Apocalyptic predictions on the future of US military security and its civilian economy, if China cuts off the export of the rare earth elements (in which it currently has a production monopoly) are masking an even more important dilemma. What will happen to China, if it cannot produce or obtain sufficient rare earth elements to maintain its rate of domestic growth?
The rare earth supply ‘crisis’ can and will be solved when there is sufficient production of heavy rare earths outside of China, to resolve the impending shortage that the Chinese perceive as a serious threat to the massive growth that they have planned, primarily for their domestic green technology industry, among others.
The recent hubbub about reduced Chinese export quotas for the rare earth elements, seems to not address the point that the quotas may in fact only affect the export of raw materials, and not the rare earth elements contained in finished or semi-finished goods. If it is just the raw materials forms (separated and purified chemical compounds) the export of which are being reduced, then it may not matter so much at all, because China has been reducing its export of ALL such raw materials since the beginning of the 21st century when it openly decided to require that Chinese raw materials not be exported unless as much value as possible had been added in China first. This was a program to create jobs in China, and to bring new technologies and manufacturers to China in search of secure supplies of raw materials. It worked and seems to have simply become state policy.
I have been saying for some time that the rare earth elements supply issue is just the tip of a rare metals supply issue, that will grow to monumental proportions in this decade if China’s domestic economy continues to grow as a consumption-driven economy. China is already far and away the all time largest producer in history of steel; it today produces some 50% of the world’s raw steel. This has resolved the issue of supplying the necessary structural metal to advance China to a world class industrial power.
Now it is the time for China to begin producing or acquiring all of the technology metals, such as the rare earths, so all of those buildings can be electrified, the roads can be filled with high tech vehicles, and the people can have cell phones, flat screen television, and personal computers.
To the one billion of us in the Americas, Europe, and Japan who already live in the Age of Technology, we must now try to add one and a third billion additional Chinese, and to do this, apparently, in just another generation. Even assuming that non-Chinese technology utilization grows at only a small rate, if at all, from where are we going to get the resources of minerals, energy, and water to more than double the production of technology metals? The answer is that we will not be able to do it. The world will now move towards higher and higher prices for technology metals. This and the geographic and geological distribution of metals, minerals, energy, and water may well lead to a world of have and have not nations. It may well be that geology becomes destiny, and those that do not produce their domestic resources, may wind up ultimately only being financially able to be suppliers to the others. I am not talking only of African nations. I am speaking also of the United States.
Without ad hominem attacks on me or on my patriotism, tell me please how we avoid America’s economic decline without now and immediately producing and conserving our own resources, and without going out into the world to find resources to sustain our standard of living and quality of life?
Japan and Korea have already begun to do just that in order to survive as industrial nations. Have we decided not to continue as one?