The strategic demand for Rare Earth minerals have caused a lot of controversy and friction over the last few years, but the conflict resolution initiative at the World Trade Organization that the European Union, the United States and Japan started against China recently has taken the dispute to a higher level.
However, there is ample reason for both sides to take a step back and reconsider the wisdom of such as confrontation.
There is no way of knowing how case against China will turn out. But, there is wide believe in the media that the result in the case will be pretty much the same as an earlier case that ruled in favor of the EU, the US and Mexico in January 2012. that may or may not be the case 2 yrs down the line.
One clear fact about the Rare Earths business is this: the West and Japan can only blame themselves for their present Rare Earths shortage as they took a short-term view to maximize their profits and chose to halt their exploration, mining and refining of Rare Earth elements in favor of purchasing them from China.
In the long-term, a strategy that combines diversification of sources with efficient use, recycling and substitution technologies will enable the West and Japan to overcome their dependency on the supply of Rare Earth elements from China. It may take a few years but it will happen, but, in the meantime, co-operation will produce better results for both sides.
Continue Reading Below
The West and Japan are in a good position to offer China access to much needed sustainable mining technologies as well as to certification schemes that would help reduce illegal trading in Rare Earth minerals.
Because, minimizing the environmental damage of Rare Earths mining and reigning in the illegal Rare Earths business are the main concerns of the Chinese government with regard to this sector.
Sharing such technologies in exchange for reliable access to Rare Earths supply over the next 10-15 yrs would benefit both sides. So, co-operation is the clear answer.
Also, there are many other raw materials related policy issues that could benefit from co-operation between industrialized countries, emerging economies and resource-rich developing countries.
It is an weakness of the existing Global governance structures that they do not provide enough transparency and opportunities to exchange views and perspectives with regards to raw materials.
In the energy sector, besides the International Energy Agency, of which China is not a member, the International Energy Forum that recently met in Kuwait to discuss pertinent topics.
There should be a move to create a similar international raw materials forum, one focusing on industrial mass metals and high-tech metals. It is difficult to envision how there could be a successful move in that direction as long as some of the most important players are in conflict.
Some industrialists have called such ideas idealism. This is a kind of realism that is needed in the 21st Century.
There is always an option that increasing conflict over access to raw materials could spin out of control and contribute additional risks to the many security issues the World is facing.
On the other hand, there is this great old wisdom from Winston Churchill: It is better to Jaw-Jaw than to War-War.
Paul A. Ebleing, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.