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Generational Dynamics Web Log for 28-Oct-2010
28-Oct-10 News -- Rare earth minerals controversy creates new alliances

Web Log - October, 2010

28-Oct-10 News -- Rare earth minerals controversy creates new alliances

France is braced for a new strike on Thursday

Rare earth minerals controversy creates new alliances

As we reported yesterday, China's export restrictions on rare earth minerals (REEs) are considered by many international officials to be China's revenge for the arrest of the fishing boat captain last month, and even for the selection of a Chinese dissident as winner of the Nobel Peace Prize.

Global production of rare earth oxides (Market Oracle)

Global production of rare earth oxides (Market Oracle)

China produces over 90% of the world's supply of rare earth minerals (REEs). REEs are not particularly rare, but they are expensive to mine because of labor costs and poisonous byproducts that pollute the environment, according to an analysis by Market Oracle.

Apparently, the current situation is due to the foresight of former Chinese leader Deng Xiaoping, according to Global Post. In the 1980s, he put the country on track to be the world leader in development of REEs, though some say it was by taking advantage of China's cheap labor costs and weak environmental laws.

The REE controversy is a boon for Australian mining companies that still produce them, according to the Sydney Morning Herald. Prices are going so high, according to the article, that a new bubble has been created, and it's likely to burst at some point.

Other countries, including the U.S., couldn't compete with China on price, and they simply stopped developing REEs in the 1990s and the early 2000s.

One American supplier, Molycorp Inc., has a mine in Mountain Pass, Calif., that was closed almost ten years ago, and could reopen, but it would take four years. Other suppliers might require up to ten years.

Didymium oxide, a combination of neodymium and praseodymium, two rare earth elements from Molycorp Mineral's Mountain Pass Mine

Didymium oxide, a combination of neodymium and praseodymium, two rare earth elements from Molycorp Mineral's Mountain Pass Mine

On the other hand, India has now decided to restart production of REEs for the first time since 2004, according to Reuters, and expects to be in production in 2011. India hopes to meet Japan's need for REEs as quickly as possible. This is part of a Comprehensive Economic Partnership Agreement (CEPA) signed by Prime Minister Manmohan Singh and his Japanese counterpart, Naoto Kan.

This agreement is significant for a number of reasons, according to an analysis by Asia Times. Japan is eager to develop a strong trading relationship with India these days, but that wasn't the case a few years ago. Until recently, Japan complained of bureaucratic bottlenecks and corruption in India, but China's actions on REE's seem to have turned things around.

When we look back at this controversy five or ten years from now from the point of view of Generational Dynamics, it may turn out to have spiraled into something big, or it may have fizzled into nothing. What makes it interesting now is that it supports the overall expected trend. The prediction is that we're headed for a new world war with China, as the mutual xenophobia between China and the West continues to grow. Thus, we expect Japan to be allied with India and the U.S., and China to be allied with Pakistan.

A part of the CEPA agreement mentioned above between Japan and India is that Japan may be investing in nuclear power plants in India. This would have been unthinkable a few years ago, because of Japan's post WW II nonnuclear policy, having been the target of nuclear weapons in 1945. But the generations of survivors of that attack are now pretty much gone, and Japan may conclude a nuclear deal with Japan.

At the same time that's going on, the United States has asked Pakistan to provide more information about a civilian nuclear agreement that they've concluded with China, according to the Times of India.

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France is braced for a major public union strike on Thursday, protesting raising the retirement age from 60 to 62. However, both houses of Parliament have passed the reform, and only procedural steps are required before the bill becomes law, probably next week. Unions have had to back down from their strike actions in recent days, and Thursday's strike is the fifth, and possibly the last. Bloomberg

The European Union is headed for a major economic summit on Thursday, following up from last spring's bailout of Greece. However, there are deep divisions on the way to proceed, and France and Germany are proposing major changes to governance of the EU that would require renegotiation of the Lisbon Treaty. AFP

(Comments: For reader comments, questions and discussion, see the 28-Oct-10 News -- Rare earth minerals controversy creates new alliances thread of the Generational Dynamics forum. Comments may be posted anonymously.) (28-Oct-2010) Permanent Link
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Generational Dynamics Web Log for 28-Oct-2010 28-Oct-10 News -- Rare earth minerals controversy creates new alliances

Rare earth minerals controversy creates new alliances

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Generational Dynamics Web Log for 28-Oct-2010
28-Oct-10 News -- Rare earth minerals controversy creates new alliances