What On The Rare Earth ...
A few weeks ago, a Chinese trawler rammed a Japanese coast guard vessel ( or vice versa, depending on who’s telling the story.) The crew was sent home, the captain was arrested. This happened near some uninhabited rocks in the East China Sea, called Diaoyu islands in China and Senkaku islands in Japan. The rocks are under Japanese administration, but are also claimed by (to make matters even more complicated) China AND Taiwan. The islands sit on top of a huge natural gas field, to make matters really interesting. To get the captain home and to make a point, China has been ratcheting up the rhetoric. China is looking for a pressure point that hurts the Japanese. First, they tried to cut off the stream of Chinese tourists that go shopping in Japan. That didn’t work.
Now, China may have found something that seriously messes with traffic in Japan.
The New York Times reports that China has declared a rare earth embargo on Japan. What in the world is rare earth used for? The New York Times tells us: Rare earth is “used in products like hybrid cars, wind turbines and guided missiles.” To be exact, rare earth is used to make magnets. From the hard drive in the computer you use to read this to huge generators, they all use rare earth. And guess what, “China mines 93 percent of the world’s rare earth minerals, and more than 99 percent of the world’s supply of some of the most prized rare earths,” says the NYT. No rare earth, no electric motors, no electric motor, no hybrid or electric cars. And OMG, no guided missiles.
China says the NYT is smoking dope. “China doesn’t block rare earth exports to Japan,” Chen Rongkai, a spokesman for China’s Ministry of Commerce, told the Wall Street Journal. “The Japanese government hasn’t been informed” of any Chinese ban on rare-earth materials, a Japanese Foreign Ministry official said. An official in Tokyo at the Ministry of Economy, Trade and Industry also said the Japanese government hasn’t received any notice from the Chinese government on a ban. Another Japanese economic official, who watches China closely, said his office would flash a “red alert” if there would be any rare earth embargo.
As long as there is no shortage of magnets, the transfer of electric car technology to China can continue unencumbered.
Update: On Friday afternoon, Tokyo time, the captain was let go, The Nikkei [sub] reports.The day before, four Japanese had been detained in China “for having entered a military zone without authorization and illegally videotaped military targets in northern Hebei Province,” China’s Xinhua reported without giving further detail.
With matters settled, the flow of tourists and rare earth may continue.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Reality check, The only reason the ChiComms took over the world production of REs was price. The US has plenty, and was only driven out of the business by Chinese slave-labor wages and 19th century environmental standards. As there may now be a profitable market for the civilized world, the US is going to restart the abandoned sites. Mis/dis info at the core.
Day 3 of this story: There are no quotas on rare earth materials - if you do your manufacturing in Communist China. The semi-official story as of yesterday was that Japan had exceeded its quota for the year. This has been a pivotal year in Sino-Japanese relations. Earlier in the year, there were strikes in the automotive sector for higher wages, but only at those plants that supplied Japanese manufacturers. Then there was that recent decree that electric vehicle manufacturers will have to turn over all their technology to their Chinese manufacturing partners. Now, this hiccup in the supply chain for rare earth elements. Move along folks. There is nothing to see here. There is no need to worry. Please feel free to invest further in Communist China.