(or at least “less”)
…to rare earths
There has been much concern, and rightly so, about the increasing dependence of the U.S. and other economies on the elements known as rare earths, for which the primary current supplier is China. These concerns have been further increased by the rather high-handed manner in which the Chinese government has conducted itself in this matter. As a result, stocks of companies with access to rare-earth mineral deposits outside of China have been doing pretty well.
A couple of weeks ago, General Electric posted about their efforts to reduce the need for rhenium in jet engines. Although it is not technically a rare earth, rhenium is indeed rare–world production about 50 tons per year–and expensive. GE’s rhenium-reduction project has three elements: recycling metal grindings from the manufacturing process, developing alloys that require less or no rhenium, and reclaiming rhenium from used engine parts.
When reading the GE post, it struck me that just about every company that is highly dependent on rare earths probably has similar projects underway. Comes now Toyota, with an announcement that it’s making good progress in developing an electric motor (for hybrids) which has no need of neodymium, a mainly-Chinese-source element that is a key component in today’s hybrid motors. (Toyota’s new motor is based on the induction-motor principle–scarcely a new technology, but one that has required considerable reengineering to meet the weight and efficiency needs of the hybrid application.)
Too often, forecasters and analysts extrapolate demand for commodities under the assumption that users of these commodities will continue to use them at pretty much the same levels, regardless of price and growing scarcity. In reality, though, some users will be intelligent enough to do what GE and Toyota are doing and to look for full or partial substitutes.
I’m by no means asserting that the rare-earths issue is solved or soon will be: even in the case of Toyota’s new motor, there’s a long road from a successful research project to a volume-deliverable commercial product. But I do expect the problem to be widely addressed on the demand side as well as via the opening of new mines and processing faciliies on the supply side.
Fancy what a game of chess would be if all the chessman had passions and intellects, more or less small and cunning; if you were not only uncertain about your adversary’s men, but a little uncertain also about your own . . . You would be especially likely to be beaten if you depneded arrogantly on your mathematical imagination, and regarded your passionate pieces with contempt. Yet this imaginary chess is easy compared with a game man has to play against his fellow-men with other fellow-men for instruments.
–George Eliot, in Felix Holt, the Radical (1866)
An alternate research project would be automating the mining of rare-earths so that the price advantage that the PRC currently has is eroded. It is not that the PRC has a physical monopoly on these commodities but rather that they have a legal structure much less hostile to mining them and a labor cost structure so low that they are the lowest priced provider. If these things cease to be true, they will lose their leverage.
If you could automate mining and do it cheaply the crisis would be over.
One of the advantages of that the nascent field of economics had when it was still called “political economy” was that it more clearly examined the nexus between the market in coercive power and the market for goods and services.
As to the major point of this post. This mornings Wall Street Journal had an article: “Toyota Tries to Break Reliance on China: Company Seeks to Develop Electric Motor Without Costly, Tightly Controlled Rare Earth Metals” by Mike Ramsey
“Toyota Motor Corp. is striving to develop a new type of electric motor to escape a simmering trade conflict involving China’s grip on a rare mineral. The Japanese auto maker believes it is near a breakthrough in developing electric motors for hybrid cars that eliminates the use of rare earth metals, whose prices have risen sharply in the past year as China restricted supply. The minerals are found in the magnets used in the motors.
“All electric motors rely on magnets to make them work. The new motor Toyota is working on is based on the very common and inexpensive induction motor, found in such devices as kitchen mixers. Induction motors use electromagnets””magnets that only have their magnetic attraction when power is applied to them. Most motors used in electric and hybrid cars today use a different type of motor that relies on permanent magnets. These magnets always have a magnetic field””akin to the magnets used to attach things to refrigerator doors. But the permanent magnets found in electric-car motors, unlike those that hold up the school lunch menu, are made from neodymium, a rare-earth mineral that is almost entirely mined and refined in China. …
“The auto industry purchases 40% of the world’s supply of neodymium and Toyota buys more than any other company, said Jack Lifton, a rare earth materials expert and founder of Technology Metals Research in Carpentersville, Ill. There is about a kilogram (2.2 pounds) of neodymium in every Prius, he said. …”
http://online.wsj.com/article/SB10001424052748703583404576080213245888864.html
Now the techie comment. Rhenium is not a rare earth.
“As defined by IUPAC, rare earth elements or rare earth metals are a collection of seventeen chemical elements in the periodic table, specifically the fifteen lanthanides plus scandium and yttrium. Scandium and yttrium are considered rare earth elements since they tend to occur in the same ore deposits as the lanthanides and exhibit similar chemical properties.”
http://en.wikipedia.org/wiki/Rare_earth_element
“Despite their name, rare earth elements (with the exception of the highly unstable promethium) are relatively plentiful in the Earth’s crust …”
Rhenium, mentioned above, is much rarer than the Rare Earths. Its abundance (or lack thereof) is comparable to the Platinum group.
It should be noted that the US rare earth mine was shut down for “environmental” reasons. It can be reopened anytime the Country wants to go back to work and give up on the attempt to have a GDP without any production.
Three thoughts:
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Might be worth digging up Nikola’s old works that were siezed when he died in 1943. Not merely the weapons he may have been working on, but what other odd technology that is still in his secret papers. Did have insight on how to do things better? (without the rare earth?) 68 years of dust isn’t hard to clean.
http://www.pbs.org/tesla/ll/ll_mispapers.html
People focus on the ‘death ray,’ I wonder what other things that would have been technology disrupters did he dream up, but never fully realized. (He died broke)
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This might be a field too, where we need a new NASA type of organization, either Private or Goverment, to develop technology that does not rely on the Chinese strangold materials. Nanotechnology is really still in the ‘fetus’ stage, and could be explored for alot of potentials.
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Can we strip-mine asteroids, moons, or other such places for the same? Some people still say earth first, maybe we should look further.
Ohh .. i forgot to add the other ‘final frontier,’ which is still to be developed:
Manganese Nodules on the SeaFloor
http://www.nytimes.com/2010/11/09/science/09seafloor.html?_r=1
So the Chinese have competition they cannot control (yet)
There’s also a good amount of rare earths to be found in the northern Urals in Russia, aside from Canada and the U.S.
.. and previously uneconomical sources will come online because the price is expected to go up. They are reopening this mine in CA.
Too often, forecasters and analysts extrapolate demand for commodities under the assumption that users of these commodities will continue to use them at pretty much the same levels, regardless of price and growing scarcity.
Unfortunately, it is not “too often” but “almost always.” The idea that demand for “natural” resources is constant while supply is completely fixed is the source of all resource depletion panics from Jevon’s 1865 “The Coal Question” to the 1867 onward once a generation panic over “peek oil.”
I call this the “Flour Barrel” model of “natural” resources. In this model, “natural” resources exist in a fixed amount in the earth just like flour exist in a fixed amount in a barrel in an old time general store. In this model, when you run out of the flour in the barrel/earth, you are out of flour entirely. Worse, you can scoop/consume the flour/resource at the same rate near the bottom as at the top so you/the- economy never knows it is running out flour/resources until the scoop scrapes against the bottom and comes up half full. Failed-birthday-parties/planatary-collaspe then ensues.
In reality, there is no such thing as a “natural” resource that exist in a fixed, finite supply. In reality, all resources are artificial and create by human action. Both the need and availability of resources depends entirely on the contemporary technology.
In the beginning, no one could make a magnet. They had to rely on naturally occurring lodestones. Then they learned they could lightly magnetize iron by hammering cooling iron while aligned with the North Polar Star (Chinese descriptions of the process sound exactly like a magic spell.) In the 1800s the electromagnet was discovered and later in the century artificial permanent magnets were produced (the were marketed as “manmade lodestones.”)
Today, there is serious research in using carbon nanotubes to create electrical and magnetic effects. I image that long term, magnets and motors will be made out of recycled charcoal briquets.
We will never run out of resources as long as we never run out of technological innovation. All perceived resource shortages occur because of short term political interruptions in the creation or distribution of the resource. This is analogous to the shopkeep locking the door to keep you away from the flour barrel.