There’s a lot of hysterical handwringing about China and its grip on the world’s supply of so-called rare-earth metals — rare substances used in electronics, defence, alt-energy and other high-tech.
For a sane description of what’s going on, and what’s at stake, head on over to Elizabeth C. Economy’s summation at the CFR blog.
In short, there is bad news: China is definitely dropping its exports, as it has been for a while. Part of it is hoarding, but there’s also an environmental aspect to it as well, as it’s been shutting down a lot of small mines.
The good news: Just because China currently dominates the field, doesn’t mean it will always, and there are definitely opportunities in Australia (see LYNAS Corp.), Mongolia, and the US (the recently IPO’d MolyCorp is the big play here).
She also lauds global governments for not letting China snap up too many resources overseas, although it’s not clear, exactly what the big deal is here. After all, a Chinese-owned mine in the US wouldn’t be subject to Chinese export rules.
The bottom line: This is an issue that is going away, but it’s not the end of the world, and to characterise the whole thing as though China has all of the world’s supply, and thus all of the bargaining chips is off base.
Note that a main story tonight on Nikkei.com involves Japan’s ongoing pleading with the Chinese for more exports.