For a number of years, there has been significant concern in the US and many other countries about utter Chinese dominance of a little known class of minerals known as rare earth metals.
There are 17 of these oddly named metals, such as such as yttrium and promethium, vital to producing products including autos, electronics, electric cars, batteries, defense systems and more.
Supply Chain Digest Says... |
 |
The Chinese alliance also has said its objective to “upgrade the industry” meaning by achieving greater control over ouutput and environmental impact by 2023.
|
 |
What do you say? |
| Click here to send us your comments |
 |
| Click here to see reader feedback |
|
|
China absolutely dominates known reserves and actual production of these metals, which recently was six times the production output of number 2 Australia. The US is even further back, and depends on Chinese exports for its needs.
This naturally raises concerns, as the fear is China might stop shipping these metals to the US if there is an escalated trade war, or certainly a shooting war, perhaps related to the disputed islands in the South China Sea.
And China just might do it. It stopped shipping rare earths to Japan for a while in 2010 due to a dispute over other islands and control of boundary waters in the East China Sea.
Now, China’s control has extended to even more mainstream metals products.
As reported over the weekend in a very interesting article in the Wall Street Journal, China produces more than 90% of the world’s manganese products, including steel-strengthening additives and battery-grade compounds.
High-purity forms of manganese have increasingly become crucial for battery-powered automobiles as a cost effective replacement for more-expensive battery ingredients.
And since October, the Chinese government has organized a widespread network of producers of manganese into what amounts to a cartel, or what is calls a “manganese innovation alliance.”
The Wall Street Journal article says that documents created by the alliance will centralize control over supply of key products, coordinate prices and inventory levels, and create networks for mutual financial assistance.
And it has already had a major impact, sending prices for manganese products soaring. Prices for a metric ton of $1600 at the beginning of 2021 have risen to nearly $3000 currently.
In good news, the China strategy has spurred manganese development projects across the globe, at least nine of them.
(Article Continued Below)
|
CATEGORY SPONSOR: SOFTEON |
|
|
| |
|
|
The problem is not the availability of manganese ore – that is relatively plentiful. The issue is the difficult and dirty work of processing of the ore to usable products.
 However, the Wall Street Journal reports that “Analysts say such projects outside China might take years to start and heavy cost investments to develop. Viable bases of manganese ore are often located in remote regions, which require expensive infrastructure to ferry and process extracted ores.”
China is trying to corner the market in other key metals as well, including cobalt and nickel, used in electronics, batteries and more.
For example, in March Chinese companies announced plans to lower the cost of supply nickel matte, used in battery production. That sent global nickel prices plummeting 9% in a single day, putting financial pressure in non-Chinese nickel producers. The move was in part based on China finding more efficient ways to process nickel ore.
On the new manganese alliance, last December Jia Tianjiang, chairman of manganese producer Tianyuan, said in a speech that “As the champion of this industry, and to fulfill our leadership and influence, we have to better manage our output to support prices” - exactly what a cartel is designed to do.
Shortly after that speech , members of the alliance announced plans for reduced output over the next few months, sending prices much higher.
The Chinese alliance also has said its objective to “upgrade the industry” meaning by achieving greater control over ouutput and environmental impact by 2023.
What are your thouhts on Chinese control of key metals? Let us know your thoughts at the Feedback section below.
Your Comments/Feedback
|
