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发帖数: 1223 | 1 【 以下文字转载自 Military 讨论区 】
发信人: TradeSmarter (Smarter), 信区: Military
标 题: 国人之愚蠢，看看这个稀土报告就知道了
发信站: BBS 未名空间站 (Thu Oct 14 22:22:08 2010, 美东)
http://web.stratfor.com/images/writers/CHINA_RARE_EARTH_ELEMENTS.pdf?fn=9617327557
China and the Future of Rare Earth Elements
October 14, 2010
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STRATFOR
PDF Version
* Click here to download a PDF of this report
A recent diplomatic spat between China and Japan has heightened territorial
tensions and called attention to China’s growing forcefulness with foreign
powers. One of the more intriguing aspects of this development was China’s
suspension of the export of “rare earth” elements (REE) to Japan. REE
comprise 17 metallic elements with a variety of modern industrial and
commercial applications ranging from petroleum refining to laptop computers
to green energy applications to radar. China produces roughly 95 percent of
the global supply of REE and Japan is the largest importer. China’s
disruption of REE shipments to Japan has caused alarm among other importer
countries, bringing new urgency to the search for new supplies and
substitutes.
The China Factor
Chinese control of the base of the REE supply chain has increasingly made
China the go-to location for the intermediate goods made from REE. In time,
China hopes to extend production into the final products as well. As new REE
supplies cannot be brought online overnight, the Chinese will enjoy a
powerful position in the short term. The Chinese Ministry of Commerce
reports that China has ratcheted down REE export quotas by an average of 12
percent per year over the past five years, further leveraging this position.
Reflecting that and the current China-Japan spat, the average price for REE
has tripled in the year to date.
Rare earth elements are not as rare as their name suggests, however. Before
the Chinese began a dedicated effort to mass-produce REE in 1979, there were
several major suppliers. Pre-China, the United States was the largest
producer. Appreciable amounts of REE were also produced in Australia, Brazil
, India, Malaysia and Russia. Any sort of real monopoly on REE, therefore,
is not sustainable in the long-run. But before one can understand the future
of the REE industry, one must first understand the past.
The story of REE is not the story of cheap Chinese labor driving the global
textile industry into the ground. Instead, it is a much more familiar story
(from STRATFOR’s view) of the Chinese financial system having a global
impact.
Unlike Western financial systems, where banks grant loans based on the
likelihood that the loans will be repaid, the primary goal of loans in China
is promoting social stability through full employment. As such, the REE
industry — like many other heavy or extractive industries — was targeted
with massive levels of subsidized loans in the mid-1980s. At the same time,
local governments obtained more flexibility in encouraging growth. The
result was a proliferation of small mining concerns specializing in REE.
Production rates increased by an annual average of 40 percent in the 1980s.
They doubled in the first half of the 1990s, and then doubled again with a
big increase in output just as the world tipped into recession in 2000.
Prices predictably plunged, by an average of 95 percent compared to their
pre-China averages.
Most of these Chinese firms rarely turned a profit. Some industry analysts
maintain that for a good portion of the 2000s, most of them never even
recovered their operating costs. At the same time, an illegal REE mining
industry ran rampant, earning meager profits by disregarding worker safety
and the environment and ruthlessly undercutting competing prices. With an
endless supply of below-market loans, it did not matter if the legitimate
mining concerns were financially viable. It was in the environment of
continued Chinese production despite massive losses that nearly every other
REE producer in the world closed down — and that the information technology
revolution took root.
In fact, if not for China’s massive overproduction, the technological
revolution of the past 15 years would not have looked the same. In all
likelihood, it would have been slowed considerably.
Before 1995, the primary uses for REE were in the manufacture of cathode ray
tubes (primarily used in television sets before the onset of plasma and LCD
screens) and as catalysts in the refining industry and in catalytic
converters (a device used in cars to limit exhaust pollution). Their unique
properties have since made them the components of choice for wind turbines,
hybrid cars, laptop computers, cameras, cellular phones and a host of other
items synonymous with modern life. Chinese overproduction in the 2000s —
and the price collapses that accompanied that overproduction until just this
year — allowed such devices to go mainstream.
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With numerous large REE deposits outside China, the long-term sustainability
of a monopoly is questionable at best. This does not mean China will not
create some destabilizing effects in the medium term as it attempts to
leverage the current imbalance to its benefit, however. That its prolific,
financially profitless and environmentally destructive production of REE has
largely benefited foreign economies is not lost on China, so it is pushing
a number of measures to alter this dynamic. On the supply side, China
continues to curb output from small, unregulated mining outfits and to
consolidate production into large, state-controlled enterprises, all while
ratcheting down export quotas. On the demand side, Chinese industry’s
gradual movement up the supply chain toward more value-added goods means
more demand will be sequestered in the domestic economy. In fact, in the
years just before the financial crisis and accompanying recession, global
demand outpaced China’s ability (or willingness) to supply the market,
resulting in bouts of price volatility. As the economic recovery proceeds,
it is no stretch to envision outright gaps in exports from China within two
to five years, even without the kinds of political complications the REE
market has suffered in recent days.
Many states already have REE-specific facilities in place able to restart
mining in response to this year’s price surge.
The premier Australian REE facility at Mount Weld plans to ramp up to 19,000
metric tons of rare earth oxides by the end of 2011. The top American site
— Mountain Pass in California — aims to produce a similar amount by the
end of 2012. Those two sites will then collectively be producing 25-30
percent of global demand.
Before China burst on the scene, most REE production was not from REE-
specific mines. REE are often found co-mingled not simply with each other,
but in the ores extracted for the production of aluminum, titanium, uranium
and thorium. As China drove prices down, however, most of these facilities
ceased extracting the difficult-to-separate REE. There is nothing other than
economics stopping these facilities from re-engaging in REE production,
although it will take at least a couple of years for such sites to hit their
stride. Such locations include sites in Kazakhstan, Russia, Mongolia, India
and South Africa as well as promising undeveloped sites in Vietnam, Canada
(Thor Lake) and Greenland (Kvanefjeld). And while few have been exploring
for new deposits since the 1970s given the lack of an economic incentive,
higher prices will spark a burst of exploration.
Getting from here to there is harder than it sounds, however. Capital to
fuel development will certainly be available as prices continue to rise, but
opening a new mine requires overcoming some significant hurdles. Regardless
of jurisdiction, a company needs to secure the lease (usually from the
central government) and obtain a considerable variety of permits, not the
least of which is for handling and storing the toxic — and in the case of
REE, radioactive — waste from the mine. Even if the governments involved
want to streamline things, vested interests such as the environmental lobby
and indigenous groups appear at every stage of the permit process to fight,
lobby and sue to delay work. And depending on the local government,
successfully mining a deposit could involve a considerable amount of
political uncertainty, bribe paying or harassment. Only after clearing these
hurdles can the real work of building infrastructure, sourcing inputs like
electricity and water, and actually digging up rocks begin — itself a
herculean task.
Another complication is the fact that many of the best prospects are in
jurisdictions undergoing significant changes. In the United States,
activists are working to reform the federal mining law dating to 1872, which
has ensured that U.S. jurisdictions remain among the most attractive mining
destinations in the world. Initiatives like the Hardrock Mining and
Reclamation Act of 2007 would drastically constrain mineral companies and
increase project costs across the board. In Australia, ongoing negotiations
over the implementation of a so-called “super tax” has dampened enthusiasm
in one of the world’s premier mining jurisdictions and home to Lynas
Corporation’s Mount Weld project. The tax, which sought to impose a 40
percent tax on mining profits, has since been watered down, but the debacle
has left a discernable mark on the country’s resource extraction industry.
And for an industry that is positively allergic to uncertainty, events like
the BP oil spill in the Gulf of Mexico and the Chilean mine collapse only
portend tighter regulation worldwide.
Re-opening an existing mine is somewhat easier since some infrastructure
remains in place, and the local community is accustomed to having a mine.
Old equipment may need to be brought up to specifications, and the
regulatory questions will still affect how miners and bankers view the
project’s profitability, but the figuring margins are simpler when the
basic geology and engineering already have been done.
Unfortunately, there is more to building a new REE supply chain than simply
obtaining new sources of ore. A complex procedure known as beneficiation
must be used to separate the chemically similar rare earth metals from the
rest of the ore it was mined with. Beneficiation proceeds through a physical
and then chemical route. The latter differs greatly from site to site, as
the composition of the ore is deposit-specific and factors into the choice
of what must be very precise reaction conditions such as temperature, pH and
reagents used. The specificity and complexity of the process make it
expensive, while the radioactivity of some ores and the common use of
chemicals such as hydrochloric and sulfuric acid invariably leave an
environmental footprint. (One reason the Chinese produced so much so fast is
that they did not mind a very large environmental footprint.) The chemical
similarity among the REE that was useful to this point now becomes a
nuisance, as the following purification stage — the details of which we
will leave out to avoid a painfully long chemistry lecture — requires the
isolation of individual REE. This stage is characterized by extraordinary
complexity and cost as well.
At this point, one still does not have the REE metal, but instead an oxide
compound. The oxide must now be converted into the REE’s metallic form.
Although some pure metals are created in Japan, China dominates this part of
the supply chain as well.
In any other industry, this refining/purification process would be a concern
that investors and researchers would constantly be tackling, but there has
been no need, as Chinese overproduction removed all economic incentive from
REE production research for the past 20 years (and concentrated all of the
pollution in remote parts of China). So any new producer/refiner beginning
operations today is in essence using technology that has not experienced the
degree of technological advances that other commodities industries have in
the past 25-30 years. It is this refining/purification process rather than
the mining itself that is likely to be the biggest single bottleneck in re-
establishing the global REE supply chain. It is also the one step in the
process where the Chinese hold a very clear competitive advantage. Since the
final tooling for intermediate parts has such a high value added, and since
most intermediate components must be custom-made for the final product,
whoever controls the actual purification of the metals themselves forms the
base of that particular chain of production. Should the Chinese choose to
hold that knowledge as part of a means of capturing a larger portion of the
global supply chain, they certainly have the power to do so. And this means
that short of some significant breakthroughs, the Chinese will certainly
hold the core of the REE industry for at least the next two to three — and
probably four to five — years.
Luckily, at this point the picture brightens somewhat for those in need of
rare earths. Once the REE have been separated from the ore and from each
other and refined into metallic form, they still need to be fashioned into
components and incorporated into intermediate products. Here, global
industry is far more independent. Such fashioning industries require the
most skill and capital, so as one might expect, these facilities were the
last stage of the REE supply chain to feel competitive pressure from China.
While some have closed or relocated with their talent to China, many
component fabrication facilities still exist, most in Japan, many in the
United States, and others scattered around Europe.
All told, a complete regeneration of the non-Chinese REE system will
probably take the better part of the decade. And because most REE are found
co-mingled, there is not much industry can do to fast-track any particular
mineral that might be needed in higher volumes. And this means many
industries are in a race against time to see if alternative REE supplies can
be established before too much economic damage occurs.
[ADVERT:32]
Affected Industries
Everyone who uses REE — which is to say, pretty much everyone — is going
to feel a pinch as REE rapidly rise in value back toward their pre-Chinese
prices. But some industries are bound to feel less a pinch than a death grip
. REE applications broadly fall into six different categories, with the
first being the least impacted by price increases and the sixth being the
most impacted.
The first category consists of cerium users. Cerium is the most common REE
and the most critical for refining and catalytic converters. As the average
global crude oil gets heavier, cerium is needed more and more to “crack”
the oil to make usable products. As clean air requirements tighten globally,
automobile manufacturers need more cerium to ensure cars run as cleanly as
possible. Cerium thus remains in high demand.
Luckily for cerium users, the steady phasing-out of cathode ray tubes means
that supplies rapidly are being freed up for other applications. Between the
sudden demand drop and ongoing REE production in China, there are actually
substantial cerium stockpiles globally. This means that cerium users are not
likely to face serious price increases even though their REE has the most
inelastic demand. Petroleum and automotive companies use the most cerium,
which also is used for polishing agents for glass and semiconductor chips,
ultraviolet ray-proof glass, self-cleaning ovens, and some steel alloys.
The second category comprises non-cerium goods with inelastic demand. This
includes items that will be built regardless of cost, either because they
are irreplaceable or because they are luxury items. This list includes
satellites, which use yttrium in their communications systems; europium,
used in LED screens in TVs; lanthanum, used for fish-eye lenses in iPhones;
scandium, used for lighting systems in movie studios; and neodymium and
gadolinium, indispensable for MRIs. These are all items that people — in
particular Americans — would not stop purchasing without a large increase
in prices. Luckily, while REE are critical to these devices, they make up a
rather small proportion of their total cost. So while the world will
certainly see REE price increases, those price increases are unlikely to
affect the luxury market.
The third category comprises defense goods. Somewhat similar to luxury goods
in terms of how REE demand and prices will affect them, demand for defense
goods is extremely unlikely to shift due to something as minor as a simple
price increase. Military technology that uses REE — ranging from the
samarium in the guidance module in joint-direct attack munition kits to the
yttrium used in the “magic lantern” that locates subsea mines — is going
to be in demand regardless of price. Demand for urgently needed military
technology is quite inelastic regardless of price in the short run, and
militaries — in particular the American military — have robust budgets
that dwarf the additional costs of components whose contribution to the
final cost is negligible. The only reason STRATFOR places defense uses as
likely to suffer a greater impact than luxury goods is that China itself is
aiming to be a producer of luxury goods, so such products will most likely
have a Chinese supply chain. By contrast, few militaries in the world with
the high-end capabilities likely to be impacted by REE prices are interested
in purchasing military technologies from China, so there will be a large
constituency pushing for alternative production of REE as well as a large
market for alternative products. This could turn out to be a boon for the
American industry: Anyone seeking to increase REE production is going to
find a friend in the Pentagon, and no one can lobby Congress quite like the
military.
The fourth category comprises goods in which REE are a critical component
and a significant price impact but that are made by industries with a long
habit of adapting to adverse price shifts. A case in point is the Japanese
auto industry. There is a long list of vehicle systems that the Japanese
have adapted over the years as the price of various inputs has skyrocketed.
In 2000, the Russian government banded together the country’s disparate
platinum group metals (such as palladium and platinum, critical in the
manufacture of catalytic converters) exports into a single government-
controlled cartel. Platinum group metal prices subsequently skyrocketed. By
March 2001, Honda had announced a new advance that reduced the need for
palladium by roughly half. Platinum group metal prices subsequently
plummeted.
In anticipation of this type of disruption, the Japanese have been
developing substitutes to REE. Presently, the Toyota Prius uses roughly one
kilogram of neodymium. At pre-2010 spike prices, that neodymium used in one
Prius cost $20, a marginal impact on the Prius’ sticker price. Should
prices rebound to pre-China levels, however, the average Prius buyer would
notice a roughly $450-price hike due to magnetic components alone. One week
into the China-Japan REE spat, government-funded researchers announced a
magnet system design that can completely replace the neodymium used in the
Prius.
This hardly solves the problem overnight; it will take months or years to
retool Toyota’s factories for the new technology. Still, consumers of REE
are going to find ways of lessening their use of REE. The information
technology revolution has proceeded unabated since 2000 in part because REE
have been one-tenth to one-twentieth of their previous prices. Absent any
serious price pressures, industries have had no need to invest in finding
means of cutting inputs or finding substitutes. (REE are so abundant that in
China they are used in fertilizers and road-building materials.)
The shift in prices could well give a much-needed boost to non-REE dependent
technologies hampered by relatively inexpensive REEs. For example, the REE
lanthanum is a leading component in the Prius’ nickel metal- |
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