Why go to Mongolia when India and Australia are among
the top 8 countries with huge reserves to be extracted? And setting up
mining facilities in Mongolia is so difficult and infrastructure and
transportation so expensive.
China and Russia together controls
more than 56 million metric tons of all known reserves of rare earth, so
how significant is their position in this sector is left to the
imagination. Moreover, China holds more than 80% of all global refining
facilities of rare earth elements as well. Even the USA needs China's
facilities to refine their ores.
This move by China will cause
the price of rare earth elements to shoot up, after being dampened over
the years by the manipulation of the USA and the West. Everything that
depends on rare earth is going to be more expensive. USA is reported to
be making a US$300 million funding assist for Lynas of Australia, hoping
to alleviate the crisis.
Problem is where is Lynas going to
process the raw minerals now that no country, even Malaysia, wants to
have processing facilites that causes health related issues. How long is
it going to take for Australia and other countries to set up more
refining facilities and can the world - USA, EU, Japan and South Korea
high tech industries in particular - afford to wait for supplies to come
on line to cover the shortage due to restrictions by China?
Anonymous
3 comments:
Why do people always say that the USA and the West like to lift big stones to clobber Russia and China, but which always landed on their own feet?
Well, take Russia as example. With 14,000 sanctions and still counting, Russia has not collapsed, is not realistically panicking and still standing. On the other hand, just cutting energy supplies to EU is causing hilarious and panic among the EU countries and killing their industries. Do we honestly believe the EU energy problem is solved, or that inflation is subsiding in the EU? Energy is a long term issue for Europe, and 'patch and pray' steps to solve it can only tide them over for a short spell. Let us not talk about the coming winter, mild or severe, just two or three months away.
For China, it only needs to tighten control of essential commodities like rare earth to achieve maximum effect. As more restrictions are added to more essential products like silicon, the noose will tighten around the necks of companies dependent on such essentials. Tit for tat always work better for countries able to counter with measures well calibrated and put into practice with long term planning. Come September, China is restricting export of some other technology items.
The Chip war is not won yet by the USA and its allies. Like a nuclear war, the aftereffects could be more devastating than the original intent.
The wheels are going to drop off from the 'Chip Alliance' bandwagon and companies are realising what Karma means going forward.
The fun has just started.
The Chip Alliance and Chip War is just like the proverbial saying of 'killing the goose that laid the golden eggs'. The USA and its allies can stifle China on Chip technology, but now it looks like the USA cannot help its own domestic not to mention allies in the chip industry without China's unrestricted supply of rare earth elements.
China had been fueling the demand by the global chip manufacturing industry with their rare earth elements for decades and is breaking that tradition going forward. As China's own priority is now extending into being self sufficient in domestic chip manufacturing, it is therefore timely and logical for it to keep rare earth elements sufficient for its own use. That is killing two birds with one stone - restricting supplies to others and conserving it to serve rising domestic demand.
The days of China not retaliating are over, starting from Trump's trade war. Every action now will meet with a reaction that is going to be more devastating than expected. The irony is that it is those countries that followed the USA blindly eg in the Ukraine War that are suffering the most, while the USA is benefiting from the misery of Europe.
Just wait for the winter of discontent coming into focus soon, if it is severe and not mild like in 2022.
Post a Comment