Jack Lifton refutes WSJ article: ‘How the Great Rare-Earth Metals Crisis Vanished’
The WSJ article published on January 8, 2014 How the Great Rare-Earth Metals Crisis Vanished declares that the “rare earth crisis” is over, and as support refers to the conclusions of a “leaked” Pentagon report. It glibly declares, analyses, and dismisses, as a failure, a Chinese plot to maintain control of the production and pricing of the rare earths as having been defeated by the forces of the market and capitalism. But the real crisis is that western end-users of rare earth enabled components have proved that if you don’t capitalize the security of supply then when the market turns in your favor you are unprepared to take advantage of it. It is in the naked greed of the stock market where the real rare earth crisis was invented, fomented, sucked dry — and forgotten. The stock market flies no national flag and its players care little for apple pie or mom. Notwithstanding what this author states there is today no nation other than China that has in place a total domestic rare earth supply chain. Thus even if you do produce rare earths outside of China you must send them to China if you want to first refine mining concentrates and then to fabricate rare earth metals and alloys for use, for example, as magnets. In particular none whatsoever today of the “critical” heavy rare earths are produced outside of China.
I wonder of this author knows that the production of the light rare earths (only) today outside of China, which he apparently believes “solves” the total rare earth (light and heavy) supply accessibility problem, must in fact compete with Chinese produced light rare earths inside China itself. And that the real problem is pricing imports into China not export duties from China. So long as it is cheaper to buy rare earths within China than to import them the Chinese total supply chain will continue to absorb the world’s demand for the production of rare earth enabled components such as those for the F35. It is this aspect of the “security of supply,” the fact that its Japanese magnet supplier operates within China using rare earths available only from and in China, that has caused Lockheed to apply for a variance from the domestic supply requirements of the Defense Authorization Act every year for the last decade. China produces and consumes almost all of the magnet-critical heavy rare earths domestically. What heavy rare earths we receive are, like those for the F35, in finished goods only.
I would explain the Chinese motives as mostly genuinely driven by their domestic marketplace, which now, for the first time, is capitalizing the costs of environmental safety and management. This seems to be including a genuine effort to get at the heart of the problem, which has been the corruption that allowed things to get out of hand through a lack of regulatory oversight and enforcement leading to a massive oversupply not only of mining concentrate but also of refining capacity…[To read the complete commentary please log into InvestorIntelReport with your username and password. If you do not have a membership, please click here or email Sue@InvestorIntel.com]
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Jack Lifton is the CEO for Jack Lifton, LLC and is a consultant, author, and lecturer on the market fundamentals of technology metals. Technology metals ... <Read more about Jack Lifton>