Javier Blas on China's Rare Earths Dominance

SPEAKER_2 (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:23)

Tracy, we're in London.

Tracy Alloway (0:25)

Yes. How do you like it?

Joe Weisenthal (0:26)

I love it so far. I'm having a great time.

Tracy Alloway (0:28)

You know what I realized? I always make the mistake, so I lived in London for a long time. I went to university here, I met my husband here, and I stayed here for over a decade. But I realized whenever I go back, I always make the mistake of doing it on that one glorious spring day, where the temperature is like 75 Fahrenheit, like 21 Celsius and everything is blooming in central London, and it's sunny and it's beautiful. And I think, wait, why did I leave?

Joe Weisenthal (0:55)

But then the next day, it's gray.

Tracy Alloway (0:57)

Yeah, okay, there is that. But I need to come back in January, when it's dark at 3 or 4 p.m. and remind myself that there are, in fact, some downsides of living here. But it is very nice to be back for a visit.

Joe Weisenthal (1:09)

This is actually my first time being in the city, because I haven't really stayed at this part of the city before. It's really nice, all the history and everything. Despite being here, we have no choice but to continue covering various repercussions, fallouts, updates, ongoing development in the trade war, or whatever we're calling it, the tariff, whatever.

Tracy Alloway (1:32)

You would rather be thinking of actual war history and going to the Imperial War Museum or something like that.

Joe Weisenthal (1:38)

On my one free day here, I did the Boomer thing, and I went to the Imperial War Museum, and I saw a lot of things that I only read about referenced in books. Anyway, all kinds of dimensions in the trade tensions and everything. But one thing that's going on is big impact on commodity markets. We've seen the price of oil plunge as recession fears get priced in. And there was this headline in the New York Times about China halting export of rare earth metals as a retaliation. And I just have to say, I've been reading about China halting exports of rare earth metals in retaliation for my entire life. It never seems to matter. It never really seems to be a thing. But it always is a really scary headline. But I've never actually, nothing as far as I recall, ever gets shut down or grinds to a halt from these supposed export restrictions.

Tracy Alloway (2:27)

This is one of the greatest branding exercises of all time. It's because it has the word rare in the title. Everyone can really easily apparently make the case that these are rare and you really need to snap them up, get the exposure before China starts limiting exports and we all have to pay through the nose for these things. But yeah, it's never happened and the rare as, I don't know if we've ever discussed on this show, but certainly other people have discussed it at various points in time. The rare actually isn't that rare. It turns out there's a lot of them out there. It's just no one really likes getting them out of the ground that much.

Joe Weisenthal (3:00)

So, since we're here in London, we can never talk to him enough about commodity things and because they're commodity things going on. I'm thrilled to be in person with our colleague, Bloomberg Opinion scribe, Javier Blas, and knows everything about all things commodities. Javier, can you just rant for a couple of minutes about rare earths? I'm not even going to ask you a question. Just go on a rant about headlines about China limiting rare earth exports.

Tracy Alloway (3:27)

Rare earths, go.

Javier Blas (3:29)

Joe, Tracy, thank you for having me.

You have been listening to these headlines and getting very scared. It's going to be a shortage of rare earths for a long period of my professional life, which is beginning to be more than 25 years, and it's so great to prove it. I have to deal with editors who will come to me and say, rival publication is saying XYZ rare earth metals panic.

Joe Weisenthal (3:57)

No, it's great for clicks, so I get why editors like it.

Javier Blas (4:00)

And then my editors will say, should we be writing something about it? And my default answer has been, no, there is not going to be a shortage. And if there is a shortage, the consequences are not going to be nearly as material as people think that they're going to be. So a couple of numbers. The United States imported last year in 2024, according to US government data, a grand total of, give me the theme music, $170 million of raref metals. No, not billion, million, $170 million. I'm pretty sure that the United States imported more olive oil from probably Spain.