[lbo-talk] A Different Environmental Threat: Peak Rare Minerals, China, and Green Technology

michael perelman michael at ecst.csuchico.edu
Sat Sep 5 19:54:25 PDT 2009


One of the keys to Green Technology may be buried in China. It has only recently begun to appear in the media, but for very different reasons. A couple of years ago, the New Scientist published a piece about the risks of the scarcity of rare minerals.

Cohen, David. 2007. "Earth's Natural Wealth: An Audit." New Scientist Issue 2605 (23 May): pp. 35-41.

Three facts are bringing this looming shortage to the attention of mainstream media. First, the US is dependent on exports of these minerals, while China is the main exporter. Second, these minerals are crucial for high technology, including both military and so-called Green Technologies.

My next encounter with the rare earth problem came in David Cay Johnston's wonderful book. Here are my notes:

Johnston, David Cay. 2007. Free Lunch: How The Wealthiest Americans Enrich Themselves at Government Expense (And Stick You With The Bill) (New York: Portfolio).

37: "In 1982, competing groups of scientists around the world found a way to combine iron and boron with a somewhat rare earth called neodymium to make extremely powerful and lightweight magnets. These magnets quickly found a market in computer hard drives, high-quality microphones and speakers, automobile starter motors, and the guidance systems of smart bombs."

38: "General Motors created a division to manufacture these magnets, calling it Magnequench .... Then in 1995 the automaker decided to sell the division. Because the deal was for only $70 million it attracted little attention. The buyer was a consortium of three firms .... but the real parties behind the purchase were a pair of Chinese companies -- San Huan New Material High-Tech Inc. and China National Nonferrous Metals. Both firms were partly owned by the Chinese government. The heads of these two Chinese companies are the husbands of the first and second daughters of Deng Xiaoping, then the paramount leader."

38: At the time, GM was trying to get a toehold in China. One of the Goddard's was at the time vice minister of the Chinese State Science and Technology Commission, which had the responsibility for acquiring military technology by any means.

39: The Clinton administration agreed the sale under the condition that the new owners keep the production and technology in the United States.

The new owners began to buy factories in the United States including GA Powders, an Idaho firm that used government money to develop a monopoly on the production powerful methods. Then the Chinese company shut down American production and moved everything to China.

The reference to Deng is interesting, as you will see in a moment.

More at:

http://michaelperelman.wordpress.com/wp-admin/post.php?action=edit&post=1245&message=6

-- Michael Perelman Economics Department California State University Chico, CA 95929

530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com



More information about the lbo-talk mailing list