Obligatory nerd explanation that "earth" is an old synonym for "ore", and "rare earth" means "few economically viable ore bodies exist".
Because these metals are so gregarious, there are very few places on the earth where they are sufficiently concentrated to be worth mining. They spread themselves around very quickly.
And because they love to mix with other metals so much, they are very energy- and chemical-intensive to refine.
Indeed… the cure for high prices is high prices. Much more interesting to entertain that Chinese officials may be trying to sound out the end users of rare earths in the process 🤔
Loved it - I’m glad you brought up the potential catastrophic environmental damages and dangers / ethics of operating a rare earth mine. I think it’s definitely a reason why, as you said “many g7 countries were happy to have someone else make them.” Y
And then there was helium. Interesting history America v/v China for industrially vital He according to Arnaud Bertrand recently.
PS. Digitisation of logistics enabled the global late modern trade expansion as well as the engineering of the industrial roll out?
NB Primary US agri production in dollars is a small fraction of the dollar worth of the annual US 'food industry', except perhaps for some high end horticultural production.
Very good, as always. Particularly enjoyed your description of the opacity of supply chains.
What follows is a read across from Tungsten so may not be absolutely applicable;
As Tim's fund raise shows we are rightly concerned by the lack of processing capacity in REE and specialty metals. However, I don't think* that's where the value is captured. The value, as always, is in the application. I suspect that much of what China is doing is breaking existing supply chains to ensure that the value add is captured in China by Chinese companies. Export data doesn't capture the export as being an REE but an electronics product for example.
Large OEMs seem less concerned about the lack of access to REE's etc than the data would suggest. Partially inertia, mostly a belief that they can buy a more finished good from China than from the "Western" provider previously.
* I think because the data doesn't show this. But then it doesn't show anything else either. In the Tungsten world the absence of Chinese exports would suggest;
Massive defence build up (subs)
Focus on fusion tests
Moving up the value chain
Failing mines
Probably some of all of the above - but we don't know because the data doesn't capture it.
Obligatory nerd explanation that "earth" is an old synonym for "ore", and "rare earth" means "few economically viable ore bodies exist".
Because these metals are so gregarious, there are very few places on the earth where they are sufficiently concentrated to be worth mining. They spread themselves around very quickly.
And because they love to mix with other metals so much, they are very energy- and chemical-intensive to refine.
Indeed… the cure for high prices is high prices. Much more interesting to entertain that Chinese officials may be trying to sound out the end users of rare earths in the process 🤔
Great piece
https://open.substack.com/pub/thiagodearagao/p/the-five-plays-behind-chinas-resource?r=2di31u&utm_medium=ios
Loved it - I’m glad you brought up the potential catastrophic environmental damages and dangers / ethics of operating a rare earth mine. I think it’s definitely a reason why, as you said “many g7 countries were happy to have someone else make them.” Y
Well summed up, Ed.
Excellent as ever - thank you Ed. That's a much more level-headed and insightful account than one reads in clickbait reporting.
And then there was helium. Interesting history America v/v China for industrially vital He according to Arnaud Bertrand recently.
PS. Digitisation of logistics enabled the global late modern trade expansion as well as the engineering of the industrial roll out?
NB Primary US agri production in dollars is a small fraction of the dollar worth of the annual US 'food industry', except perhaps for some high end horticultural production.
Arnaud Beretard is a truly reliable source 🤣
Very good, as always. Particularly enjoyed your description of the opacity of supply chains.
What follows is a read across from Tungsten so may not be absolutely applicable;
As Tim's fund raise shows we are rightly concerned by the lack of processing capacity in REE and specialty metals. However, I don't think* that's where the value is captured. The value, as always, is in the application. I suspect that much of what China is doing is breaking existing supply chains to ensure that the value add is captured in China by Chinese companies. Export data doesn't capture the export as being an REE but an electronics product for example.
Large OEMs seem less concerned about the lack of access to REE's etc than the data would suggest. Partially inertia, mostly a belief that they can buy a more finished good from China than from the "Western" provider previously.
* I think because the data doesn't show this. But then it doesn't show anything else either. In the Tungsten world the absence of Chinese exports would suggest;
Massive defence build up (subs)
Focus on fusion tests
Moving up the value chain
Failing mines
Probably some of all of the above - but we don't know because the data doesn't capture it.
The solution is already here - #Tanbreez
V interesting and compelling as ever. Avocados, ok but how much is that. Approx USD 10 billion?
Very interesting, and look forward to hearing your further thoughts. The avocado analogy is fascinating.
My wife and I both read your book and greatly enjoyed it.