (capitalism) and other rewards such as a passport and international travel with family. Even then there can be impositions, one agreeing to live a life of luxury in a gated community away from prying eyes but not permitted to leave the area.
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Of course part of the way forward is to abandon their treasonous NET ZERO lunacy and only build genuine power stations that will last until 2100 at least.
We’ll save decades of time and money and even the more stupid voters will soon realise that energy security equals national security.
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This story highlights the Startled Snail nature of government strategic thinking – not just an Australian phenomenon.
I’m old enough to remember when FIRB effectively halted China Non-Ferrous Metal Mining Company‘s 2009 attempt to take control of Lynas – and in the process throttle Australia’s growing contribution to global REE production.
https://www.afr.com/politics/china-stung-by-tougher-firb-rules-20090925-jn681
The takeaway: government agencies sometimes recognise risks, because they are obvious to anyone with mild domain interest, a lukewarm IQ, and a pulse – but SFA happens because politicians don’t have those credentials. Rinse and repeat with almost any issue that’s slightly technical or outside of Beltway significance.
That’s how you crash a national electricity system.
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Great idea to stop buying EV’s. BYD stands for burn your driveway. The Chinese government have banned all electric vehicles from car parks in government buildings. What does that tell you?
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It tells me not to trust unattributed rhetoric. Lucky I am a sceptic and found it is false. Here is one quote from drive.com.au
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Craig Tindale’s article “The Return of Matter: Western Democracies’ Material Impairment” does a great job at outlining the extent to which China has done this across a gamut of critical materials. Worth a read, if you don’t mind ending up screaming obscenities at your monitor over how stupid/incompetent/treasonous our political class has been for three or more decades now.
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Once again, buying our stuff from the cheapest source will give us grief in the long run, just like giving up on our oil drilling and refining and getting it cheaper elsewhere, it’s all sweet until it isn’t.
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“buying our stuff from the cheapest source will give us grief in the long run,”
Yes, but it means we can have washing machines instead of being unable to afford them!
If you triple the price of all manufactured goods you will only own a 1/3 of what you do. Clothes, haircombs, toothbrushes, computer speakers, crockery, microwaves, gym equipment.. the list is endless
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But wait, the US just secured huge reserves in Greenland.
https://x.com/jackprandelli/status/2052511055167869268
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“The supply chain logic is straightforward:
Extract in Greenland → process in the US → supply defence and advanced technology sectors”
Isn’t that ‘extract in Greenland then sell to highest bidder…’? Or do the Yanks own Greenland already. Everything in the ground is ours..
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If you think this market manipulation playbook is unique to rare earths you’d be wrong.
China has been buying market share at the base of the manufacturing chain for the past 25 years. In 2000, I started a business that focused on making prototype tooling very quickly. Unfortunately, China wanted to bring more plastic molding business it the country so it quoted making CNC machined molds for less than the cost of raw materials. The tooling business in the US dried up. Since the tooling was in China already, they offered to do the molding and just send the plastic parts to its tooling customers. Their tooling customers became molded part customers. But Chinese labor costs for assembled parts was much lower and is highly skilled. Since they had the molded parts, why not assemble the parts in China and now the foreign customer can sell their goods at a higher margin. China of course wasn’t just a supplier, it was a student and learning the ins and outs of the business. Soon they were making improvements to their customer’s products and starting their own brand of the same product that was better than the foreign customers and cheaper. The foreign customer would sue for IP infringement but the Chinese would patent their improvements and insist the foreign customer pay a license fee to the Chinese producer.
The Chinese start at the base of the supply chain and then rapidly move up the value chain. Yes, they control the rare earth markets, but they also dominate the manufacturing industries where those rare earth materials are used like electric cars, windmills and solar panels. It is no longer a free market and the Chinese will do whatever it takes to dominate the entire supply chain.
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Yep, that right there is the ‘free market capitalist system’ that we all know and love at work.
That’s all been happening in the west forever, big eats small, ( sometimes a different verb is used), patents were and are useless in the face of infinitely deep pockets, big businesses wear losses to take over niche markets.
And, China simply ran with it, having a government which planned ahead and invested in infrastructure, and didn’t hamstring companies with endless layers of regulation and bureacracy.
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“happening in the west forever”
Amazon has launched Amazon Supply Chain Services, allowing other businesses to use its extensive logistics network, which directly competes with FedEx and UPS. Monday the price of shares in the two companies dropped on the news.
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A reminder of the ‘cheap’ rare earths mining/processing in China.
As long as latte sippers in the west can say how ‘clean and green’ they are at their dinner parties, who cares about some poisoned kids in China…..
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