Here's a ridiculous obsession among the intelligentsia: rare earth minerals -- pew pew OMG.
Writes Tom Standage, deputy editor of this prime ~econ takeover target, in today's newsletter introducing the issue:
The Economist is a champion of free markets. But in this case, as we argue in our leader, intervening in commodity markets makes sense. The trouble is that America is going about it in the wrong way. Its spending is wasteful and poorly targeted.
Bagehot would probs be turning over in his grave, poor chap.
In 1973 a club of Arab petrostates held the world to ransom by halting crude-oil exports to countries they accused of supporting Israel. Petrol prices soared; Western economies buckled. Today the danger is that China will use its grip on other natural resources to achieve its aims, such as seizing Taiwan.
Because we all, uh, know that raw material resources is the key to dominance and prosperity. (For those of you not well versed in the econ/history literature, this is saaarcasm; "resources" are more often a curse than a boon, and with substitution and price system don't really matter -- except in the obsessive mind of the intelligentsia)
The battleground is the supply of “critical” metals, a group of minerals vital to making military, electrical and computing infrastructure—everything modern economies need to be safe, high-tech and green. China supplies most of these: it mines about 80% of the world’s tungsten, for instance, and refines 99% of its gallium.
My understanding, too, is that all these "critical" metals exist pretty abundantly (though in low-density) across the Earth's crust... we just don't want to -- emphasis on we because a lot of e.g., Europe's deposits are in Scandiland.
As so often is the case: You can just change your mind (in this case about environmental permits and local opposition etc) and the problem goes away.
First: lay out the obvious pro-market case:
It would be nice to say that the best defence against China’s tactics is to double down on global markets. They certainly have a part to play. The oil crises of the 1970s boosted the development of commodity trading—in which prices for key materials are set on exchanges by millions of buyers and sellers entering 40m derivatives contracts daily. Time and again, hit by wars, industrial strikes and natural disasters, markets have handled shocks better than government planners ever could.
THEN: undermine it because ugh, duh, exceptioN!
However, America is right. China’s dominance over critical minerals means that continuing to place full faith in the invisible hand would be naive and unsafe. China has spent decades building control over minerals, bankrolling projects at home and acquiring assets abroad. Its producers have consolidated into behemoths that the state can control and which have the market power to deter would-be competitors by flooding global markets—even if that means taking temporary losses.
Yeah, we need bitcoin mooooning so Undisc can take over this shit and right the ship.
archive: https://archive.md/eeUjJ
Is this like with gold, where when prices rise, supply will emerge, and it becomes profitable to mine what used to be unprofitable?
I'd think that's the case for all commodities, plus or minus investment cycle and how long-lived the plants are (e.g., gold extraction or oil platforms)
The solution to low prices is low prices
It's almost like the market is self correcting or something
Man, Standage wrote some great books back in the day (The Victorian Internet remains a fave), but his work at The Economist leaves a lot to be desired.
The fascination with rare earths often misses the economic fundamentals. Resource concentration does create leverage but it is only sustainable when alternatives are either technically infeasible or prevented by policy. In the case of critical minerals the barriers are not geological scarcity but regulatory, environmental and cost structure choices made domestically in Western economies.
China’s advantage is not that it owns the entire physical supply but that it has integrated mining, refining and distribution at scale with state backing. That lets it weaponize pricing through coordinated capacity surges and strategic losses to deter new entrants. In other words it treats these markets as strategic infrastructure rather than a commodity revenue stream.
Makes sense that free markets usually handle stuff well, but China’s grip on critical minerals really is a different beast. Governments can’t just sit back when a single country controls 80–99% of what the world needs.