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Focus On The Japan vs China Rare Earths Saga Misses The Point

It’s all so utterly predictable.

Every man, woman and canine following the rare earths space will be aware of the ongoing saga of China’s alleged unofficial ban on rare earth exports to Japan. We’ve been told that China got uppity with Japan over its arrest of a fishing trawler captain, and the next thing you know China was apparently telling rare earth exporters, to quietly yank on Japan’s chain, through the temporary cessation of exports [because of course doing it quietly in this way, would mean that no-one would put two and two together, right?].

The wider story broke in the New York Times last week, following the earlier publication of a single anecdote on the subject, by the Industrial Minerals web site. This is a Web site not to be confused by the way [as it was by at least two so-called "reputable" mainstream news publications], with Dudley Kingsnorth’s Industrial Minerals Company of Australia Pty Ltd [IMCOA]. Dudley and his company had nothing to do with the story as it emerged.

Protagonists from all sides of the various stories and sub-stories came rushing forward, claiming this, that and the other. Then came the inevitable denial from China, followed by the inevitable “they denied it so they MUST be guilty” routine, and before we knew it, ladies and gentlemen, we had ourselves a good ol’-fashioned tale of conspiracy, dark dealings and yet more ABSOLUTE evidence, by gosh, of the perfidious nature of the Chinese. And so it goes.

I almost hate to break it to you, folks, but the truth of the matter is that outside of a few dingy offices, several thousands of miles away from where you and I are probably sitting right now, no-one really knows what ACTUALLY happened last week, or continues to go on – or not, as the case may be. Anecdotal “evidence” continues to flow but frankly, it’s all rather irrelevant.

Ultimately it doesn’t actually matter if the alleged ban was or is real or not: diversifying our supplies of any important materials, makes as much plain common business sense now, as it did before last week’s storm in a teacup. Right? Whether it’s alleged threats to cut off supply, or an unfortunate but catastrophic earthquake or other natural disaster, placing all of one’s procurement eggs in one geographical basket is just daft if it can be avoided, particularly in the case of the rare earths where there are deposits geographically located all over the globe.

Perhaps if North Americans and Europeans spent as much energy on actually implementing and coordinating sound procurement strategies, underpinned by sound national policies and objectives, as they did on the pissing and moaning that has taken place these past few days, we might have been just a little closer to the creation of a robust, decent supply chain than we are now. The reaction to last week’s story feels like being stuck on a boat with half a dozen rowers all paddling in different directions, taking us nowhere except towards the ominous waterfall ahead. All mouth and no trousers, as they say back in my old neighborhood.

The story does actually get a little better in Japan; that country has been looking to develop non-Chinese sources for their technology metals for years. They have also been developing alternatives to rare earth elements – again, for years. Not that certain Japanese ministers and politicians appear to know this [or those who would quote them]; apparently there is nothing unique to the Americas or Europe, in politicians having no clue regarding the scientific work being done right under their noses, in their respective countries.

As a resource-poor nation, Japan has had no choice on this matter, for years. As just one example, Japanese researchers have been working to reduce the amount of dysprosium needed in high-performance neodymium-based permanent magnets since at least 2004, if not earlier. Long before the present rare earths bubble, or the one before that…

And yet, despite being just about the world’s leading location [certainly outside of China] for science and innovation in the rare earths and their applications, Japan was excluded as a possible partner, in work to be conducted by a new US rare earths research & development center, which was proposed in legislation making its way through the US House of Representatives this week. There is mention of cooperation with directorates of the European Union, to avoid “duplication of efforts”, in the bill, so I suppose we should be thankful for small mercies. Not linking up with Japan, however, and its formidable scientific and engineering talents, is just plain myopic, and brings into question the motivations of the bill in the first place.

We’ll see how the China vs Japan story unfolds [or doesn't] as time goes by. We’ll also see if the rare earths bill gets turned into legislation or if the upcoming campaign season and subsequent lame duck session in Congress will see the bill disappear into oblivion. In the meantime, let’s just hope that the powers that be, in the public and private sectors of the USA and Canada, can get their political and financial acts together in the face of potential supply chain disruption, from threats real or imagined.