Breaking Chinese Blackmail Chips : "Japan team maps 'semi-infinite' trove of rare earth elements" and the world is better off

Reported by the Japan Times , a very big story for the future of technology - Japan team maps 'semi-infinite' trove of rare earth elements

Japanese researchers have mapped vast reserves of rare earth elements in deep-sea mud, enough to feed global demand on a “semi-infinite basis,” according to a new study.

The deposit, found within Japan’s exclusive economic zone waters, contains more than 16 million tons of the elements needed to build high-tech products ranging from mobile phones to electric vehicles, according to the study, released Tuesday in the journal Scientific Reports.

The team, comprised of several universities, businesses and government institutions,

U.S. Navy photo

surveyed the western Pacific Ocean near Minamitori Island.

In a sample area of the mineral-rich region, the team’s survey estimated 1.2 million tons of “rare earth oxide” is deposited there, said the study, conducted jointly by Waseda University’s Yutaro Takaya and the University of Tokyo’s Yasuhiro Kato, among others.

The finding extrapolates that a 2,500-sq. km region off the southern Japanese island should contain 16 million tons of the valuable elements, and “has the potential to supply these metals on a semi-infinite basis to the world,” the study said.

The area reserves offer “great potential as ore deposits for some of the most critically important elements in modern society,” it said.

This discovery seems to free Japan and other countries from being blackmailed by China, which has, it is alleged, threatened to or actually cut off the export of rare earth elements to countries in order to force them to alter policies or engage in Chinese approved actions. Here's a report from 2010:

Beijing denied reports it had prevented shipments of the rare minerals that many of Japan's top exporters, such as the world's biggest automaker Toyota, rely on to make cutting-edge products ranging from car batteries to computers.

But traders in Tokyo said China had blocked exports to Japan of key minerals by slowing down administrative procedures in ports in Shanghai and Guangzhou to prevent materials being loaded on ships.

"We heard from our officials in China that the shipping of rare earths (to Japan) was suspended on September 21," a spokesman for Japanese trading house Sojitz in Tokyo told AFP.

Japan on Friday said it would release a Chinese fishing boat captain arrested earlier this month after a collision between his trawler and two Japanese coastguard vessels in a disputed area of the East China Sea.

In addition, China has "adjusted" export quotas on occasion - thus increasing the price of these elements, as reported by the Wall Street Journal in China Cuts Export Quota on Rare-Earth Metals (also in 2010):

China cut its quotas on first-half exports of rare-earth metals around 35%, a move likely to feed trade tensions and concerns among global buyers after an even deeper cut late this year.

China supplies around 95% of the world's rare-earth metals, which are used in high-tech batteries, television sets, mobile phones and defense products. Beijing's decision to cut export quotas by 72% for this year's second half sparked criticism that China was taking undue advantage of its position to raise prices.
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China's export quotas are stoking trade tensions less than a month before Chinese President Hu Jintao visits with U.S. President Barack Obama. "We are very concerned about China's export restraints on rare-earth materials," a spokeswoman from the U.S. Trade Representative's office said Tuesday. "We have raised our concerns with China and we are continuing to work closely on the issue."

In trade talks this month, U.S. trade officials were unable to persuade China to ease restrictions on rare-earth metals, according to a USTR report to Congress released last week. The report said the U.S. will continue to press Beijing on the issue and would consider bringing the matter to the World Trade Organization.

Some 2013 analysis from Amy King and Shiro Armstrong here:

China has managed to dominate the global rare earth metal market because it can produce rare earths at low cost due to distorted factor markets that suppress prices. In the case of rare earths, cheap land, energy and labour (unregulated against workplace dangers) minimise costs, and severe environmental damage are not factored into the cost of production. Chinese policy-makers have been risking WTO action by gradually reducing the production of rare earth metals instead of addressing the underlying failures in labour and environmental standards. In August 2010, at a meeting with Japanese business leaders at a Japan-China economic forum, Chinese Minister of Commerce Chen Deming cited Chinese concerns about environmental protection and national security as the reason for this decision.

China now has to demonstrate to the WTO that the restrictions on production and exports were in fact directed at cleaning up the industry and addressing its serious environmental impact, not some misguided attempt to restrict global supply.

Given what we know of China's level of concern over enviornmental matters, I would think such proof might prove hard to come by. Further, it is difficult to say it is a "misguided attempt to restrict glogal supply" when such a level of control comports very well with the types of power levers China's leadership loves to pull and their general "bully boy" approach to things. Reminds on of OPEC in the days before the U.S. fracking business broke their oil supply scam.

Thus the Japanese discovery seems to break the risk of that blackmail and breaks that lever. Nice!