China stockpiling “21st century gold”

Image of some rare earth oxides
Image of some rare earth oxides, from the USDA

Many don’t realize that some of the most precious substances on earth today are minerals known as “rare earth elements” — such as neodymium, vanadium, and terbium. They are not rare in terms of their presence, and most of them are abundant in the earth’s crust.  Rather, they are “rare” in that they are often not concentrated and can be commercially expensive to mine.

Global rare earth element production from 1950...
Image via Wikipedia

Yet, they are vitally important to our modern way of life, as they provide essential materials for advanced electronics, from cell phones to laser-guided missiles and fuel cells. And, currently, the nations of earth are mighty dependent on China for providing those minerals.  It’s not, necessarily, because other nations do not have their own resources.  The US has a number of mines, but much of the production has been halted due to environmental concerns.  And as this chartillustrates, today China dominates the world in the production of these vital minerals.

Which makes today’s news in the Wall Street Journal worth paying attention to: “Tightening Its Grip, China Begins To Stockpile Rare-Earth Metals” (WSJ, 2/7/2011). From the article:

Details of the stockpiling plans haven’t been made public. But the outlines of the effort have emerged in recent statements from Chinese government agencies, state-controlled companies and reports in government-run media. The reports say storage facilities built in recent months in the Chinese province of Inner Mongolia can hold more than the 39,813 metric tons China exported last year.

China controls more than 90% of current global supply of rare-earth metals—a group usually classified as 17 elements and sometimes are called “21st Century gold” for their importance in such high-tech applications as laser-guided weapons and hybrid-car batteries. Beijing has been tightening its exports with a quota policy.

Mining companies around the world have responded by taking steps to increase production.

Motivations are always hard to judge as official pronouncements from that nation almost always seem to be tailored to desired public belief, but regardless of intention the decision has other nations, commodity-trackers, and policymakers taking notice.  South Korea, Japan, the UK, the EU, and the US are all looking over their national policies concerning rare-earth ore, and some are considering stockpiles of their own.

The Bible talks about the dangerous dependence on other nations the physical descendants of Abraham will have in the last days, a dependence that will make them vulnerable (e.g., Jer. 4:30).  Rare-earth metals could be a vital element in such a scenario.  Times of relative peace and normalized relations have allowed America, for instance, to think it safe to shut down its own mines for “environmental concerns” and to become overly dependent on China, a fast-growing economic and military rival.  Should difficulties arise, however, the situation would be difficult to remedy quickly.  As the article points out, it can take a decade to get a new mine up to production speed.

4 thoughts on “China stockpiling “21st century gold”

  1. The figures on that chart are terrifying in their implications. So much of what happened in World War II revolved around vital supplies being cut off by the Axis Powers. And this time around a crash program to come up with substitutes won’t be so easy to come by.

    Pres. Obama has put forward the idea of sending a manned mission to an asteroid. Maybe he should be thinking of sending a tow truck. We might not get the array of metals we need (whether to back our currency or to feed our industry) in due time any other way. (Speculating from a human point of view, of course…)

  2. TeapotTempest

    Now this is VEERRRY interesting. I just finished reading an article that illustrates how China has been building vacant (yes, I said VACANT) cities over the past decade in areas such as Inner Mongolia that are deserted and have no possible relevancy to China’s economy — unless they are somehow related to the mining and storage of rare earths. You don’t believe this? Check out the following article on World Net Daily:
    http://www.wnd.com/?pageId=260645 and the supporting report on http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12?slop=1. Go ahead. Tell me I’m a kook. But read it first.

  3. Linda Patterson

    How much are we already in debt to China? What point in time is China going to insist on compensation for that debt? Look at all the people they have in such a small area. One wonders at what point they say “since you owe us so much and we need housing we are coming with people to occupy all those empty houses and buildings.” They may never do this, but looks like on way to get their interest on the money as well as taking control of many other things here in this country that owes them so much.
    Looks like way back when; we sold ourselves. Thank God the time is coming when Christ can say to us with all authority, it’s all mine. I rule and you need to learn to obey or suffer the outcome of not obeying.

  4. Steve

    Yeah, I’ve known about this subject for awhile, because I’ve been researching investment opportunities.

    China dominates the market because of its cheap labor. Rare earth elements exist in other parts of the world, especially Canada, but it was always difficult to compete with China’s low production costs.

    Announcing that they were going to withhold some supplies to feed their own growing economy sent shock waves around the world. Suddenly, the price of rare earth started jumping, and nations are scrambling to make up the difference.

    The consensus right now? China cutting back on deliveries of rare earth will probably continue, providing opportunities for production elsewhere, but China will not give up its overall dominance of the market for geopolitical reasons.

    A few months ago, China and Japan got into a territorial dispute about sea lanes and certain islets. Playing the economic card, China cut Japan completely off from their supply of rare earth. Japan had the foresight to stockpile several months of supplies, beforehand, and they so were able to weather the storm.

    But it goes to the point: The price of rare earth will rise as China keeps more of the stuff to itself; but – at the same time – China will probably not give up its relative dominance, because it gives them too much of a geopolitical card.

    As Sherlock Holmes once said, “the game is afoot.”

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