A strategic discovery that will cost China its chokehold on a key high technology resource

China's long-term program to leverage itself into a dominant position in the global high tech economy took a huge blow last week.  Worst of all, the blow came at the hands of Japan, which remains the most hated foreign rival, thanks to its gruesome military and colonial history.  Jeremy Burke of Business Insider reports:

Researchers have found a deposit of rare-earth minerals off the coast of Japan that could supply the world for centuries, according to a new study.

The study, published in the journal Nature on Tuesday, says the deposit contains 16 million tons of the valuable metals.

Rare-earth minerals are used in everything from smartphone batteries to electric vehicles.  By definition, these minerals contain one or more of 17 metallic rare-earth elements (for those familiar with the periodic table, those are on the second row from the bottom).

These elements are actually plentiful in layers of the Earth's crust, but are typically widely dispersed.  Because of that, it is rare to find any substantial amount of the elements clumped together as extractable minerals, according to the USGS. Currently, there are only a few economically viable areas where they can be mined and they're generally expensive to extract.

China dominates the rare earth business and has been unafraid to exploit the leverage that this supplies.  The sole U.S. rare earth mine, the Mountain Pass Mine, was driven into bankruptcy in 2015 by low prices and sold to a Chinese-led consortiumShenghe Resources, in June 2017.  This despite the fact that then-CIA director Mike Pompeo commented the month before that U.S. dependence on foreign sources of rare earths raises "real concerns."


Mountain Pass Mine (photo credit: AlanM1).

The acquisition must be approved by the Committee on Foreign Investment in the United States (CFIUS), now notorious for approving Russia's acquisition of Uranium One, but there is no record of its decision discoverable by Google searches or contained in CFIUS's latest report to Congress.

This budding Chinese monopoly now faces disruption by Japan, but exploitation of these deposits will not be quick or cheap:

The deposits were found in the Pacific Ocean seabed near remote Minamitori Island, about 1,150 miles southeast of Tokyo.  Extracting them would likely be costly, but resource-poor Japan is pushing ahead with research in hopes of getting more control over next-generation technologies and weapon systems.

A roughly 965-square-mile seabed near the island contains more than 16 million tons of rare-earth oxides, estimated to hold 780 years' worth of the global supply of yttrium, 620 years' worth of europium, 420 years' worth of terbium and 730 years' worth of dysprosium, according to a study published this week in Nature Publishing Group's Scientific Reports. ...

[I]solating rare-earth minerals from mud hundreds of meters underwater is expensive.  More research needs to be done on methods of extracting the rare earths continuously, Prof. Takaya said. A Japanese consortium of government-backed entities, corporations including Toyota Motor Corp. and research institutions hopes to conduct a feasibility test within the next five years, the researchers said.

Decades ago, I interviewed many Japanese business leaders in the world metals business responsible for developing reliable supplies of ferrous and non-ferrous ores, and I was deeply impressed by their commitment to ensuring strategic supplies, even though they were profit-driven businesses.  They had a very long-term perspective, sinking huge sums into overseas projects to ensure predictable supplies.  I have little doubt that the technological obstacles will be addressed with great vigor.

Meanwhile, China must realize that the leverage available to it through domination of rare earths will diminish in the future.  Will this tempt its leaders to act while that leverage remains strong?

Hat tip: Karin McQuillan

China's long-term program to leverage itself into a dominant position in the global high tech economy took a huge blow last week.  Worst of all, the blow came at the hands of Japan, which remains the most hated foreign rival, thanks to its gruesome military and colonial history.  Jeremy Burke of Business Insider reports:

Researchers have found a deposit of rare-earth minerals off the coast of Japan that could supply the world for centuries, according to a new study.

The study, published in the journal Nature on Tuesday, says the deposit contains 16 million tons of the valuable metals.

Rare-earth minerals are used in everything from smartphone batteries to electric vehicles.  By definition, these minerals contain one or more of 17 metallic rare-earth elements (for those familiar with the periodic table, those are on the second row from the bottom).

These elements are actually plentiful in layers of the Earth's crust, but are typically widely dispersed.  Because of that, it is rare to find any substantial amount of the elements clumped together as extractable minerals, according to the USGS. Currently, there are only a few economically viable areas where they can be mined and they're generally expensive to extract.

China dominates the rare earth business and has been unafraid to exploit the leverage that this supplies.  The sole U.S. rare earth mine, the Mountain Pass Mine, was driven into bankruptcy in 2015 by low prices and sold to a Chinese-led consortiumShenghe Resources, in June 2017.  This despite the fact that then-CIA director Mike Pompeo commented the month before that U.S. dependence on foreign sources of rare earths raises "real concerns."


Mountain Pass Mine (photo credit: AlanM1).

The acquisition must be approved by the Committee on Foreign Investment in the United States (CFIUS), now notorious for approving Russia's acquisition of Uranium One, but there is no record of its decision discoverable by Google searches or contained in CFIUS's latest report to Congress.

This budding Chinese monopoly now faces disruption by Japan, but exploitation of these deposits will not be quick or cheap:

The deposits were found in the Pacific Ocean seabed near remote Minamitori Island, about 1,150 miles southeast of Tokyo.  Extracting them would likely be costly, but resource-poor Japan is pushing ahead with research in hopes of getting more control over next-generation technologies and weapon systems.

A roughly 965-square-mile seabed near the island contains more than 16 million tons of rare-earth oxides, estimated to hold 780 years' worth of the global supply of yttrium, 620 years' worth of europium, 420 years' worth of terbium and 730 years' worth of dysprosium, according to a study published this week in Nature Publishing Group's Scientific Reports. ...

[I]solating rare-earth minerals from mud hundreds of meters underwater is expensive.  More research needs to be done on methods of extracting the rare earths continuously, Prof. Takaya said. A Japanese consortium of government-backed entities, corporations including Toyota Motor Corp. and research institutions hopes to conduct a feasibility test within the next five years, the researchers said.

Decades ago, I interviewed many Japanese business leaders in the world metals business responsible for developing reliable supplies of ferrous and non-ferrous ores, and I was deeply impressed by their commitment to ensuring strategic supplies, even though they were profit-driven businesses.  They had a very long-term perspective, sinking huge sums into overseas projects to ensure predictable supplies.  I have little doubt that the technological obstacles will be addressed with great vigor.

Meanwhile, China must realize that the leverage available to it through domination of rare earths will diminish in the future.  Will this tempt its leaders to act while that leverage remains strong?

Hat tip: Karin McQuillan