China Playing With Japan’s Need Of Rare Earth Elements

Rare Earth Elements

In 1992, Deng Xiaoping, the late Chinese leader, reportedly declared, “There is oil in the Middle East; there is rare earth in China.”

It was at that moment that China started a program to develop and exploit vast reserves of the metals to be found in the country, estimated at 57 percent of the world total. Although the 17 elements known as rare earth minerals are not that rare as they seem to be their extraction implies great costs and great effort as well.

Seven years later after Deng mentioning of the rare earth minerals, his successor Jiang Zemin ordered the Chinese state to “Improve the development and applications of rare earth, and change the resource advantage into economic superiority.”

18 years later this proves to have been a good strategy, as China is now the second economical power in the world.

China is known today as a country dominant in rare earths, controlling about 97 percent of the global market. Therefore China achieved its much sought supremacy. It seems that after all the effort and the money invested in this matter, as China invested huge amounts of money in the research work on rare earth elements, the efforts was worth. Hundreds of scientists were involved in the research studies that have been performed in China. The determination and hard work is clearly proven by the fact that the only two journals dedicated to rare earth metals are in Chinese.

The importance of some rare earth elements seems to be crucial, especially when it comes to dysprosium, a silvery metal used to make hybrid motors, lasers, nuclear reactors, and computer hard drives.

If you ever wondered where this element comes from, well ninety-nine percent of it is produced in China.

The Greek meaning of the word: “difficult to get at”, provides one the most accurate description.

Rare earths are essential for making iPods, electric cars, missiles and a range of other products.

Being involved in a now long dispute over Japan’s detention of a Chinese fishing trawler captain, Chinese customs officials have decided to stop shipments to Japan of so-called rare earth elements.

After having personally demanded on Tuesday the release of the Chinese captain being detained by Japan, Prime Minister Wen Jiabao threatened to take unspecified further actions if Japan did not comply.

Even though Chen Rongkai, a ministry spokesman denied that any embargo had been imposed, this seems to be one of those unspecified actions.

The government’s denial of being involved in such matters appears like a normal thing since any publication of government regulations or other official pronouncements barring exports would allow Japan to file an immediate complaint with the World Trade Organization, claiming a violation of free trade rules.

There is no way for Japan to prove that China racked one’s brain and finally found a way to torment it, and what better way than by preventing the loading of rare earths on ships bound for Japan.

China learnt its lesson in November after having faced World Trade Organization complaints coming from The United States, the European Union and Mexico. The complaints were related at that time to the issuing of regulations limiting the export of phosphorus and eight other industrial minerals.

Some of the most prized rare earths, which sell for several hundred dollars a pound are to be found in China.

According to Dudley Kingsnorth, the executive director of the Industrial Minerals Company of Australia, a rare earth consulting company, they have been announced that Beijing intends to reassess the ban in one month’s time if the fishing captain still has not been released.

Therefore, Japan has been given a deadline. Will they treat it as such and respect the given deadline?

“By stopping the shipments, they’re disrupting commercial contracts, which is regrettable and will only emphasize the need for geographic diversity of supply,” he said. He added that in addition to telling companies to halt exports, the Chinese government had also instructed customs officials to stop any exports of rare earth minerals to Japan.

Although shipments are still allowed to go to Hong Kong, Singapore and other destinations, no such rare elements like rare earth oxides, rare earth salts or pure rare earth metals should reach Japan.

Yet, according to the officials no ban has been imposed on the export to Japan of semi-processed alloys that combine rare earths with other materials.

China previously made no notice to Japan about the suspension, as Japanese authorities have stated. In spite of this thing, Japanese government mentioned the fact that it had repeatedly asked China not to do such a thing, as this would prove harmful for the production and trade.

Being the main buyer of Chinese rare earths for a long time now, Japan received the toughest attack today as China decided to take this measure. Being used for a wide variety of things these rare earths seem to be vital in industry and not only.

As Japan has few natural resources and has long been dependent on imports, the measure adopted by China might create panic among Japanese authorities.

As it is well known The United States was the main supplier of oil to Japan in the 1930s, and the imposition of an American oil embargo on Japan in 1941, has been considered by some historians as one of the reasons that made Japan attack Pearl Harbor.

After having announced in July that a cutting of export quotas by 72 percent was planned for the remainder of the year, the price of many rare earths reached a rather worrying value. Was this the estimated effect? Is this precisely what China wanted to do?

Most probably so.

Now, it looks like Japan is somehow forced to stop the production of hybrid cars, guided missiles and even wind turbines, rare earths being involved in their production.

It has been said that up to now China played the role of a reliable supplier and this mainly because rare earths had become a rather profitable source, a way of bringing important amount of money in the country. Yet, it seems that the dispute involving a captain of its nationality is a reason strong enough to prevent China from playing the role of the Good Samaritean, at least when it comes to Japan and its increasing need of rare earths.

China speculated exactly on Japan’s need. Will this determine Japan to release the Chinese captain?