Thursday, October 28, 2010

I Feel the (Rare) Earth Move

Like Bill said:

"Whatever excuses you despots and tyrants are gonna use to explain your bad behavior, just throw those right out the window, she sees through all of them. There are only three words you are going to need for when Hillary shows up... I. am. sorry."

A follow-up on China's rare earth embargo that I wrote about last week:

The Chinese government on Thursday abruptly ended its unannounced export embargo on crucial rare earth minerals to the United States, Europe and Japan, four industry officials said.

The embargo, which has raised trade tensions, ended as it had begun — with no official acknowledgment from Beijing, or any explanation from customs agents at China’s ports.

Could this have anything to do with it?

The Chinese shipments resumed Thursday morning only hours before Secretary of State Hillary Rodham Clinton raised the embargo issue at a news conference in Honolulu, where she announced plans to visit China on Saturday to pursue the matter with Chinese officials.

Mrs. Clinton spoke after meeting with Japan’s foreign minister, Seiji Maehara, and said that the suspension of shipments had been a “wake-up call” and that both countries would have to find alternative sources of rare earth materials.

China will still have the export restrictions in place, limiting supply to 30,300 metric tons (in a world that wants 50,000 metric tons) of rare earth material. Not only has limited supply driven up the price, the export taxes serve to keep the supply that's available in China at a much lower price - in effect forcing companies to move there for production. But, as the NY Times article points out, businesses and countries don't appreciate being messed with like this, and perhaps the "alternative sources" route is the best idea.

But China’s willingness to play economic hardball could yet have long-term drawbacks, if it prompts multinationals to reduce their reliance on manufacturing in China and spread their investments among more countries.

Yes, let's do that. Rare earth mining is a nasty business for the environment anyway - let's start looking closer at synthetic or other replacements for these materials. In the meantime, best of luck to the SOS on her visit. Don't make us send her back there again.