Rare Earth Epic Fail (continued)

Posted in Made in China, Stumble and Fail at 10:55 am by George Smith

Sez the New York Times:

HONG KONG — China’s commerce ministry announced on Tuesday in Beijing a steep reduction in export quotas for rare earth metals in the first months of next year, a move that threatens to cause further difficulties for manufacturers already struggling with short supplies and soaring prices.

The reduction in quotas for the early months of 2011 — a 35 percent drop in tonnage from the first half of this year — is the latest in a series of measures by Beijing that has gradually curtailed much of the world’s supply of rare earths.

China mines more than 95 percent of the global supply of the metals, which are essential for smartphones, electric cars, many computer components and a range of military hardware. In addition, the country mines 99 percent of the least common rare earths, the so-called heavy rare earths that are used in trace amounts but are crucial to many clean energy applications and electronics.

Once the US was a world leader in rare earth mining, as documented in a Department of Energy report DD blog commented on before the holidays.

Now it doesn’t have a single mine although the economy depends on the material. As do US companies, like Apple, which have their all their electronics kit made overseas. (In a related matter, the US also experienced a road paint shortage this year because of two factors: The economic collapse laying off workers, and the additional shipping of all critical materials production overseas.)

The rare earth story is just another dismal chapter demonstrating shortsighted national leadership over the last ten years. And a complete anathema in corporate America to employing American labor in a US environment at any time because it’s simply more immediately profitable to do it overseas.

This has led to a serious dilemma, one with real negative impacts on the nation’s long-term economic and strategic postures.

The New York Times article notes that with China having cornered the rare earth business, the rest of the west is waking up to the fact that it will have to restart mining it abandoned.

This was noted in DoE’s report on the subject, which also explained the US would start to rely on mines in Australia and Canada.

Predictably, stock jumped in Molycorp, the US company that owns the only rare earth mine, in Mountain Pass, CA, which it will attempt to bring on-line next year after mining was killed there early in the decade.

“The Mountain Pass facility, which [Molycorp] bought from Chevron (CVX.N) in 2008, has not mined or milled rare earth oxides since 2002, according to an S1 that the company filed with the U.S. Securities and Exchange Commission this spring in association with its initial public offering,” reported Reuters.

“The company is modernizing and expanding the facility, but does not plan to reach full planned production rates before 2012.”

It’s stock has quadrupled over the past year, as a consequence of China’s actions and the US epic fail with regards to mining the elements.

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