By on October 20, 2010

Are they or aren’t they? Yesterday, the story broke that China might be placing a hold on exports of rare earths to the United States. This comes after rumors of the hold on exports to Japan reportedly entering its fourth week. This could put a halt to Prius assembly once Toyota exhausts its stores of rare earths; you can’t make batteries without the stuff.

The official word is that China will continue to supply the United States and will, in fact, raise exports, but only Herr Bertel Schmitt probably knows for sure. In the meantime, have no concern for the Chevy Volt; although the battery packs are assembled in the United States, the heavy lifting’s done in Korea.

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18 Comments on “First the Prius, now the Volt? China Threatens Supply of Battery Materials...”


  • avatar
    OldandSlow

    Now that the Chinese dominate the rare earth minerals market, they can do this, especially with increasing demand.
     
    If they are too ham handed in setting quotas, their reputation as reliable trade partner will suffer in a similar fashion as the Russians who have periodically shut off their exports of natural gas.
     
    Personally, I doubt our corporate leaders in the West will rebel.  Look for some major a$$ kissing and speculative money making selling “rare earth” futures in the commodity markets.
     

    • 0 avatar
      nonce

      China really isn’t the only place to get these things.  They are just the only place that are currently mining them.
       
      Other countries, including the US, could subsidize their own mining industries and start getting these things out if they really really wanted to.  If China pushes too far, they will.

  • avatar

    So – its not enough that America is at the mercy of the Chinese for virtually 95% of the things we have to buy on a daily basis…but now, they are threatening to reduce the supply of the battery materials too?

    When are the people going to rise up and oust these politicians who have allowed corporations to outsource all of our factories to Asia? 

    I don’t believe in the free market anymore. The free market is going to KILL america because we can’t compete with SLAVE LABOR. The corporations would rather pay these people 1/15th what they pay us here and we cannot compete with that. 

    WE NEED ECONOMIC NATIONALISM.  And the Democratic Party is the ticket for that.

    • 0 avatar

      Sure. Economic Nationalism, a.k.a. Fascism. It grows on economic troubles like mushrooms on manure. It has been tried before.

    • 0 avatar
      thebeelzebubtrigger

      No, economic nationalism does NOT equal fascism. It’s really just simple common sense. Any sane organization prioritizes taking care of its own needs first and foremost. Giving so much power to huge, multinational corporations has destroyed U.S. industry because the capitalists, given the freedom to do so, have chosen slave labor and trashing the earth for resources rather than paying a living wage and wise management of natural resources because it’s “cheaper”.
       
      Bertel, I find your writing on TTAC fascinating most of the time. But politically you are about as clueless as Sarah Palin! Please stick to cars…
       
      EDIT:
      Realized I probably should add that this is not an endorsement of the Democratic Party — IMO they are too far gone to be of any use at all. Personally, I plan to never vote for a major party candidate again. Voting Republicrat or Demoblican is truly throwing your vote away. If enough people chose independent alternatives we might have a fighting chance at getting back to being a representative democracy (of the *people*, not of corporations).

      In fact, the U.S. may actually be broken beyond fixing via “the system”, though no doubt many of us will continue trying that. But the whole “two party system” we have now is strictly theater. While they grandstand on fake issues like abortion and gay marriage the real stuff gets passed unanimously and the corporatocracy entrenches itself ever more deeply into power like a big, greedy tick.

      And so many people want to gift the U.S. with an average standard of living similar to that enjoyed by India and China.
      I sometimes truly wonder, is corporatism a *religion* for these people? It’s totally unamerican.
      Americans first, and let’s put corporations back in their place.

      But most of all, can’t we just stop all the obvious political crap on TTAC?
      Maybe some of you could start another site, TTAP or something so you can get it out of your systems without polluting the autoblogosphere so much…

  • avatar

    Article coming up.  I need to do a bit more research.
    The NYT left out one minor, but important detail. You’ll know in while which.
    Korea delivers no out: According to my information, China stopped all rare earth exports to everywhere, period.
    Film at 11

    • 0 avatar
      Stingray

      Last week’s Newsweek (Oct 11th) ran an article about China and made a reference of this.
       
      At least in the version we get down here in Latam.

    • 0 avatar
      L'avventura

      If you’re doing research on this topic, both the Economist and Foreign Policy magazines had excellent articles on this during the blockade of rare earths(RRE) to Japan during the fishing boat collision.
       
      Bloomberg’s Article was also excellent:
      http://www.bloomberg.com/news/2010-09-29/pentagon-losing-control-of-afghanistan-bombs-to-china-s-neodymium-monopoly.html
       
      For a Chinese perspective, Beijing Review had an interview with Lin Donglu, the Secretary General of the Chinese Society of Rare Earths
      http://bjreview.com.cn/expert/txt/2010-10/11/content_303311.htm
       
      Export ban’s are illegal under WTO agreements, which is why China is denying them.  There was no question that China was intentionally blocking RRE esports to Japan during their political scuffle.  And the US needs RREs not for the Volt but because they are crucial components for defense equipment.  In everything from cruise missiles to M1 Abrams tanks.  Let’s remember that America is at war on two fronts and RRE shortage can have dire consequences.
       
      Most pundits think China’s ban to be strategic, however it may have been accelerated due to the exposure by the knee-jerk ban on Japan.  China knows that RRE mines are planned to come online in the next few years in America, Europe, and Africa.  Their leverage on RRE is quickly disappearing, and China wants products that use RRE to be centralized in China, from everything from motors, batteries, to even defense equipment.  China wants those technologies.
       
      China is racing against Japan, S. Korea, and the US on being the major producer of those technologies:
      http://www.foreignpolicy.com/articles/2010/10/11/the_great_battery_race
       

  • avatar
    Robert.Walter

    I’ve been tracking this topic (thanks for the additional good reference points Jack).

    About 25 years ago, Deng Xiao Ping recognized that China’s analogue to the Middle East’s oil was it abundent and easy to extract Rare Earth deposits, and he set the Middle Kingdom on a path to exploit and leverage these resources …

    Until now, we have seen exploit, as an exporter of the material, using cost advantage to drive the competition out of the market, and to force consolidation on the downstream refiners of the material.  Once the refiners consolidated and collapsed, the Chinese bought them (inter alios Magnequench, a former GM company), and against promises to leave the operations in the US, moved whole factories to China.  With the removal of that production technology to china, a good deal of american manufacturing and technological know-how is spread to the four winds…

    Then, now, that remaining downstream consumers of chinese RE materials have become dependent on the chinese, gradually changing their designs to incorporate technology depending on RE materials, making their investments to produce these products, convincing their customers to buy and use these products, the chinese pull back on deliveries, thus destabilizing the down-stream producers and consumers of the products…

    So, when china, the producer of 95% of RE material reduces its export quotas by 72%, there is bound to be trouble in the dependent downstream supply chain…

    From the NYT/IHT today:

    “Despite a widely confirmed suspension of rare earth shipments from China to Japan, now nearly a month old, Beijing has continued to deny that any embargo exists.
    Industry executives and analysts have interpreted that official denial as a way to wield an undeclared trade weapon without creating a policy trail that could make it easier for other countries to bring a case against China at the World Trade Organization.
    So far, China seems to be taking a similar approach in expanding the embargo to the West.”

    http://www.nytimes.com/2010/10/20/business/global/20rare.html

    and german industry which imports 3-5k tons of RE/year is putting pressure on Berlin and Brussels over the issue:

    http://www.nytimes.com/2010/10/20/business/global/20rareside.html?ref=global

    • 0 avatar
      Robert.Walter

      One other thought … could it be that the chinese central planners blew it, and failed to properly project the growth of their own internal needs for RE material?  Thus were the hastily announced quota revisions, and much of the talk of protecting the chinese environment, merely excuses for diverting materials from their dependent offshore customers to developing chinese firms? 

    • 0 avatar
      Stingray

      It’s curious how history repeats itself in some matters.
       
      Oil, now this RE issue, Apple/Windows/Android, and I guess there are many many others.
       
      As is said here: Man is the only animal that stumble with the same stone more than 1 time.

  • avatar
    Zackman

    Interesting. Strictly a few abstract comments:

    This is looking more and more like the original “Rollerball” movie where only a handful of companies control the world and its resources.

    During WWII, America lost its source of rubber. What did the nation do? It invented synthetic rubber. Germany developed synthetic fuel after its sources of oil were drastically reduced. The Japanese had more rice, so they drank more Sake and ultimately turned into flying suicide bombs until too many of them were vaporized by the U.S. I’m certain scientists are working on a substitute for RE materials from a single source. The Energizer Bunny will just have to take an R&R vacation in Hong Kong.

    As China “progresses” into an auto-choked paradise, followed by India, it’s reasonable to believe they are going to hoard the majority of these resources for their own consumption.

    So, to the U.S. and the rest of the western world, get busy. Ethanol isn’t the answer, at least not the total one, but any reduction in the amount of corn syrup in our food supply isn’t a bad thing, either.

    Rare Earth, a two-hit wonder, stunk.

  • avatar
    PeriSoft

    I’d just like to say that I LOL’d at the article picture.
     
    FWIW, The Economist didn’t seem to think that the embargo would amount to much; unfortunately I don’t remember the specifics of the article. The Economist is pretty awesome, but when you plow through 10 articles at a time, it’s easy for one to get lost…
     
    In other news, I suspect that I’m one of very few people who read that magazine while sitting cross-legged on the floor outside their toddler’s room waiting for him to go to sleep, and having a PB&J with milk for dinner.

  • avatar
    BlisterInTheSun

    “I just want to celebrate!”

    All the classic rock allusions are great, but TTAC has yet to top Sajeev’s epic MC5 reference….

  • avatar
    Steven Lang

    Rare Earth!
    How can we not learn from men with such wise faces?
    I can see them now informing the world’s leaders of how they should protect Mother Earth. While firmaments of Mother Nature provide the smelly essence of their disjointed pearls of wisdom.
    With six people in the band I’m also assuming that from Classic Rock standards they have at least three guitarists, an organ, and a cowbell.

    • 0 avatar
      Zackman

      You know, being a baby-boomer of 59, I have to admit I hate 99% of what is known as “classic rock”. “Corporate rock” is what it really was. Anti-war, save the earth garbage. Some tunes I like, but to me, the top-40 hits of 56-72 were more honest. Enough of that.

      Although so much politics are involved, whether we like it or not, the “Traveling merchants” of the world impact what and how, and pretty soon, when we drive. Not a pleasant scenario.

      obbop needs to enlighten us with a few words of his unique wisdom!

  • avatar

    When I hit the space bar to scroll down while I am reading the comments, instead of scrolling down one screen it goes to the bottom of the page to a Bing ad. I’m using Safari on a Mac.
    (If I scroll with the scroll bar, it works correctly.)

  • avatar
    Commando

    Of course the product planners never, ever, think of the viability of an abundant supply of some weirdo raw material that they design the car around.  It’s all about public image.  It’s not our fault it requires delirium 718 by the ton.
    Obama is requiring GM to go that route and it’s totally without any clue of the overall practicality of buying into something.  It’s whatever sounds good to the masses.

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