What is a Rare Earth Element?: Rare earth elements are a group of seventeen chemical elements that occur together in the periodic table (see image). The group consists of yttrium and the 15 lanthanide elements (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium). Scandium is found in most rare earth element deposits and is sometimes classified as a rare earth element. Link How are rare earth elements used and why are they important?: The USA originally used “rare earth elements” when we started to make color television sets in the 1960’s. Europium was the essential material for producing the color images. The Mountain Pass Mine began producing europium from bastnasite, which contained about 0.1% europium. This effort made the Mountain Pass Mine the largest rare earth producer in the world and placed the United States as the leading producer. Link “Rare earth metals and alloys that contain them are used in many devices that people use every day such as computer memory, DVDs, rechargeable batteries, cell phones, catalytic converters, magnets, fluorescent lighting and much more.” Link During the past twenty years, there has been an explosion in demand for many items that require rare earth metals. Twenty years ago there were very few cell phones in use, but the number has risen to over 7 billion in use today. Link Control over the commodity, “rare earth elements” became important for the economic health of the USA. The Italians built their empire, in part, based on the trade of salt. To the ancient Chinese, silk production gave them an advantage. The British Empire sailed the world for spices. Control over a highly desired commodity gives a country leverage, power, economic advantage, and creates the hegemons throughout history. The Chinese began to encroach on American advantage and our leaders did not protect this industry. We had it……and we didn’t fight to keep it. Control the Commodity, Gain Advantage, Control the World: Beginning in the 1980’s, the Chinese returned to an age old strategy of cornering the market on a particular commodity, rare earth elements. Once the Chinese obtained significant control of these mines, they dropped the prices, and ran the American mines out of business. This is the “rinse and repeat” model for the Chinese as they adopted this philosophy across all industries, from common housewares to fabric production, and from stone to satellites. The Chinese Model: The Chinese gain a significant foothold in a particular industry. Then, via subsidies, they drop the prices to run all other competition out of business. Because the USA does not support industries or sectors in such a way, our manufacturing is ripe for the picking. Going forward, with no competition in sight, ….. the Chinese set the market price (prices have risen over 500%). Using this chart, we can begin to see the divergence between the USA and China, starting in the mid-80’s. By the late 90’s, China was setting the price. The USA…….. blinked. Other Commodities Worth Mentioning: China also looked beyond their borders to control world mines as demand increased for various resources. Cobalt and Lithium are NOT rare earth elements but the Chinese model is similar and worth mentioning in this context. Several POUNDS of rare earth elements are needed to manufacture electric car batteries. When lithium (used for cell phone batteries) and Cobalt (used for car batteries) were discovered in the Democratic Republic of Congo, the race for control over the mines began…. along with human rights abuses. Somewhere between 35,000-40,000 children are excruciatingly exploited in these mines. Link The video from this WaPost article of the mines will make your blood curdle. Link While UK Daily Mail’s article focused on a 4yr old who worked in the mine, this Guardian article highlights a 7yr old. Link American Child Labor laws and OSHA mining safety requirements don’t exist when the Chinese come to play….. Because “trillions are at stake” and because Control = Power. The Election of President Trump Presents a Problem for the Chinese: With the election of Donald Trump to the US Presidency and the confrontation of illicit Chinese trade practices dominating our headlines, the Chinese have resorted to their old playbook. Those rascally Chinese still think we’re stupid and/or Donald Trump is the same as other US Presidents….. Surprise! China, once again, is threatening to withhold rare earth elements in the recent trade tension with the USA. The business channel pundits are in full meltdown because the prospect of their IPhone upgrade is in danger. Yet, WE ARE THE NEWS, now, and we remember the last time the Chinese played this card. To understand this recent threat from China, we need context and the history of the LAST TIME China tried to extort Japan in the same way. No, it’s not the first time China has taken such a position. They tried it with Japan back in 2010, when China controlled 95% of the world market. Why aren’t the pundits telling us about the same Chinese playbook? Back in 2010, prices rose another 10% globally because of China’s extortion and the dust-up with Japan. The issue was taken up by the WTO and China was forced to begin exporting once more. Does China think we have forgotten their past deeds? Link Well, apparently the pundits have forgotten. We also remember how the world reacted to the Chinese extortion over rare earth elements. Other countries began to search for additional resources. This chart shows China’s rise in rare earth elements and their subsequent decline as other countries became wise to Chinese treachery. Look at the bottom right of the chart. See the rise of Australia right after the dust-up of 2010? Look at the top left of the chart. See the elimination of the USA after we let China into the WTO in 2001? Coincidence? What you DO NOT SEE is Japan’s reaction…… yet, or more precisely, Japan’s search for a consistent supply of rare earth elements for their economy. Keep in mind, China is the #1 consumer of rare earths, Japan is #2, and the USA (was) #3. Link So, where do you find rare earth elements? They’re sometimes formed from volcanic activity, but mostly they were formed from the supernova during the creation of the earth. Over millions of years, wind and weather eroded the mountains, which is why these elements are scattered across the earth. To find these elements in concentrated abundance is rare. To find an undisturbed cache of rare earth elements, it makes sense to look in a place which has remain undisturbed for millions of years….. the earth’s crust….. which is exactly where the Japanese went looking. See this picture above? Take a look at the date of the photo from Reuters. “Yasuhiro Kato, an associate professor of earth science at the University of Tokyo, displays a mud sample extracted from the depths of about 4,000 metres (13,123 ft) below the Pacific ocean surface where rare earth elements were found, at his laboratory in Tokyo July 5, 2011. REUTERS/Yuriko Nakao” That’s right, July 5, 2011. After the dust-up of 2010, the Japanese went looking for their own supply of rare earth elements…… and Japan found them. I’m not just guessing Japan targeted their own supply of natural rare earth elements, CNBC and Reuters were reporting on it back in 2014. Link The study says Japan found 16 million tons. Here is the study – heavy on the technical, make a pot of coffee to get through it all. Link “The cache lies off of Minamitori Island, about 1,150 miles southeast of Tokyo. It’s within Japan’s exclusive economic zone, so the island nation has the sole rights to the resources there.” “There’s enough yttrium to meet the global demand for 780 years, dysprosium for 730 years, europium for 620 years, and terbium for 420 years.” Link From mid-2018. “This is a game changer for Japan,” Jack Lifton, a founding principal of a market-research firm called Technology Metals Research, Link. A game changer. Ya’ think? Since rare earth elements are needed for manufacture in the fastest growing segment of all global economies, the procurement of rare earths would be quite important. ……… And a good relationship with countries who produce/control a large supply of rare earth elements would be a good thing…… right? Dearest China, tell me again….., tell me how stupid you think the Americans are…… And to the business pundits, who ignore their own prior reporting on these discoveries, mislead the public, create tension and discord, while President Trump is dealing with China on trade negotiations…… shame on you. And one more thing, since I’ve mounted the soapbox. Let’s speculate, as our dearest business pundits love to do. If the President and his administration can clear enough red tape to allow the build of an 11 billion dollar LNG port in a swamp in Cameroon Parish, Louisiana, in about 18 months, how long do we think it would take for the Trump Administration to PLOW THE ROAD for mining to continue at USA facility – Mountain Pass Mine in California. Note: the company who owned Mountain Pass, Molycorp, took a 1.7 BILLION dollar loss because of Chinese subsidies, running competition out of the market, and the company went bankrupt in 2015 – selling the mine for 20.5 Million dollars —- yes, our leaders were stupid.) Link You won’t believe this BUT, at one point, Mountain Pass produced 50K tons/yr and sent the minerals TO CHINA for processing…… yes, that’s how stupid our leaders were. Yes, Americans remember. We never forget. We are the news now! We remember well. For me, it was 6th grade, Social Studies, when we studied South America. I had to report on the country of Chile. Mandated by Mrs. Dodson, my teacher, necessary on our reports were the locations of copper, silver, iron ore, and bauxite (necessary for aluminum production) mines, as well as other natural resources, rich and abundant fisheries, and historical versus modern trading routes. Carrying the “bigger than me” white poster board to school to present my project was cumbersome. I lost one of the silver dimes glued on to represent a Chilean silver mine…. distressing to a 6th grader, and the goldfish crackers I glued off the coastline, to represent fisheries, were broken. I grumbled. Mrs. Dodson, surely was unreasonable, making us do these extravagant reports about a far away country, and mines wherein I had no interest………. Little did I know…….. Thank you, Mrs. Dodson. We would be remiss, however, if we did not consider ALL locations for natural resources. Right? Think bigger. Have you ever heard the name Naveen Jain? He was an Indian national who came to the USA with $5 in his pocket. He wants to mine the moon. It’s an estimated 16 QUADRILLION worth of metals. His companies name is Moon Express. Link …….. And just think…… we were puzzled when President Trump and Prime Minister Abe talked about going to the Moon and Mars together. Does it all make sense now? It’s all possible with great leaders. End.