Rare Earths and Hostages

Just received a blog-in-exile from Mr. Wingrove concerning China’s monopoly over rare earth elements as depicted in the recent National Geographic issue and the broader implications on the world’s financial markets. Pretty interesting scary stuff…

Full text after the break. Thanks David!

Rare Earths And Hostages

Have you ever heard of the Seventeen Essentials? If not, don’t be ashamed. Not a lot of people have. Nor do those same people realize just how important they might prove in the future history of this globe of ours.

The Seventeen Essentials, huh? Just what the hell is that Wingrove fella talking about now?

Okay. Well we’re talking about oxidized minerals. Specifically about the following seventeen elements in the Periodic Table –

21 Scandium           39 Yttrium             57 Lanthanum     58 Cerium        59 Praseodymium

60 Neodymium      61 Promethium    62 Samarium       63 Europium    64 Gadolinium

65 Terbium             66 Dysprosium     67 Holmium         68 Erbium        69 Thulium

70 Ytterbium         71 Lutetium

Or, more commonly – Sc   Y  La  Ce  Pr  Nd  Pm  Sm  Eu  Gd  Tb  Dy  Ho  Er  Tm  Yb  and  Lu.

And no, I’m not doing a James Cameron here and making them up. These are real – look ‘em up – and they’re used in practically every technological gizmo produced in the West.

Only there’s one big problem. We don’t have any of them. We don’t own any of them. The only place that has these ever rarer rare earths (which is what they are) is China. That is, but for the odd few thousand metric tons being mined in Africa – and hey, look who’s in charge there!

There’s a wonderful piece in this month’s NATIONAL GEOGRAPHIC (June 2011) if you want to look and see what these things are like, and look at the (frankly horrifying) graph which shows whose hands they’re in.

Until 2002 the USA used to mine them themselves. Even back in the 1980s they had half the world’s supplies while China had none. But now? Now the US mines not a single ton of the stuff and has reserves of a mere 15% of the world’s total. Against which, of the 125,000 metric tons produced, almost all of it belongs to China. Ninety seven per cent, if you want to split hairs. And boy do we need that stuff. Without it… well, nothing works. Smart Phones, medical scanners, car batteries, wind turbines, computers…

In the Fall of 2010, during a diplomatic dispute, China cut off supplies of rare earths to Japan for a month, which had a major knock-on effect on world markets. When it comes to rare earths China are the top dogs, with 48 per cent of the world’s total reserves. And in days to come the situation is only going to get worse as far as the West is concerned.

Which is why I’m so delighted about the news today that Burberry’s – manufacturers of super-expensive handbags in London – saw their profits soar by almost FOUR HUNDRED PER CENT. Because that means the Chinese want Western luxuries, and as long as we can provide them for an ever-expanding Chinese middle class (who’ll soon be 400 million strong) then we’ve got a chance of riding the dragon. Whiskey, Beef, Fashions, Expensive Watches…

It seems that whatever we do nowadays, it’s affected quite heavily by what the Chinese want and what the Chinese are doing. The old laws of economics have gone by the board, only no one’s told you that yet. The China Syndrome has made the old rules redundant.

Truth is, we’re living through an economic revolution unheard of on this planet, and who knows where it’s all going to lead. The only thing we can be certain of is that the price of EVERYTHING will go up in the years to come as China’s demand grows more voracious. And it strikes me that only one country is prepared for this…China.

So, as they say, watch this space. Oh, and ask yourself next time you’re listening to the news – “Why aren’t they telling me what’s really happening?” Maybe because the people who are feeding us our news just don’t want to face facts. China is here to stay. And year on year they are growing larger and richer and more powerful. And at the end of that long march to the Number One spot?

I’d say, right now, that we’re looking like hostages to Fate.

Hey guys… and don’t blame me… I just wrote the books… I didn’t create this situation…

David Wingrove 16th June 2011

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