If you don’t know what rare-earth minerals are, you’re not alone.
The problem is that if we can’t figure out how to source them from home, the implications for the United States could be dire.
It’s not exactly the sexiest campaign issue, I can understand — and it certainly slipped under the radar when the president signed an executive order Wednesday “to reduce the Nation’s vulnerability to disruptions in the supply of critical minerals.”
The rare-earth minerals are, officially, a group of 17 rare elements critical to U.S. security. While the minerals may be rare, their uses aren’t.
As Defense News reported, the minerals are crucial in the “defense industry’s manufacturing of missiles and munitions, hypersonic weapons, and radiation-hardened electronics — as well as consumer electronics like cellphones. The Trump administration previously identified 35 minerals as both essential and whose supplies are vulnerable to disruption.”
The issue isn’t just that the minerals need to be sourced from abroad. It’s that they need to be sourced from a specific (and problematic) country: China.
“The U.S. imports 80 percent of these elements directly from China, with portions of the remainder indirectly sourced from China through other countries,” Defense News reported Friday.
Last year, as Washington and Beijing sparred over trade, China indicated that rare earth minerals would be a bargaining chip.
The Global Times, one of Beijing’s most-outspoken (and least-grammatical) mouthpieces, made it clear the Chinese Communist Party was willing to hold the minerals hostage if the United States didn’t agree to stop cracking down on controversial Chinese tech giant Huawei.
“Scaling down rare-earth exports to the US is ‘a smart hit’ against the US crackdown on Huawei and the US-China trade war, Wu Chenhui, an independent rare-earth analyst, told the Global Times on Tuesday,” the May 28, 2019, article read. “The latest move is also seen as China’s retaliation for the US export control of its high technologies to China, and as a strategic material, the export of China’s rare earths has to be adjusted now, analysts said.”
The Xinhua News Agency, usually one of the Beijing’s more restrained propaganda organs, also made it clear in vigorous language the CCP was willing to choke off America’s supply of the minerals.
“Waging a trade war against China, the United States risks losing the supply of materials that are vital to sustaining its technological strength,” a piece published by Xinhua a day later read.
“China produces a majority of the world’s rare earths, chemical elements that have magnetic and luminescent properties and are used in a range of consumer products and electronics.”
With Wednesday’s executive order, the Trump administration aims to change that.
The order states “that our Nation’s undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States. I hereby declare a national emergency to deal with that threat.
“In addition, I find that the United States must broadly enhance its mining and processing capacity, including for minerals not identified as critical minerals and not included within the national emergency declared in this order.
“By expanding and strengthening domestic mining and processing capacity today, we guard against the possibility of supply chain disruptions and future attempts by our adversaries or strategic competitors to harm our economy and military readiness.”
The national emergency seeks to create “secure critical minerals supply chains that do not depend on resources or processing from foreign adversaries” and ensure “the United States develops globally competitive, substantial, and resilient domestic commercial supply chain capabilities for critical minerals mining and processing.”
The good news is that this isn’t a matter of China controlling most of the world’s reserves, but rather the CCP manipulating the global market over the long term to eliminate competition.
“In the 1980s, the United States produced more of these elements than any other country in the world, but China used aggressive economic practices to strategically flood the global market for rare earth elements and displace its competitors. Since gaining this advantage, China has exploited its position in the rare earth elements market by coercing industries that rely on these elements to locate their facilities, intellectual property, and technology in China,” the executive order reads.
“For instance, multiple companies were forced to add factory capacity in China after it suspended exports of processed rare earth elements to Japan in 2010, threatening that country’s industrial and defense sectors and disrupting rare earth elements prices worldwide.”
To encourage production within the United States, the order authorizes government grants to subsidize production equipment and suggests tariffs and quotas could be implemented on rare-earth imports from China and other problematic countries.
Unfortunately, tools outside of the regular free market apparatus will likely have to be used.
As Foreign Policy pointed out in a May article, “Given China’s state-mandated dominance of the niche rare-earth industry, it basically controls pricing and ensures that normal economic rules don’t apply. That makes it hard to respond to China’s current dominance by turning to market-based solutions, like urging mining companies to pour hundreds of millions of dollars into big upfront investments that could be rendered uneconomical with a single decision in Beijing.”
Ordinarily, this would be troublesome. Given the importance of rare-earth minerals in consumer tech and defense — as well as Beijing’s willingness to use their dominance in the market as blackmail — this is something a bit more serious.
“Each F-35 fighter, for instance, needs 920 pounds of rare earths; each Virginia-class nuclear submarine requires 9,200 pounds,” Foreign Policy reported. “Tomahawk missiles, guidance systems, and jet engines all need different combinations of alloys and specialized products using some of the 17 different rare-earth elements.”
Establishing these supply chains through incentives hasn’t worked thus far.
A national emergency, however, is a different matter.
Will it spur America’s rare-earth mineral mining capacity from its slumber? That remains to be seen.
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