Discussion on:

The two-timing white knight of U.S. rare earth metals

The US could slap a huge export tariff on these minerals if they don't want them exported.

The question is, just how many politicians are in Molycorp's pocket?
There are a LOT of things that could be 'fixed' or at least minimized if the US set tarriffs like that. Hasn't happened because the corp-bought politicians won't vote for the things that that could hurt their paymasters. And sadly, their 'paymasters' aren't the people, with all the taxes we pay.

If I understand the arrangement correctly, Molycorp (a US company) is selling their product through a subsidiary corporation, Neo Material Technologies (a Canadian company) that ultimately sells the products to Chinese manufacturers.

To my knowledge the North American Free Trade Agreement (NAFTA) would prevent tariff to be imposed on the product that is sent from the US to Canada. Additionally, the US has no ability to impose Tariffs upon goods that are exported from Canada, regardless of their destination.

So it looks like Molycorp will sell their minerals to buyers outside of the US because NAFTA and other such forward looking policies have already exported most of the manufacturing facilities and jobs. And the US will not be able to control the exportation of our natural resources or even receive compensation through tariffs because of these same trade policies.

Good thinking.

instead of looking at Molycorp, you should be looking at Great Western Minerals. They will be the first vertically integrated mine to market REE producer outside of China. MCP tried to buy them before MCP became public. GW has the heavy rare earths that will be the critical ones and honest management. The expect to be fully producing by early 2013. They also own GWTI in Detroit which will play a key role in re establishing a permanent magnet and REE Industry in the US.

Excellent point, bbcc11. Not only is Great Western on my radar, but I wrote about them - although not by name - last December in SmartPlanet's "Why safe nuclear will rely on rare earths" (http://www.smartplanet.com/blog/intelligent-energy/why-safe-nuclear-will-rely-on-rare-earth-minerals/11328). GW owns RARECO, the South African mining company I featured. The story focuses on the thorium aspect of rare earths. I get into more detail of RARECO and GW in my Kachan & Co. report, "Emerging Nuclear Innovations - Picking global winners in a race to reinvent nuclear energy" (http://www.kachan.com/research/emerging-nuclear-innovations-report). I will be keeping an eye on GW's rare earth progress. Feel free to keep us all posted!

While we may disagree on the peak and depletion timelines of oil, phosphate/NPK fertilizers, gold, and rare earth elements, etc., but the finite nature of their existence on this planet is an absolutely indisputable fact. Nations are going to have to look at peak commodities not just as a trade strategy, but as a survival strategy. The sooner we acknowledge the inevitable nature and reality of peak commodities, the sooner we will have some kind of national security that we won't be manipulated and stranded by the lack of them in the near future - as we have by peak oil in the middle east.

Did I mention that 85% of the worlds supply of rock phosphates (the most critical ingredient in NPK fertilizer that feeds 95% of the world) are in Morocco and Western Sahara? This is a serious problem that by-enlarge our scientifically illiterate population and their reflected leadership are clueless about.

They would sell their soul to the devil to make a buck over precious metals that China already has.

The Chinese leaders have a different mind set than most western leaders; they are actively planning for their future by securing strategic resources now while the west is stuck in a short term view of the future. China is buying up as much uranium and thorium as they can so that the 100 or so new nuclear reactors will have enough fuel to use during their expected lifetime.

Mean while, in the west we are more worried about gas prices today and not looking at a future where valuable resources will not be availble. We need long term goals and focus on making those goals happen like the Chinese are doing now.

You take a difficult to find commodity that is much needed by the country you live in, but sell it to another nation who already has a virtual monopoly, how is that NOT "Treason For Profit"?

It amazes me that the federal government would allow the export of ANY rare earths to known enemy countries.

Since when is China an enemy country?
Did China become an enemy country after it got rid of its colonisers?
Is the USA an enemy country from the Chinese perspective?
If they are enemy countries why trade with them?
Are they both committing treason?
Oh yes, there was Vietnam as an enemy country.
Did Vietnam become an enemy country after it got rid of its colonisers?
Did the Vietnamese attack the USA or did they just happen to have lots of resources to be attacked for and therefore became an enemy country?
Did all countries who dispensed with the colonial powers become enemy countries?
Seems like you are a typical american as perceived by the rest of the world.

Perhaps you should do some homework yourself and get off your high and mighty horse. China's policy towards the U.S. is, to eventually destroy us. It's part of their communist manifesto. Pretty much ANY country that is communist can be considered an enemy country to the U.S.. Communist nations DO NOT LIKE countries that are free, if that's what you can call the U.S. nowdays.
Either way, China owns quite a bit of the U.S. now, especially with all the trillions that we owe them....

Yea, just go and kill a commie for Christ.
Try to read their alleged Communist Manifesto.
It's quite boring, but no mention of the USA.
How come that so much of the USA is owned by these commies.
They seem to be better at capitalism than communism.

another reason to dislike the man who was called the "first black president".."bill clinton"

It is called Capitalism in a Free Market economy. Exactly what the Republican slimebags running for President want for us all, Right?

So far as I can tell from US Government maps, the mine is on public land managed by the Bureau of Land Management. That means the ore is public property. Polycorp may have paid for a lease and may be paying royalties on the ore extracted (though it is likely not nearly what it is worth), but that doesn't change the ownership of the minerals themselves. If I am right and they belong to US, then the minerals should be mined and sold for the benefit of the American people, not just for the owners and shareholders of Polycorp. (Of course, if the mine is actually on private land, then they have only a moral obligation not to sell to China.)

Once the lease is signed, which presumably gives the lessee the mineral rights, the lessee can sell the minerals just about any where it wants. Legal possession of the minerals (or oil and gas in the case of drilling rights) goes to the lessee once the lease is signed. If you want to change that, it will require major changes in US law and reverse legal precedent since the day the US was founded.

However, there are some general restrictions having to do with countries such as North Korea, Iran, and even China when it comes to militarily sensitive products, but currently Canada (the intermediary) is not covered. Selling what could be construed as militarily sensitive materials to China this way is a very tricky issue, and it has been coming up a lot recently. But interpreting ownership of the ore in the way you want would just open up a can of worms far outside this issue and is not the way to deal with it.

Congress has the authority to declare rare earths a 'strategic material.' With this designation comes the authority to forbid exportation. They should use it!

Hmm. That doesn't sound so bad, considering the falling prices of rare earth minerals. When they *remove* that support, it may be necessary for western governments to step in and do their bit:)

When shareholder profits take precedence over industrial policy or lack of, this is the end result. I would support a charter revocation of Molycorp.

Some illogical bloviating going on here. The whole point of new rare earth mines opening (also in Australia) is so that no one country controls access or availability. Since a huge amount of what the US (and the rest of the western world) imports is made in China, there is no reason not to export to them. But Japan is the next biggest user--again mostly for products that are exported--and this was the problem when China restricted exports (for whatever reasons). As noted in the article Japan will be taking a very large fraction of the US output.
......
It is of course ridiculous to imagine that China wants conflict with the US. It is in fact the exact opposite: there are plenty of far-right American war-mongers who see that promoting this notion is the way to keep the MIC rolling along, consuming trillions of dollars of your deficit budget.

We've been in conflict with China for 35 years, it's called a trade war. What we have today under the name "free trade" isn't free trade at all. It's free coming into the U.S. because our market is about 98% open to the world, but in the other direction, it's not. It's mostly merchantilism: gaming the system. Foreign governments understand, as ours does not, that international trade is an arena of national rivalry, and they play the game in their own national interests. Our government is hostage to an outdated 19th-century economic theory of global harmony, and on this basis conducts our trade relations with blissful naivet??.

Whew! Thanks, rhodez. Now maybe I can learn to stop worrying and and love the Chinese.

By the way, China shut off Japan's rare earth supply because Japan seized a Chinese 'fishing boat' that was nosing around some disputed islands claimed by both nations, a matter of import not because of fishing rights but, rather, because of implications for territorial waters and undersea reaources.

Still, I can't help but wonder, given your summary of the geopolitical situation vis-a'-vis the PRC and how ridiculous it is to even imagine that those fine folks would want conflict with the US, why would this beneficent trading partner publicly announce -- in the state-run 'The Global Times', no less -- that it is aggressively seeking to develop anti-carrier weaponry, including anti-ship ballistic missiles with the stated rationale that "Since US aircraft carrier battle groups in the Pacific constitute deterrence against China's strategic interests, China has to possess the capacity to counterbalance."

http://www.zdnet.com/blog/government/is-china-gearing-up-to-start-world-war-iii/9368

I mean, the whole Pacific Ocean? That's kind of ominous, right? Not the Taiwan Strait: the whole freakin' Pacific Ocean! You know, where Hawaii is?

You have to wonder, what "strategic interests" are we deterring?

And, since aircraft carriers are our (the US) premier force-projection weapons platform, and we have more than twice as many as the rest of the world combined, it seems a bit silly for them to rattling this sabre at us, But this is the same folks who believe they could survive a massive nuclear exchange.

... into actionable items? What can and should we do to protect the US from foreign interests owning more than is an acceptable level? What exactly is that acceptable level and why? What branch of the government should be pursuing any of these actionable items and who (public figure) from that branch specifically should be paying attention to these concerns and why aren't they? Has anyone asked?

a strong president only has to make one phone call to the CEO of molycorp and discuss two scenarios...1) mine the rare metals and the vast majority is sold to our domestic market, or 2) threaten to implement existing environmental laws or pass new environmental laws in Colorado that in essence will make it unprofitable to mine anything more from that mine. We could also threaten to impose export taxes on minerals that are needed in the national interest. congress has the authority to tax businesses too. There is always the possibility to find ways in other mining states to make it easier for Molycorp competitors to get established if its in the national interest. the long term solution is to open up more mines in other states, fund them with in exchange to sell a certain amount to american industry. There are lots of ways to work around this if our politicians want to.