Page 60 of The Last Kingdom

Beginning in 2006, China levied duties and implemented quotas on the export of rare earth elements. A dispute arose when those export quotas were cut by 40% in 2010. China argued that the quotas were necessary to protect the environment. Overmining was causing concerns. But the United States asserted that it was protectionism, as the difference in price for rare earths inside and outside China gave an unfair advantage to Chinese firms.

In 2010 China banned all exports of rare earths to Japan during a diplomatic standoff between the two countries after a boat collision incident. That showed China was not above using its near monopoly as leverage.

The United States filed a case with the World Trade Organization’s Dispute Settlement Body against the Chinese export restrictions. The European Union and Japan also joined. The panel ruled against China. And an appellate review board upheld the ruling. China dropped its export restrictions in January 2015. Since that time, prices for rare earths have fluctuated in a steady up-and-down progression, literally at the whim of the Chinese.

Supplies

The search for alternative sources of rare earths is happening in Australia, Brazil, Spain, Canada, South Africa, Tanzania, Greenland, and the United States. Prior mines in all of these countries were closed years ago when China undercut world prices in the 1990s. It will take years and billions of investment dollars to restart production. In addition, there are environmental restrictions that will come into play in all of these locales, regulations the Chinese do not impose on themselves.

Increased demand has strained supply, and there is growing concern that the world may soon face a shortage of rare earths. Within five years demand for the elements will exceed supply by 40,000 tons annually, unless major new sources are developed. Recycling of electronic waste is one method for obtaining new supplies. Recycling plants are currently operating in Japan and France. Some recycling is done here in the United States, but nothing at levels that will produce significant new amounts.

Rare Earth Uses

Rare earths are heavily used in the production of high-performance magnets, alloys, glasses, and electronics. Some are used as catalysts for petroleum refining and diesel fuel additives. Others are important in magnet production, critical for electric motors, generators, disk drives, portable electronics, microphones, computers, phones, and speakers. Still more are used to make fuel cells, batteries, flat-screen monitors, fiber optics, and lasers. They are even used in agriculture to increase plant growth, productivity, and stress resistance. Rare earth feed additives for livestock have generated larger animals and a higher production of eggs and dairy products. None of the portable electronics, which the world has come to depend on, can be made without rare earths. In addition, their presence is vital to maintaining the national defense, as nearly every weapon system we have requires them.

Current Situation

Lying off the coast of Hawaii, within its territorial waters, are one hundred billion tons of rare earth minerals. Estimates are that just one quarter of a square mile of these deposits would be able to provide one-fifth of the current global annual consumption. The minerals lie at depths of 11,500–20,000 feet below the surface. Deep, but not insurmountable for mining. Much of it is in the form of nodules, about the size of a potato, each packed with nickel, cobalt, and other rare earths. There are trillions of these nodules, just waiting on the ocean floor to be gathered. Their appearance on the market would alter not only China’s near monopoly and end our reliance on foreign suppliers, but it would also lower the price for these elements worldwide.

Chapter 32

COTTON WALKED WITH FENN AS THEY FLED THE BATTLEMENTS ANDreentered the castle, the four men with rifles in tow. Fenn led the way through the ground floor, out a rear door, and into a dimly lit courtyard.

Fenn took him off to one side.

“Herr Malone, I have to do this without you. Butbitte, please go to my office and access the camera marked ‘Grand Hall.’ I want you to see and hear what is about to happen.”

He decided not to argue and nodded.

“You know the way?” Fenn asked.

He smiled. “I can find it.”

Fenn headed off with the four armed brothers and Cotton re-entered the castle, quickly hustling to Fenn’s study. On the LED screen was a ledger for the cameras and he clicked on the one marked “Grand Hall.”

The screen filled with the image of a brightly lit space with about fifty figures inside, all ages, shapes, and sizes. Each wore a black robe, like the ones he’d seen earlier, with a hood. At the far end was a raised platform. A sole figure entered from the right and walked up onto the platform, staring out through eye slits in the black hood at the assembled. He wore a gold sash across his breast, the only one with such an adornment.

The figure spread his arms out wide and said, “It is now the appointed hour for us to assemble in council. None but members in good standing are entitled to remain during our deliberations.”

Fenn’s voice.

Speaking German.

One of the assembled stepped forward. “Master, the gates to the castle are secure, the doors locked, the sentinels are on watch, and all those present are entitled to remain.”

Fenn nodded. “Good brothers, upon you devolves the work of the Order. You hold, each in your allotted sphere, so much of the peace and prosperity of the realm in your hands. Prove that you are worthy of the confidence reposed in you. Be wise in counsel, courteous in demeanor, firm and vigilant in duty, and careful and considerate in debate, lest an excess of zeal and strong convictions betray you into unguarded expressions, and the peace and prosperity of our Order be thereby endangered. And brothers all, remember the pledge of secrecy to the outside world as regards the business transacted at this council.”

Another hooded man entered the hall at the far end and paraded to the platform. The group parted to allow him a clear path. He stopped before the dais. “Master, I find a stranger at the outer gate, under guard of the sentinel.”

“Return at once and learn the purpose of this intrusion.”

The black hood nodded, turned, and left the hall.

Fenn said, “Good brothers, eternal vigilance is the price of peace and security. We should be ever on guard, whether the one who approaches be friend or foe. A friend will rejoice in our unity and strength. A foe will dread them. Let all, then, do their duty, as if the welfare of all depended upon each alone, and the visitor will find us a fraternal band united by no common tie, but loyal, brave, and strong. This should be the front we present to all who approach our castle gate. Master-at-Arms, prepare our brothers to receive the visitor.”

One of the men yelled out, “Form in a double column.”

The hooded men lined up in rows on two sides, leaving a passage between them. At the far end a figure entered wearing a white robe with hood, flanked on either side by black hoods. They each held their charge by an arm. The three marched down through the open ranks and around the hall twice. Nothing about it seemed forced. White Robe walked freely.

---