Who’s surprised by the rare earth embargo? Not Toyota.

I’ve been traveling for the last week, and only now catching up on China’s possible decision to place an embargo on rare earth elements to Japan (or not – according to the WSJ). I’m not in the habit of commenting on headlines, but in this case, I’d like to make a point that I haven’t seen brought up elsewhere. It is this: Japan’s economic and manufacturing mavens saw this coming years ago. Below, two images that I took at the Toyota Metal Facility outside of Nagoya in June 2009. For those who don’t know it – and that’d be most of humanity – Toyota Metal is the industrial behemoth’s in-house recycling, and recycling research, facility. First, a pile of crushed cars – those are hybrids in the foreground.

And next, the hybrid batteries extracted from those test vehicles (and others), awaiting recycling.

Now, Toyota wouldn’t tell me how, precisely, they’re extracting rare earths from these batteries. But they were quite upfront about the fact that rare earth recycling was a top priority for the company, and had been for a long, long time. They were also quite upfront that  – rather than doing it for environmental reasons – they were funding it due to supply concerns, ie China. I might add that – last December – I had similar conversations with individuals connected to the Korean steel industry. [in both cases, the reporting was done in the course of my work for Recycling International].

So what to make of this possible non-event? Well, Toyota, at least (and other members of Japan, Inc) saw it coming long ago, and have been upgrading technology to deal with the development. Obviously, this speaks to the deep suspicions that continue to exist between the respective industrial bureaucracies of Asia’s two biggest economies. In any case, it’d be nice if the general media covering this mess would stop to note that – in its quest for alternative supplies of rare earths – Japan and other importers have possible recourse to sources other than mines. Or, at least, they’re working on it.

10 comments

  1. Japanese industries being importers of everything have always been very mindful of waste for both reasons of economy and supply. I have to think of Kaizen methods where every step of a manufacturing process is examined for any type of waste, material waste, time waste, even space waste, to conserve all resources.

    To manufacture magnets (related obviously to rare earths), the Japanese companies focus on pressing to near-net shape to minimize further processing. Most Chinese magnet manufacturers press large blocks, which then need to be cut, and sliced, and ground to achieve the same geometry.

  2. It doesn’t seem possible that China would have such a worldwide monopoly on rare earth elements. Why have so few deposits been found elsewhere yet ?

  3. Great informative post. The obvious conclusion is that the US and its companies appears to have been asleep at the switch while the Japanese have been preparing. Am I right?

  4. @Chris Brown: The reason that China holds a 90%+ market share on several of the rare earths is that China alone has been willing and able to supply them at a very low cost.

    There are plenty of known deposits of rare earths worldwide. In the event of a supply disruption, it would become economical to exploit these deposits (or, in some cases, to resume production).

    As for the Times, I’ve been fairly annoyed at their China coverage for quite some time. I wouldn’t say that the Journal is that much better, but they certainly won’t pass up an opportunity to embarrass the Times!

    The Times article was a pretty juicy target — sourced from a single consultant (secondhand!) plus unnamed “industry officials” (tell me these aren’t the same ones who fed the information to the consultant). Whereas the Journal article was just super-careful to cross their t’s and dot their i’s. Multiple sources, from China, Japan, and elsewhere, identified by name or at least by ministry, giving their interpretations of what actually happened and clearly separating rumor from fact. When they want to embarrass the Times, they really go all-out.

  5. The ganzhou of China’s Jiangxi provinence is china’s major wolfram producing area .90 percent of the companys there are joint ventures.Do you know how do the japanese transport the rare earth to Japan,they make the cups of the rare earth,so literarylly it’s not rare earth any more.In this way the Japanese can take as much rare earth as they can.
    the US is the second-largest reserves in the rare earth ,and stoped the exploition in 1999.
    The indium ,one-sixth reserves of gold,is used widely in the production of missle.charge one-tenth of the gold,That’s why the rare earth from China is so welcome!
    In china ,people use the most envirmentally-unfriendly means to exploit the rare earth,the earning can’t even offset the losess of pollution.
    What the Chinese goverment should do now is cutting the export of rare earth totally rather than export restrictions .

  6. The Times-Journal spat continues to get more interesting. Keith Bradsher just fired back with an “I’m right and you’re wrong” article.

    Keith Bradsher’s article now cites eight unnamed “executives, analysts and traders” in rare earths and adds a bunch of named sources. The headline is now qualified by “Executives Say,” i.e., “Don’t blame us if it turns out to be false, we’re just reporting what they say.” Several of the interviewees acknowledge that the rare earths mentioned are those with export quotas, and that unrefined minerals are not being blocked. There are no Chinese sources in the article. (Mr. Bradsher does not speak Chinese — nor do most of the Times correspondents.)

    It looks to me like the Times got caught red-handed putting a spin on things. And now they’re backpedaling from the original article — but still putting a spin on things.

  7. Tom – Great analysis on the media side of things. Thanks for pointing all of that out — I would’ve missed it, otherwise (traveling, traveling).

  8. Very interesting reporting.

    You mentioned distrust between China and Japan – Japanese distrust of China ( I am sure the other around, too, but it is not for me to tell) is very deep – but not old. 30 or so years old, generally speaking. Unfortunately, however, I cannot think of any possibility for this to lessen. It is truly regrettable.

    My question… Is there a country China trusts? Is there a country who doesn’t distrust China? If not “trust”, where does China feel some sort of affinity?

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