CHINAMacroReporter

'Breaking China’s Stranglehold on the U.S. Rare Earth Elements Supply Chain'

‘China’s control of the supply of usable, refined rare earth elements undermines U.S. security and that of its allies.’
by

Larry M. Wortzel & Kate Selley

|

American Foreign Policy Council

April 16, 2021
'Breaking China’s Stranglehold on the U.S. Rare Earth Elements Supply Chain'
Dr. Larry Wortzel is Senior Fellow in Asian Security at the American Foreign Policy Council. He served as a commissioner on the U.S.-China Economic and Security Review Commission for 19 years, including two years as Chairman. Dr. Wortzel, who is also Col. Wortzel (ret), served two tours of duty as a military attaché in the U.S. Embassy in Beijing.
BIG IDEA | ‘China’s control of the supply of usable, refined rare earth elements undermines U.S. security and that of its allies.’
‘And, at the moment, the U.S. does not have a strategic plan or vision to assure its own technological and national security success in this arena.’

As a child of a certain era, whenever I hear about rare earths, I can't help thinking of my go-to karaoke song, 'Get Ready,' by - you guessed it - the band, Rare Earth.

That said, among the points raised in Larry Wortzel’s excellent analysis is that China dominates the rare earth industry even though it only has 40% of the world’s rare earth deposits.

  • The rest it acquired through shrewd foreign acquisitions.
  • And also by again employing the Belt & Road Initiative for a strategic purpose.

‘Over the years, the U.S. has become dependent on a potential adversary for some of the most crucial materials in high technology production: rare earth elements.’

‘This was not always the case.’

  • ‘From the 1960s through the 1980s, the S. was the world leader in rare earth element production, most of which came from the Mountain Pass Mine in California.’
  • ‘By the early 1990s, however, weaker labor and environmental laws allowed China to begin to satisfy the demand for rare earth elements.’
  • ‘Twenty-five years later, the U.S. imported all of the rare earth elements it required, mostly from China.’

‘In the U.S. today, although other mines are under development, the Mountain Pass Mine in San Bernardino County, California, is the only operational rare earth metals mine.’

  • ‘It produces about 10 percent of all rare-earth concentrate, from which the metals are extract
  • ‘Yet the mine does not process its own materials— nor does any other S. firm. Instead, the extracted materials are shipped to China for processing.’

‘Although China controls less than 40% of the world’s REE deposits, it has over time increased its global proportion of supply by subsidizing the relocation of companies involved in the rare earths supply chain to China and through the acquisition of foreign firms.’

‘The PRC government, meanwhile, as part of Communist Party General Secretary Xi Jinping’s “Belt & Road Initiative,” (BRI) has strategically catalogued where along the BRI it can develop and secure rare earth elements.’

‘China’s control of the supply of usable, refined rare earth elements undermines U.S. security and that of its allies.’

  • ‘And, at the moment, the U.S. does not have a strategic plan or vision to assure its own technological and national security success in this arena.’

‘The Biden administration has now taken the first steps to addressing America’s critical vulnerability to China’s control of the global rare earths market. The new Administration’s Executive Order maps out a “whole of government” approach to solving the rare earth elements supply chain problem:’

  • ‘The Secretary of Defense (as the National Defense Stockpile Manager), in consultation with the heads of appropriate agencies, shall submit a report identifying risks in the supply chain for critical minerals and other identified strategic materials, including rare earth elements, and policy recommendations to address these risks.’
  • ‘The report shall also describe and update work done ‘Addressing the Threat to the Domestic Supply Chain From Reliance on Critical Minerals From Foreign Adversaries and Supporting the Domestic Mining and Processing Industries.’

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