{"id":8482,"date":"2024-03-04T05:47:45","date_gmt":"2024-03-04T05:47:45","guid":{"rendered":"https:\/\/rarcode.com\/threeconsulting\/?page_id=8482"},"modified":"2024-03-21T15:23:12","modified_gmt":"2024-03-21T15:23:12","slug":"issues","status":"publish","type":"page","link":"https:\/\/rarcode.com\/threeconsulting\/issues\/","title":{"rendered":"Issues"},"content":{"rendered":"<section class=\"l-section wpb_row height_huge with_img\"><div class=\"l-section-img\" role=\"img\" data-img-width=\"1280\" data-img-height=\"720\" style=\"background-image: url(https:\/\/rarcode.com\/threeconsulting\/wp-content\/uploads\/2024\/03\/1706526518641.png);\"><\/div><div class=\"l-section-h i-cf\"><div class=\"g-cols vc_row via_grid cols_1 laptops-cols_inherit tablets-cols_inherit mobiles-cols_1 valign_top type_default stacking_default\"><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><h1 class=\"w-post-elm post_title us_custom_6df4bc3a has_text_color align_center entry-title color_link_inherit\">Issues<\/h1><nav class=\"g-breadcrumbs us_custom_6df4bc3a has_text_color separator_icon align_center\" itemscope itemtype=\"http:\/\/schema.org\/BreadcrumbList\"><div class=\"g-breadcrumbs-item\" itemscope itemprop=\"itemListElement\" itemtype=\"http:\/\/schema.org\/ListItem\"><a itemprop=\"item\" href=\"https:\/\/rarcode.com\/threeconsulting\/\"><span itemprop=\"name\">Home<\/span><\/a><meta itemprop=\"position\" content=\"1\"\/><\/div><div class=\"g-breadcrumbs-separator\"><i class=\"far fa-angle-right\"><\/i><\/div><div class=\"g-breadcrumbs-item\">Pages<\/div><\/nav><\/div><\/div><\/div><\/div><\/section><section class=\"l-section wpb_row height_custom\"><div class=\"l-section-h i-cf\"><div class=\"g-cols vc_row via_grid cols_1 laptops-cols_inherit tablets-cols_inherit mobiles-cols_1 valign_top type_default stacking_default\"><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"g-cols wpb_row via_grid cols_1-2 laptops-cols_inherit tablets-cols_inherit mobiles-cols_1 valign_top type_default stacking_default\" style=\"--gap:3rem;\"><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"w-image style_shadow-2 align_none\"><div class=\"w-image-h\"><div class=\"w-image-shadow\" style=\"background-image:url(https:\/\/rarcode.com\/threeconsulting\/wp-content\/uploads\/2024\/03\/mt-0230-about-img1.jpg);\"><\/div><img loading=\"lazy\" decoding=\"async\" width=\"470\" height=\"390\" src=\"https:\/\/rarcode.com\/threeconsulting\/wp-content\/uploads\/2024\/03\/mt-0230-about-img1.jpg\" class=\"attachment-large size-large\" alt=\"\" srcset=\"https:\/\/rarcode.com\/threeconsulting\/wp-content\/uploads\/2024\/03\/mt-0230-about-img1.jpg 470w, https:\/\/rarcode.com\/threeconsulting\/wp-content\/uploads\/2024\/03\/mt-0230-about-img1-300x249.jpg 300w\" sizes=\"auto, (max-width: 470px) 100vw, 470px\" \/><\/div><\/div><\/div><\/div><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><h3 class=\"w-text\"><span class=\"w-text-h\"><span class=\"w-text-value\">Understanding The Larger Issues<\/span><\/span><\/h3><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><h4 class=\"moto-text_182\"><strong><span class=\"moto-color1_4\">How did china get on top?<\/span><\/strong><\/h4>\n<p class=\"moto-text_system_10\"><strong>How Did China Establish Its Global Monopoly?<\/strong><\/p>\n<p class=\"moto-text_normal\">Even the most transitory review of history shows that it was the misapplication of regulations that sparked China\u2019s monopoly.\u00a0 With this fact as a starting point, Molycorp was a most improbable solution because it was never a key player in the historical supply chain for the most critical technology resources: heavy rare earths.\u00a0 Molycorp\u2019s primary business was selling low value and abundant Lanthanum to W.R. Grace, to be used by the petroleum industry.<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"w-separator size_medium\"><\/div><div class=\"g-cols wpb_row via_grid cols_1 laptops-cols_inherit tablets-cols_inherit mobiles-cols_1 valign_top type_default stacking_default\" style=\"--gap:3rem;\"><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p class=\"moto-text_normal\">The critical resources, the rare earths with higher atomic numbers, came from many other suppliers.\u00a0 In fact, rare earth resource production was never a problem for the U.S.\u00a0 Most of our nation\u2019s rare earth resources were, and continue to be, a byproduct of some other mined commodity.<\/p>\n<p>rrrrrrrrrrrrrrrrrrrrrrrrr<\/p>\n<p class=\"moto-text_normal\">Today the U.S. mining industry extracts rare earths at a rate equal to 85% of global demand.\u00a0 Unfortunately these resources are intentionally discarded due to a misguided U.S. &amp; international regulatory snafu that took hold in the 1980s when the Nuclear Regulatory Commission (NRC) and the International Atomic Energy Agency (IAEA) began to enforce regulations specific to the nuclear fuel industry across all areas of mining.<\/p>\n<p class=\"moto-text_normal\">By misapplying these regulations the NRC effectively classified all of our nation\u2019s historical heavy rare earth resources as \u201csource material due to the companion element thorium.\u00a0 Historical byproduct rare earth producers found it more expedient to discard these resources than face the regulatory and economic burdens of becoming a \u201csource material\u201d producer.<\/p>\n<p class=\"moto-text_normal\">Without the flow of high-value heavy rare earths from the byproduct producers, China gained control over the flow of these critical materials.\u00a0 Once in control, China instituted onerous export taxes on these heavy rare earth resources &#8211; thus restricting the competitiveness of non-Chinese producers of metallurgical and other value-added rare earth products.\u00a0 As these U.S. (Japanese and French) rare earth value chain firms struggled to compete, China began a generous, state sponsored program of acquisition and relocation.<\/p>\n<p class=\"moto-text_normal\">The Chinese government referred to this state sanctioned technology acquisition in the historical military context of \u201cTreasure Hunting Ships&#8221;.<\/p>\n<\/div><\/div><div class=\"w-separator size_medium\"><\/div><\/div><\/div><\/div><div class=\"g-cols wpb_row via_grid cols_1 laptops-cols_inherit tablets-cols_inherit mobiles-cols_1 valign_top type_default stacking_default\" style=\"--gap:3rem;\"><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"w-tabs style_default switch_click accordion has_scrolling\" style=\"--sections-title-size:inherit\"><div class=\"w-tabs-sections titles-align_none icon_chevron cpos_right\"><div class=\"w-tabs-section\" id=\"w011\"><button class=\"w-tabs-section-header\" aria-controls=\"content-w011\" aria-expanded=\"false\"><div class=\"w-tabs-section-title\">Why rare earth define our future?<\/div><div class=\"w-tabs-section-control\"><\/div><\/button><div  class=\"w-tabs-section-content\" id=\"content-w011\"><div class=\"w-tabs-section-content-h i-cf\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p><strong>Rare Earths &amp; The Broader Economy<\/strong><\/p>\n<p>Rare earths are not just a defense issue.\u00a0 The future of the U.S. economy is ultimately tied to the control and utilization of these materials.\u00a0 China understands this and uses its monopoly as a geopolitical weapon to capture technology, industry, jobs.<\/p>\n<p>Today China\u2019s rare earth monopoly lends itself to direct and indirect control over $7 trillion in value added goods around the world.\u00a0 This amounts to 10% of the global economy, but more specifically it represents the highest growth and widest margin businesses \u2013 a position traditionally controlled by the U.S., Germany and Japan.<\/p>\n<p>Left unanswered, China will continue to strip technology companies and multinational defense contractors of their intellectual property and manufacturing as they are forced to move to China in order make sure they have access to critical rare earths.\u00a0 This is resulting in an ever increasing level of control over the integration of \u2018Western\u2019 defense programs and the dwindling of national tax bases.<\/p>\n<p>The U.S. has no place in a modern economy if we cannot lead with the most advanced products and green technologies, all based on advances in material science that are largely dependent on rare earths.<\/p>\n<p>In short, China is on a path of global economic and technological hegemony.<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"w-tabs-section\" id=\"v1e2\"><button class=\"w-tabs-section-header\" aria-controls=\"content-v1e2\" aria-expanded=\"false\"><div class=\"w-tabs-section-title\">Hasn&#8217;t someone fix this problem by now?<\/div><div class=\"w-tabs-section-control\"><\/div><\/button><div  class=\"w-tabs-section-content\" id=\"content-v1e2\"><div class=\"w-tabs-section-content-h i-cf\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p><strong>Molycorp, The Pentagon\u2019s Shot In The Dark<\/strong><\/p>\n<p>From a resource standpoint this national security failure will soon be turning 20, but the Pentagon would have us believe that the spectacular Wall Street failure that was called Molycorp would have single handedly delivered the U.S. economy and defense industry from the grips of China\u2019s rare earth monopoly.<\/p>\n<p>The Pentagon\u2019s fantasy went up in flames in short order.\u00a0 Concurrent with Molycorp\u2019s initial production, rare earth prices fell over 90%.\u00a0 How the world\u2019s largest strategic planning bureaucracy in the world, the Pentagon, failed to anticipate this possibility is beyond comprehension.<\/p>\n<p>The company lasted less than 5 years from IPO to bankruptcy filing.\u00a0 Over that short period it burned through over $3 billion in investor capital.<\/p>\n<p>Regardless of the Pentagon\u2019s failure to consider China\u2019s monopoly position, a cursory review of the rare earth industry\u2019s history would suggest that Molycorp was a poor candidate from the get-go.\u00a0 Operating in the California desert, with high direct mining and environmental cost, 83% of its production historically sold at low margins or below cost.\u00a0 From a strategic supply and capabilities standpoint it was a non-starter.\u00a0 Despite Molycorp\u2019s well documented incompatibility with National Security needs the Pentagon bet it all on this single project.<\/p>\n<p>The improbable story goes something like this.\u00a0 Sometime well before its 2010 IPO, Molycorp, a Denver-based mining company, convinced the Pentagon it would fulfill all of our national security needs relating to rare earth materials for major defense systems and our economy.\u00a0 Molycorp had the backing of big Wall Street firms so the Pentagon entrusted our nation\u2019s security to their solitary mine in the California desert.<\/p>\n<p>In 2010 Molycorp became an IPO powerhouse and Wall Street darling.\u00a0 Its market capitalization shot up past $7 billion.\u00a0 Investors, trade journals and \u201cmarket experts\u201d were euphoric:\u00a0fait accompli.\u00a0 Fortunes were made.\u00a0 The smart money moved on to the next deal.\u00a0 The financial press announced\u00a0mission accomplished\u00a0and that\u00a0the free markets won again\u2026. the Pentagon agreed.<\/p>\n<p>Today Molycorp is bankrupt\u2014its facility rusting away into the sand.\u00a0 The company, having burned through billions of dollars, never lived up to its promise of meeting our national security needs.<\/p>\n<p>This epic fail has left the U.S. Defense Department more vulnerable than ever to the threat of supply interruptions for our most important materials, metals and system components.<\/p>\n<p>The free-market victory was a sham.\u00a0 From a National Security stand-point Molycorp\u2019s geologic and technical capabilities were essentially worthless.\u00a0 Molycorp\u2019s domestic capabilities were limited to the production of low-value rare earth oxides which are useless to the defense industry or any advance technology industry.\u00a0 In the end, Molycorp acquired all of its metallurgical capabilities from a company inside China, breaking their promise to develop a secure U.S. source of essential rare earth metals, alloys and magnets critical to U.S. defense contractors. The move ensured that the future procurement of all rare earth dependent weapons systems were effectively under Chinese control.<\/p>\n<p>These issues were pointed out to DoD specialists and others, but all of the warnings and technical data were ignored. The Pentagon never accounted for any of these inconvenient facts in reports to Congress or the Administration.<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"w-tabs-section\" id=\"v2f4\"><button class=\"w-tabs-section-header\" aria-controls=\"content-v2f4\" aria-expanded=\"false\"><div class=\"w-tabs-section-title\">Who is preventing a solution?<\/div><div class=\"w-tabs-section-control\"><\/div><\/button><div  class=\"w-tabs-section-content\" id=\"content-v2f4\"><div class=\"w-tabs-section-content-h i-cf\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p><strong>Elusive Solutions: Hope Springs Eternal, But Critical Thinking Remains Ethereal<\/strong><\/p>\n<p>Civilian officials inside the Pentagon and a handful of Congressmen and Senators continue to believe that one of the remaining 3 or 4 U.S. penny-stock rare earth companies will somehow finance their unlicensed and unpermitted mining operations (hundreds of millions of investor), develop a metallurgical value chain platform (requiring billions of investor dollars) that replicates China\u2019s rare earth value chain that spans two enormous cities.\u00a0 Of course this wishful thinking does not take into account China\u2019s state directed monopoly (somehow ignoring the smoldering ash-heap bankruptcy called Molycorp and the many other bankrupt or technically bankrupt want-to-be rare earth enterprises).<\/p>\n<p>This level of willful \u2018make-believe thinking\u2019 has no place in the grownup\u2019s world.\u00a0 Resolving this National Security threat requires adult thinking and constructing solutions that must be impervious to China\u2019s monopoly pricing power at every level of the value chain.<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"w-tabs-section\" id=\"e3e8\"><button class=\"w-tabs-section-header\" aria-controls=\"content-e3e8\" aria-expanded=\"false\"><div class=\"w-tabs-section-title\">More day dreaming?<\/div><div class=\"w-tabs-section-control\"><\/div><\/button><div  class=\"w-tabs-section-content\" id=\"content-e3e8\"><div class=\"w-tabs-section-content-h i-cf\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p>Other members of Congress maintain the \u2018simplistic\u2019\u00a0positon that only \u2018free market solutions\u2019 are acceptable, again ignoring the economic reality of a State sponsored monopoly.<\/p>\n<p>China\u2019s state sponsored monopoly falls into the economic classification of a \u2018market failure\u2019.\u00a0 The U.S. has a long and successful history of addressing these types of market failures with constructs like cooperatives.<\/p>\n<p>Smart private sector investors are not going to put up billions of dollars to challenge a government sponsored monopoly that has demonstrated its willingness and ability to bankrupt competitors.\u00a0\u00a0 Again, this amounts to irresponsible daydreaming \u2013 and it needs to end.<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"w-tabs-section\" id=\"n52e\"><button class=\"w-tabs-section-header\" aria-controls=\"content-n52e\" aria-expanded=\"false\"><div class=\"w-tabs-section-title\">What is the solution?<\/div><div class=\"w-tabs-section-control\"><\/div><\/button><div  class=\"w-tabs-section-content\" id=\"content-n52e\"><div class=\"w-tabs-section-content-h i-cf\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p>Why a Cooperative &amp; Thorium Bank:\u00a0 Any solution must be impervious to Chinese monopoly pricing power.\u00a0 To achieve this the proposed legislative solution allows for the creation of two privately owned, funded and operated entities: one to accept the abundant and recoverable rare earth resources that are discarded each year and the other to accept and safely store the thorium.<\/p>\n<p>\u2022 The first entity would be structured as a fully integrated rare earth value chain cooperative that would be funded and owned by multi-national technology corporations and produce the value added products its owners require.<\/p>\n<p>\u2022 The second entity, the Thorium Bank, would allow for the thorium liability to pass from the many producers of rare earths (currently discarding the material to avoid liability), through the rare earth cooperative and into this long term storage facility.\u00a0 This corporation would be funded and operated by investors interested in developing uses and markets for thorium, including energy.<\/p>\n<p>This cooperative structure is necessary for a number of reasons: 1) rare earth oxides are useless to technology companies and the defense industry, 2) building a fully integrated value chain to upgrade rare earths\u00a0 oxides\u00a0in to useful products (metals, alloys, magnets, garnets, etc.)\u00a0will cost billions of dollars, 3) the demand requirements for the defense industry or any single technology company are grossly imbalanced by the necessary capital cost to build out a fully integrated value chain, 4) China can price oxides or value added products\u00a0below western production cost (by taking losses, as a modern U.S. facility could produce below China&#8217;s current cost), 5) traditional investors do not invest money in losing enterprises so as long as China has monopoly power no &#8216;smart money&#8217; is going to bet against China, 6) however, technology companies will invest to protect Intellectual Property.<\/p>\n<p>The Thorium Bank is Paramount because it allows all of the primary rare earth resources, currently disposed of, to come from byproduct producers.\u00a0 Since these byproduct rare earth producers\u00a0make money on some other commodity (phosphate, titanium, iron, zirconium, etc.) they\u00a0cannot be bankrupt by China.<\/p>\n<p>The creation of the Thorium Bank is the most\u00a0critical part of the solution, because no one will invest the necessary capital in a rare earth value chain if China can cut off suppliers.<br \/>\nLike Sematech Corporation (<span class=\"moto-color1_4\"><a class=\"moto-link\" href=\"https:\/\/en.wikipedia.org\/wiki\/SEMATECH\" target=\"_blank\" rel=\"noopener\" data-action=\"url\">https:\/\/en.wikipedia.org\/wiki\/SEMATECH<\/a><\/span>), created by Congress in the 1987 NDAA to assure a domestic supply of semiconductors, the cooperative and thorium bank require legislative authority to operate and function.<\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><div class=\"g-cols wpb_row via_grid cols_1 laptops-cols_inherit tablets-cols_inherit mobiles-cols_1 valign_top type_default stacking_default\" style=\"--gap:3rem;\"><div class=\"wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\">\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section>\n","protected":false},"excerpt":{"rendered":"IssuesHomePagesUnderstanding The Larger IssuesHow did china get on top? How Did China Establish Its Global Monopoly? Even the most transitory review of history shows that it was the misapplication of regulations that sparked China\u2019s monopoly.\u00a0 With this fact as a starting point, Molycorp was a most improbable solution because it was never a key player...","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-8482","page","type-page","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/pages\/8482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/comments?post=8482"}],"version-history":[{"count":13,"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/pages\/8482\/revisions"}],"predecessor-version":[{"id":9346,"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/pages\/8482\/revisions\/9346"}],"wp:attachment":[{"href":"https:\/\/rarcode.com\/threeconsulting\/wp-json\/wp\/v2\/media?parent=8482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}