In the year 2006, a company boasting the imaginative name of “Magnequench” shut down its plant at Valparaiso to begin operations anew, 2703 miles (give or take a mile) away – in Tianjin. This move, at the time, was non-descript and inconspicuous both in terms of publicity and reaction. The fact that Magnequench was the best rare-earth magnets producers in the world was a fact that was privy to, and valued by only those who were materially impacted by such production. Who were these affected individuals? The manufacturers of Abrams battle tanks and Boeing’s JDAM smart bombs. The industrial secrets and Intellectual Property associated with Magnifique was given away to Beijing on a platter while the manufacturing facilities themselves were taken over by “Coco’s Canine Cabana,” a doggy day-care centre. National interests had literally gone to the dogs!
Guillaume Pitron, a French journalist and documentary maker, Guillaume Pitron, in “The Rare Metals War,” brings to bear a no holds barred battle that is playing out in all corners of the world for the exclusive right to own and exploit a clutch of extremely valuable and impossibly rare family of metals. From gargantuan mines in the searing hot Mojave Desert to the polluted lakes and ‘cancer villages’ of Baotou in inner Mongolia, Pitron finds industrial and institutional size ‘capture’ of territories and natural resources. At the forefront of such an unashamed ‘grab’ stands China. The monopoly of China in the domain of rare metals, is downright, frightening. In 2018, China’s share of the global supply of critical raw materials was enough to make eyes pop and jaws drop: 95% of both light and heavy rare earth minerals, 87% of Antimony, 82% of Bismuth, 84% of Tungsten, 73% of Gallium, 66% of Scandium, 64% of Fluorspar. The list goes on and on and on.
So how did China attain a position of unchallenged ascendancy in this sector? Pitron argues, and compelling so, that the primary culprits responsible for this lopsided control of resources are a combination of complacency and transfer of negative externalities in the form of costs and pollution from the West to the East. While a hypocritical Western world, riding proudly on sloganeering and pomp had no qualms in outsourcing the societal and environmental costs of metal extraction to lesser developed nations, China was more than delighted to absorb the transferred costs – and what was not apparent to the outsourcers at that time – reap the resulting humongous value too! The NIMBY (Not In My Back Yard) concept thus fell flat on its sorry face.
The lamentable saga of Rhone-Poulenc in France highlights in stark detail the appalling surrender by the West of its precocious resources to the welcoming arms of China. In the 1980s, Rhone-Poulenc’s factory in La Rochelle purified between 8,000 & 10,000 tonnes of rare earths annually! A contrivance of ecological activism, legal regulations and allegations of radioactive leaks forced the manufacturing facility in La Rochelle to curb their activities and instead procure its products from China, at rock bottom prices. Now, China produces 100,000 tonnes of rare earths every year by employing workers working at temperatures of seven hundred degrees and clad only in flip-flops and shorts and no hard hats even!
Moralistic grounds and health hazards aside, mining of these rare metals, as Pitron illustrates can be an extremely inefficient exercise. Crushing 1,200 tonnes of rock yields precisely one kilogram of lutetium. YES! ONE KILOGRAM! Neodymium and gallium, call iron ores home, however the abundance of iron is compromised by the scarcity of the two rare metals. There is 1200 times less neodymium and approximately 2650 times less gallium than there is iron.
It is time the Western world wakes up to this unrivaled dominance of China. In the words of Pitron, ‘China is erecting a completely independent and integrated industry, starting with the foul mines in which begrimed labourers toil, to state-of-the-art factories employing high-flying engineers.’
The race for rare metals has just begun. “Over the next 30 years we… will need to mine more mineral ores than humans have extracted over the last 70,000 years”, writes Pitron. And at the forefront of this endeavour would be China with its huge monetary muscle, access to invaluable resources, and an enviable control over global supply chains.
Let the zero-sum games begin, unfortunately!
