Another interesting article this morning Critical Raw Materials
HOARDING – get in the game. According to Reuters, the European Union is considering stockpiling raw materials, possiblyincluding rare earths, and will confront any country restricting supplies. The policy which Reuters has seen in "draft" will feed
into a strategy review to be launched before April. The strategy includes examining whether to propose a stockpiling program
for the most critical raw materials. The European Commission currently has a list of 14 critical raw materials. They are:
antimony, beryllium, cobalt, fluorspar, gallium, germanium, graphite, indium, magnesium, niobium, PGMs (Platinum Group
Metals), Rare Earths, tantalum and tungsten. These raw materials are deemed critical for the most part because of their high
supply risk. A high percentage of the worldwide production of the each of these materials comes from China (antimony,
fluorspar, gallium, germanium, graphite, indium, magnesium, rare earths, tungsten), Russia (PGM), the Democratic Republic of
Congo (cobalt, tantalum) and Brazil (niobium and tantalum). This production concentration, in many cases, is compounded by
low substitutability and low recycling rates. Separately, according to Bloomberg, Caijing magazine, citing an unnamed source
in China's Nonferrous Metals Industry Association, reports that China will start stockpiling rare earth minerals this year. China’s
domination of rare earth supply is the result of a well-conceived plan going back decades to Deng Xiaoping who recognized the
strategic nature of the metals. Low-cost production, often without regard for environmental impacts, allowed China to knockout
competitors globally. A lack of concern or policy on the part of end-user corporations and nations allowed China to achieve
its goal. Now China has enacted a policy of limiting exports in order to focus value-added finished product manufacture in
China. Simultaneously, “mom-and-pop” operations in China are being shut down to concentrate production in the hands of
larger conglomerates, maintain pricing discipline, and improve the industry’s environmental footprint.