International Man: What are Rare Earth Elements (REEs), and why are they so important?
Doug Casey: The REEs are a group of 17 elements that you may recall from your high school chemistry class. They take up two rows in the periodic table, sitting by themselves at the bottom of the chart. They’re chemically similar to each other.
REEs are widely dispersed on the Earth’s surface. They aren’t “rare” per se, but since they’re not generally concentrated, you only rarely find deposits that are rich enough to qualify as a mine for elements like germanium, gadolinium, ytterbium, yttrium, or 14 others with exotic and obscure names. They’re basically all minor byproducts of mines for other elements—largely aluminum or zinc. They’ve only recently found significant uses with the development of high-tech, especially electronics and magnets. Fifty years ago, they were basically just chemical curiosities.
The US has one pure REE mine, the Mountain Pass, in the California desert near Nevada. In fact, it’s the only one in the Western hemisphere. Now owned by MP Materials (MP: NYSE $25), I have no opinion on the operation. It went bankrupt under its last owner—perhaps it will do better this time around.
International Man: Former Chinese leader Deng Xiaoping once said, “The Middle East has oil. China has rare Earth.”
Today, China dominates the production and processing of REEs.
Why is that?
How likely is it that the US or someone else will be able to break China’s stranglehold soon?
Doug Casey: Unfortunately, at this point, the US is only number one in dissipation, wokeism, and consumerism.
When it comes to mining, including the rare earth elements, it typically takes at least ten years from the time you make a discovery to even start production. That’s apart from the fact that discovering an economic deposit in any mineral is unusual. Even after you make this discovery, typically at great expense, it’ll take another ten years to finance it and get regulatory approvals to put it into production. That’s a very risky process because anything could happen in 10 years. It’s actually a fool’s game in today’s world—and I speak as someone who’d been doing it for most of my adult life.
The US has gone downhill radically in regard to producing real goods over the last 40 years, and it’s likely to continue its decline. It’s become a so-called “service” economy. To use an accurate, though politically incorrect, aphorism, the US has transformed itself into a society where we’re all Chinese, taking in each other’s laundry.
It wasn’t so long ago that American wannabe Masters of the Universe liked to say, “We think, they work.” Well, the problem is that most of the things that we think about aren’t productive. In fact, they’re delusional and destructive. It’s no accident that actual production has migrated out of the US, which has become a high-tax, high-regulation environment compared to other places in the world.
China’s got lots of problems, and they could undergo their own collapse as well, albeit for different reasons. But they’ve been doing very well, and I expect that trend will continue.
International Man: In 2010, China abruptly cut off global exports of REEs amid a dispute with Japan. The average price of REEs skyrocketed by over 20 times.
Could something like that happen again?
Doug Casey: Absolutely. China totally dominates this industry.
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