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New Rare Earth Developments

Rare Earths: The World Trade Organization Just Screwed You

Written by Brian Hicks
Posted October 25, 2010

If it’s not China screwing us, it’s the World Trade Organization...

Just days after China announced it was cutting off rare earth exports to Japan, Europe, and the United States, the WTO said it needs another six months to rule on the rare earth complaint issued against China.

The move makes no sense.

Under the WTO’s own rules, a panel is supposed to publish its dispute ruling within six months of being set up; since it was set up in December 2009, we should have seen a ruling by May 2010.

But I guess it’s asking too much for an organization that promotes free trade and economic growth to promote free trade and economic growth...

For consumers and economies around the globe, the ban and additional six-month delay in ruling means the very materials vital for green development, high gadgetry for cars, electronics, and military equipment are on put on hold.

I wish I could sit on my behind and do nothing while the world waited for a decision, too. But I’d get fired.

On the other side of the WTO fight, China says restrictions on rare earth exports conform to WTO policy.

“Our restriction policy is in line with the WTO rule, and not just in the exports, but in the manufacturing as well,” said a China Ministry of Commerce spokesman.

We're left in the dark

 So we've no idea how long the ban could last, and the WTO is creating a six-month window in which we're all left scrambling for supply.

In case you don't understand the urgency in this situation, let me explain...

Rare earth minerals like neodymium and lanthanum are critical for superconductors, iPods, wind turbines, and batteries for electric cars. Samarium cobalt is an essential material for the M1A2 Abrams tank...

And since China is the only country in possession of many of these minerals, we are at the mercy of the Middle Kingdom.

The New York Times reported China “quietly stopped shipments of so-called rare earths” to the U.S. and Europe. This news followed a U.S. investigation into whether China was violating WTO rules by subsidizing clean energy exports and limiting clean energy imports.

Automakers that rely on the neodymium magnets in power steering are flipping out, because it’s imported from Japan and China.

Ford, which won’t comment on how rare earth will impact their company's production, is fearful — though they won’t admit it. And Toyota has reportedly inked a rare earth contract with India.

China’s spinning excuses

China's excuse that it’s worried about its environment and its own supply is bogus. 

But countries like Japan are buying this news…

In addition to Japanese companies looking to India for any rare earth supply they can get their hands on, the country is so worried that they want to start mining for rare earths in Vietnam.

And it’s not a moment too soon… Just last week, Japan estimated they have — at most — a six-month supply of rare earths remaining.  (Before the rare earth ban, Japan bought 60% of rare earth exports from China).

But bringing supply on line could take years. No one has that kind of time.

Which means that any company that’s even remotely close to supply will explode — like the little mining outfit we've discovered in Greenland.

Now don’t get me wrong; there is a rare earth growth story in the United States, and maybe even in Vietnam...

But there’s real reason to get excited about Greenland, a region “that could shift the balance of power, spectacularly changing the national fortunes of Greenland,” according to The Times of UK.

And we’ve got the whole Greenland story and news of a skyrocketing $1.50 stock right here… 

Trust me. This stock won't wait around for investors.

It’s moving… and fast. Get the full details right now.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

 

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