Can the US derail 2025?

Max Demian said:

Why am I sceptical? I don't have a clear picture how China plans to implement this, without antagonizing bystanders. They would have to enforce a serious crackdown on the black market and shutdown all Alibaba entities selling rare earth or rare earth compounds to begin with.

Then they would need to police the world market to ensure the US cannot source it's need from intermediary sellers. Effectively they need to lower their export quota by the amount the US imports, if they can estimate that right. However, according to:

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the US imported 100% more rare earth's in 2018 than in 2017. Quite obviously a stockpiling measure. That alone gives them a year worth of supply. The unknown is how fast can they get the refinement facilities up and running to process the ore from US and Australian mines to weather a long term decoupling. Also, not to discount are recycling initiatives. There's plenty of this stuff in junk electronics

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First of all, the 2010 incident of China withholding rare earths from Japan is a textbook example of success as it got the fishermen returned in days. It was only a failure if you thought that the purpose was to permanently cripple Japanese electronics manufacturing.

So the link you posted shows no stockpiling of rare earth compounds or ferocerium alloys but a 91% increase in scandium and yytrium. Then we must also account for the fact that America's need for these elements has been steadily rising by an average of 15% a year from 2014 and 2017. If that trend continues, then we can approximate that the need for them in 2018 was close to 602 metric tons and in 2019, the need should be about 693 metric tons. If the US purchased 1000 metric tons in 2018, that leaves a 398 metric ton stockpile. We don't know what purchases in 2019 look like yet, but this is so far looking more like a 6-7 month stockpile than a 1 year stockpile.

Then we have to talk about recycling. First of all, America's been sending a lot of its recyclables to other countries, including China, so there's not likely to be as much around as you surmise. Then, I researched briefly the current technologies associated with recycling rare earths and it seems that the technology is still lacking a lot of research so its cost effectiveness and efficiency is too low to do on mass scale. Currently less than 1% of electronics have had their rare earths scavenged. According to this peer-reviewed scientific article published October 2018, (abstract only; the rest you need to pay), which has a very rosy take on the future of rare earth recycling, the technology is still quite unreliable/unavailable.


And it's not about total denial of America's rare earth supply. It will severely hamper the efforts to get them and constrict the supply causing great stress on the reliant industries in the short term but in 1-3 years, the US will be able to get its own processes up and running. Therefore, if China uses its rare earths card, it's going to be a one shot thing, but one shot could be all it needs since the US is out of cards after a tech ban but China is right on the verge of an overtake and stunting the US by 2 years (which is really a huge across-the-board blow to tech industries) could get China a heads into the lead from which it will never look back again.

Now do I think this card will be used? No. Why? Because China's talking about it. The more you talk about, the more heads-up you give your opponent. If China wanted to use this card, it should implement the ban without any warning at all. DOW would go underwater overnight and Larry Kudlow would be holding up chunks of iron on national TV telling people that this is rare earth and all we need; everybody it's ok, put your money back in the stocks LOL. This advertising here seems to point to a different strategy, which might be to sink US scientific efforts into developing its own rare earths refineries and money into stockpiling only to undercut in a year and wipe the fruits of these efforts out. Just a guess.

Self sufficiently is not an option in the short run Even assuming they can get the mine open and refining done what about the downstream processing of useful material like magnet and so on. China dominated those sector too
As to policing alibaba. I don't think it is that difficult. Once decision is made they will be ruthlessly implemented and alibaba will comply and hired thousand of inspectors if need be to make sure nobody is offering rare earth material on their website
The same apply with custom and border police The might still be smuggler but not much Luxin discussed the subject on CCTV or CGTN now

Should the U.S. push China too hard in the trade war, the Chinese side is now hinting at the ultimate tariff on rare earth minerals. How devastating could it be on the U.S. economy? Guests: John Gong, professor of economics at the University of International Business and Economics, and from Washington, DC, Douglas Smith, former assistant secretary of the U.S. Department of Homeland Security.

If the US doesn't have to worry about their rare earth supply, why did they ring the alarms in the first place? It must be because they wanted an excuse to vilify China for no good reason because Americans just want to hate. Are they admitting they make up crap to justify undermining China? Is this like Trump charging that China is behind the global warming hoax when it all Western countries that led the charge? Or maybe it's like when the J-20 was unveiled, all of the sudden stealth can be defeated unlike before when they kept claiming US stealth fighters were essentially invulnerable. US rare earth companies went bankrupt in an orchestrated scheme to vilify China.

I saw on CNBC the CEO of the US's only rare earth miner at Mountain Pass that went bankrupt and he bought. He said all the rare earth ore they excavate goes to China to be processed and refined. So is this some sort of elaborate and expensive trick on part of the US just to vilify China for holding a fake villainous monopoly as charged. If China is getting rich off of rare earths, why does the US do business with China on rare earths when they hold a monopoly like DeBeers can't do business in the US because they hold a monopoly on diamonds? All this expense and time so they can just lie about China? They say China would lose out making no money by denying rare earths to the US. As some have pointed out that China tried to restrict rare earths to the West almost a decade ago. That means making money isn't a priority.

People who think this is only about supply are the same people who think foreign companies outsource jobs to other countries purely for humanitarian purposes and they just want to help poor people get jobs. It's not just about supply like it's not just about who has the cheapest labor is where outsourced jobs go to. Just like rare earths, they ship them to China because that's where they can maximize profits meaning any place else will cost them more. Greed is like water. It will always find the lowest level it can go where in this case where they can make every possible penny they can. Of course they think China thinks like they do when taunting how much money China will lose is more concerning than signing your soul away to the devil.

Let's remember that before China became the number one supplier for rare earths, the US was the leading producer in the world and rare earths was on the list of US products that were banned from being sold to China. And somehow it's universally wrong that China might deny from the US a cheap source for refined rare earth elements...

s002wjh said:

short term yes, but once that card is used, its gone. US/aussie and other all have rare earth, they import from china because price and processing. So rare earth card should not used easily.

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Short term, medium term, long term. It doesn't matter. Let me quote Keynes, one of my fav economist.
"In the long term, we'll all be dead"!

So in the current situation, it doesn't matter whether is short, medium or long term. What matters is that the damage is done!

And another nail in Trump's "Trade war is easy to win" motto‼

s002wjh said:

the mine in US and other place already open, its just they still rely on china for processing, but if china stop rare earth, MP said they can get the process etc up in about a year. Just like Huawei, its one time use card, once used it US will subsidized the industry and decrease its reliance on China rare earth. Its upto china when and how to used it.

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aussie also have rare earth mining operation.

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Actually, rare earth are everywhere in the world.

Can't you see, it's not about getting to the stuff, or refining the stuff. It's about cost! And right now China is by far the cheapest, so even if US can get hold of the stuff, and refine it. They can't compete on price, and this is going to have a knock on affect up the value chain, leading to more cost to US industries, thus erroding yet more of their competitive edge!

s002wjh said:

Malaysis just an example there are other place, Aussie already have process facilities there. my point is ppl tend to overestimate rare earth card. if rare earth only exist in china sure, its ace in the hole, but other place has it too. short term there will be issue just like huawei, long term country will adapt to it.

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So why don't Trump just slapped 25% tariff (remember tariffs are good)! on China, then production will just moved to Malaysia or even to your Australia!

Think man, think!

Biscuits said:

... that’s just wrong.

China delisted sales from a few categories for Japan to get their fishermen returned. Japan’s electronics slowed to a crawl for a few days, and Japan returned all of them without a scratch.

That is the textbook example of sanctions done right.

Although it will not have the same devastating effect on America, as the US economy is heavily agarian in addition to a middle sized high tech sector. Just sinking the latter might not be enough, compared to Japan which is exclusively high tech.

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Great post, I forgot about that! It was all done because of the fishman and Japan's claim to territorial sea dispute (which the Japanese say there's no dispute - damn, where's Mr Pony when you need him, lol)

Max Demian said:

Why am I sceptical? I don't have a clear picture how China plans to implement this, without antagonizing bystanders. They would have to enforce a serious crackdown on the black market and shutdown all Alibaba entities selling rare earth or rare earth compounds to begin with.

Then they would need to police the world market to ensure the US cannot source it's need from intermediary sellers. Effectively they need to lower their export quota by the amount the US imports, if they can estimate that right. However, according to:

Please, Log in or Register to view URLs content!

the US imported 100% more rare earth's in 2018 than in 2017. Quite obviously a stockpiling measure. That alone gives them a year worth of supply. The unknown is how fast can they get the refinement facilities up and running to process the ore from US and Australian mines to weather a long term decoupling. Also, not to discount are recycling initiatives. There's plenty of this stuff in junk electronics

Click to expand...

Be that as it may that US has stockpiled one years worth.

In the end it still comes down to simple economics - supply and demand.

Once supply is controlled and curtailed, prices is going ti shoot up, and no matter how much you stockpiled, your stock valued is going to go up, (believe me, it was my job to value stock) leading to higher end-use price! Anyway you cut it, it's not going to be painless as painted by Mr Traffic man and his western MSM.

Gatekeeper said:

So why don't Trump just slapped 25% tariff (remember tariffs are good)! on China, then production will just moved to Malaysia or even to your Australia!

Think man, think!

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ppl really tend to over play its card. does US rely on China rare earth now yes, can it get rare earth elsewhere if china stop it, yes. will it cost more sure, but its not like every component require enormous amount of rare earth. once rare earth card is used, then its gone!!.

Rare earth elements aren't found like veins of gold or silver. They're mostly microscopic. Tons of earth have to excavated and processed just to get a usable amount meaning also the land is strip-mined. The process requires hazardous chemicals and expensive machinery to separate the elements from the earth. Some these rare earths are natural by-products of radioactive elements in the earth. They get concentrated too during these processes. If it's so easy, why doesn't the West do it themselves? China sits at the sweet spot of the rare earths industry. It has the cheap labor the West doesn't have and the technology poor countries can't afford. The rare earths that China supplies is not called what it truly is... another outsourcing story. Why? Because the US wants its rare earths cheap. So cheap they don't dare speak of it with the standard anti-China propaganda trade story. They don't want to let it out that for an American workers to do it, they would have to pay six figures for each of them because of hazard pay and the high insurance costs to cover them. Because it would cost so much for them to produce, that cost transfers over to what the price will be for customers to purchase. You know what Western countries would have to do to have an independent from China rare earth supply on the cheap? They would have to exploit third world countries and have their people do all the work with few protections and pay. Essentially violate people's human rights.