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Jack Lifton
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Jack Lifton is an Independent consultant and commentator, focusing on the market fundamentals and future end use trends of the rare metals. He specializes in the sourcing of nonferrous strategic metals and on due diligence studies of businesses in that space. His work includes exploration,... More
My company:
Technology Metals Research
My blog:
The Jack Lifton Report
  • Rare Earth Production and Supply Issues: The First Steps Towards Global Resource Re-Distribution? 4 comments
    Aug 16, 2010 10:32 PM
    All of the apocalyptic predictions about what will happen to both US military security and its civilian economy if China cuts off the export of the rare earth elements, in the production of which  China currently has a monopoly, are masking an even more important dilemma. What will happen to China if it cannot produce or obtain not only sufficient rare earth elements to maintain its rate of domestic growth?

    The rare earth supply "crisis' can and will be solved when there is sufficient production of heavy rare earths outside of China to resolve the impending shortage that the Chinese perceive as a serious threat to the massive growth that they have planned primarily for their their domestic green technology industry, among others. 

    The recent hubbub about reduced Chinese export quotas for the rare earth elements seems to not address the point that the quotas may in fact only affect  the export of raw materials and not the rare earth elements contained in finished or semi-finished goods. If it is just the raw materials forms (separated and purified chemical compounds) the export of which are being reduced then it may not matter so much at all, because China has been reducing its export of ALL such raw materials since the beginning of the 21st century when it openly decided to require that Chinese raw materials not be exported unless as much value as possible had been added in China first. This was a program to create jobs in China and to bring new technologies and manufacturers to China in search of secure supplies of raw materials. It worked and seems to have simply become state policy.

    I have been saying for some time that the rare earth elements supply issue is just the tip of a rare metals supply issue that will grow to monumental proportions in this decade if China's domestic economy continues to grow as a consumption driven economy. China is already far and away the all time largest producer in history of steel; it today produces some 50% of the world's raw steel. This has resolved the issue of supplying the necessary structural metal to advance China to a world class industrial power.

    Now it is the time for China to begin producing or acquiring all of the technology metals, such as the rare earths, so all of those buildings can be electrified, the roads can be filled with high tech vehicles, and the people can have cell phones, flat screen television, and personal computers.

    To the one billion of us in the Americas, Europe, and Japan who already live in the age of technology we must now try to add one and a third billion additional Chinese, and to do this, apparently, in just another generation. Even assuming that non-Chinese technology utilization grows at only a small rate, if at all, from where are we going to get the resources of minerals, energy, and water to more than double the production of technology metals?  The answer is that we will not be able to do it. The world will now move towards higher and higher prices for technology metals. This and the geographic and geological distribution of metals, minerals, energy, and water may well lead to a world of have and have not nations. It may well be that geology becomes destiny and those that do not produce their domestic resources may wind up ultimately only being financially able to be suppliers to the others. I am not talking only of African nations. I am speaking also of the United States.

    Without ad hominem attacks on me or on my patriotism tell me please how we avoid America's economic decline without now and immediately producing and conserving our own resources and without going out into the world to find resources to sustain our standard of living and quality of life?

    japan and Korea have already begun to do just that in order to survive as industrial nations. Have we decided not to continue as one?

    Disclosure: none
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Comments (4)
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  • Futurist
    , contributor
    Comments (2128) | Send Message
     
    Jack,
    I have no doubt that China will put a huge strain on the demand for RREs. But I really don't think that GE, Ford, Boeing, and the other Very Large industrial American companies don't see the shortage approaching. Those with political clout often have the ears of the decision makers.

     

    As I understand from your articles that the US does have the ability to produce its own metals. You are concerned that the timing will be a few years late. That is a much different issue, I think, than whether a natural resource rich country like the US can sustain as one of the world's largest manufacturers.

     

    I agree that the timing of the US in addressing this issue is maddeningly slow. But I don't get the same "vibe of doom" that you portray in your article.

     

    What do you think that prices on the refined metals you follow will explode upward causing huge problems with economies around the globe?
    17 Aug 2010, 10:29 AM Reply Like
  • Jack Lifton
    , contributor
    Comments (398) | Send Message
     
    Author’s reply » I think that the global metal industry will transform itself over the next 25 years into a China/India supply base, and that prices will ultimately be set by China/India in their own currencies, which will cause the prices of the metals in dollars to go up as the value of the dollar to the Yuan/Rupee declines. America can stave off its economic decline by conservation and an end to planned obsolescence, but no politician wants to commit political suicide by admitting that we need to create not destroy wealth to maintain our standard of living. Our current politicians have failed to safeguard us against anything but a major military threat. They all need to be replaced by economically experienced and sophisticated leaders.
    17 Aug 2010, 10:57 PM Reply Like
  • Futurist
    , contributor
    Comments (2128) | Send Message
     
    Thanks,
    I also expect world economies to shift over the next 25 years. Population and demographics are hard to change. But most Americans know that wealth needs to be created. Much future wealth has already been spent so it is difficult to create now to pay for what already has been spent. But I am an optimist at heart. Our political system does allow for quick and orderly change. Never as quick as is needed.
    Unfortunately America acts as a sleeping giant. We do need to wake up and come out of hibernation. But if and when that happens we are a very mighty ecomomic power. We have raw materials and an educated labor force. We have unused factory space with utility services already installed.
    Our economic structure might be at risk. But I would bet my old soul that America is strong again in the future.
    18 Aug 2010, 12:28 PM Reply Like
  • giorgio gobbo
    , contributor
    Comments (5) | Send Message
     
    Futurist, you used to have an "educated" work force but compared to others, like China or India, not anymore. It may be even more accurate to say that you do not have an education system or a body of students capable of receiving education. Research and Development unfortunately requires thinking and does not have boxes to tick for multiple choices.
    21 Aug 2010, 04:26 PM Reply Like
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