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Some advice for Sir Iain Duncan Smith

Summary:
We think it would be helpful if, when talking about the details of policy about metals, the details about metals were known.Sir Iain Duncan Smith, the former Conservative party leader said: “The Government should now call this in and block it. “China already has three-quarters of the world’s rare earth minerals and an even larger share of their processing.“Rare earth minerals like lithium are to the 21st century what oil was to the 20th century and deals like this are all about taking control of strategic materials to make the West go to China for them.”Lithium is not a rare earth mineral. They are the 15 lanthanides plus yttrium and scandium. This might sound like some terrible pedantry but we’re afraid it isn’t. China does indeed mine some three quarters of the world’s rare earths,

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We think it would be helpful if, when talking about the details of policy about metals, the details about metals were known.

Sir Iain Duncan Smith, the former Conservative party leader said: “The Government should now call this in and block it.

“China already has three-quarters of the world’s rare earth minerals and an even larger share of their processing.

“Rare earth minerals like lithium are to the 21st century what oil was to the 20th century and deals like this are all about taking control of strategic materials to make the West go to China for them.”

Lithium is not a rare earth mineral. They are the 15 lanthanides plus yttrium and scandium. This might sound like some terrible pedantry but we’re afraid it isn’t. China does indeed mine some three quarters of the world’s rare earths, process even more of them. It does not have anything like the same stranglehold over lithium which is, in most classifications, a minor metal and in all is definitely not a rare earth.

Even then the Chinese position in lithium is for a particular method of extraction. When mining spodumene it is necessary to have a processor of the concentrate produced at the mine. China does dominate that process. Other extraction routes - from brines, clay deposits as this one under discussion, from micas - do not require that processor for the material is processed up to industrial quality at the mine itself.

This is not, therefore, pedantry for the misidentification as a rare earth leads to this belief of Chinese dominance as with the rare earths. Australia is the dominant producer of lithium - that spodumene that is then often processed in China - followed by Chile which processes directly.

We also think there is a distinct whiff of overreach here.

Ministers have been urged to block a planned Chinese takeover of a British lithium miner as fears mount over Beijing’s grip on materials critical for electric cars.

Bacanora Lithium, which is listed in London, said it has received a £190m bid from its largest shareholder, China’s Ganfeng Lithium, which is already one of the world’s largest producers of the material.

Bacanora is listed in London. But the deposit anywhere near to actual exploitation is in Sonora in Mexico. It sounds a little colonial almost for the British government to be determining who might own minerals in Mexico. The next idea in the company pipeline is at Zinnwald in Germany. Again - and this is a deposit that one of us actually knows rather well having done work in the area on associated minerals - the British government insisting upon who may own minerals in Germany seems to us a bit of a reach.

This is, of course, Hayek all over again. Gaining the actual knowledge to run the world in any detail is somewhere between extremely difficult and impossible for any government to achieve.

More than that we do rather worry about that property rights thing. Bacanora Lithium is currently the property of the shareholders of Bacanora Lithium. Property rights, if they are to have any meaning at all, meaning that one can dispose of one’s own property as one wishes. Rather than, say, being limited by the technical misunderstandings of a politician.

(Just for the avoidance of doubt none of us here have any relationship with any of the companies. We do know Sir Iain and like him, this is a critique more in sorrow than anger)

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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