So this is rather an interesting development but I am not sure it means this is shifting back to the US. Outside of the politics and political tensions I feel this would have happened in about 10-15 years time via a natural shift to other countries to lower shipping costs and manufacturing costs. I am going to guess that if the European manufacturers have parts sourced from over there they might be thinking in a similar fashion.
Side note: I watched a YouTube video of late that made the claim that developing countries for various reasons are aging a lot faster than we are in the United States as far as the stat of average age of labor force (probably immigration plays a big role here, so look for more relaxation in our recently tightened immigration rules). What is interesting was the claim was that the average age in most of Asia will overtake the United States by 2042 I think the claim said. Included was Brazil (part of the BRICS fantasy) and India, I think they said Malaysia or Indonesia but I do not remember.
To the point of this post, this could mean a shift in North American railroad traffic in the auto parts segment say if they move from Asia to Mexico, possibly? I think most of this traffic is probably on the rails already but from the West Coast Ports? Would most of this stay in Asia?
I don’t expect this to happen. Only 25% to 30% of all auto parts are imported from outside the EU. Of these only 25% come from China. That means just 7.5% of all auto parts are imported from China. And the imports are related to rare earths, batteries, and chips. All parts that are not easily moved to other countries.
Regards, Volker
I don’t think rare earths are the obstacle some may think. And it appears the DoD does not think that either. We’ll see over the next few years how that holds up.
Rare earths are not actually that rare. They are simply bound in other rocks and difficult to extract.
This process is complex and dirty, producing radioactive waste, for example, so industrialized countries were happy to outsource it to China. China produces approximately 60% of the world’s rare earths, but processes 90% of them. The US also sends most of the rare earths mined in its country to China for processing. As a result, China now has a monopoly on processing technology.
Environmental regulations make it difficult to carry out processing in many industrialized countries such as Germany. In the USA, there should be no such problems at present.
Regards, Volker
I understand all that and so does the EU (I think).
EU and United States are both doing research to skip past the above into using alternatives. I think they made some headway with magnets and batteries. DoD made a statement by the year 2027 they will not be dependent on China. Not sure how they will pull that off but we’ll see.
That is the long-term plan. I think immediate term they are trying to secure or develop sources outside of China.
On an EU scale 2027 is short term. Approval for a processing plant can take up to 15 years in the EU.
Given China’s technological monopoly and 90% market share, I find it questionable that sufficient processing capacities for rare earths can be found outside China in the short term.
In the EU, the focus is currently more on recycling. That doesn’t rule out new processing plants, but I don’t think the EU sees any particular need for action, as it does not view itself as being in a trade war with China.
Strict limits for emissions, water, and waste (e.g., radioactive residues) make it difficult and very expensive to process rare earth in the EU possibly requiring newly developed technology (not yet available I think) to produce less emissions and waste than in China.
Not sure how things look over here from the EU, but despite the thought that environmental considerations in the USA might now be ignored by the administration, they are not ignored by the local populations, and I have seen projects that were strongly opposed by local residents have had their causes picked up by politicians of all parties that don’t want to be on the wrong side of their constituents.
Remarkably, Texas seems to be more strict with the environment then other places I have lived. Just within my subdivision: (Bobcats, Coyotes, armadillos, red tailed hawks, owls, white ibis, blue herrons, turkey vultures, pretty decent insect life as well, including black widow spiders and fairly large wolf spiders, massively large locusts, large hornets, honey bees, praying mantis, lizards, etc). I have not seen a deer yet but I suspect that has to do with the abundance of predators.
Dallas has a few nature preserves in the suburban area (one below is private I believe)
Most of my business career was spent with one of the largest investor-owned electric utilities in Texas. In addition to generating and selling electricity, we had a large lignite coal mining operation and an extensive natural gas pipeline system.
Long before EPA came to town, our management took responsibility for the environmental impact of our operations. Among other things they put scrubbers on our lignite fired power plants and implemented a program to restore the mine sites to their original or better condition.
We were able to recover some of the costs through our rates thanks to an enlightened Texas Public Utility Commission.