Defense & National Security

U.S. at China’s Mercy for Rare Earth Minerals

The United States is entirely dependent on Red China for rare earth minerals, as environmental zealots strangle the American rare earth manufacturing industry, threatening national security and prospective economic growth.
 
Rare earth minerals (REE) are critical to everything from military weapons, solar power, electric hybrid cars, wind turbines, computer monitors, plasma televisions, smartphones, other high-tech equipment and all renewable “green” energy.  The Department of Defense needs rare earth elements for a variety of applications including communication equipment, smart bombs, global positioning, and guidance and control systems.
 
Environmentally destructive Communist China has a monopoly on the global supply and production of rare earth and accounts for 97% of the rare earth metals market, though China doesn’t actually contain more than 30% of the world’s rare earths.
 
The Chinese have a policy of restricting and driving down the currency of exports while driving up the price of those exports.  Since 2005, the Chinese have reduced their allowed exports by 6%, yet in 2010 they reduced their exports quota by 40% and announced they will reduce their exports even further in 2011, according to a 2011 report by the US Geological Survey, citing figures from the China Customs Import and Export Tariff Department.  The declines in exports contributed to a surge in prices.
 
The Chinese have also temporarily shut down production of Batou Steel Rare Earth, their largest rare earth mine, admittedly to drive up prices to levels they believe are appropriate, artificially creating critical shortages of rare earths.  This was a wakeup call to Congress.
 
“China is spending more on the rare earth industry than the U.S. spent during World War II,” said Stephen Leeb, chairman and chief investment officer of Leeb Capital Management and author of The Coming Economic Collapse.
 
 “The basic point is that there is a war going on.  China has spent two-and-a-half trillion dollars on new energy.  That amount of money is about how much the U.S. spent during the Second World War.  In their minds, they are at war,” said Leeb.
 
There was little incentive for development of deposits outside China because prices having been kept lower for years by a glut of Chinese production, said Jim Sims, spokesman of Molycorp, Inc, the only mine in America dedicated to rare earths located in Mountain Pass, Calif.
 
The National Center for Policy Analysis on Nov. 2 hosted its first conference in Washington addressing the direct link between the U.S. rare earths supply and the nation’s safety, as well as policy proposals to decrease our dependence on foreign suppliers and improve our domestic energy production.
 
The primary advantage that the U.S. possesses over our strongest competitors is our domestic resource base, according to the National Research Council.  Yet domestic mineral exploration has detonated during 1990s and 2000s because the Environmental Protection Agency is crippling U.S. manufacturing of REE.
 
The U.S. currently ranks the worst in the world among mining companies because it takes a new mine an average of seven to 10 years for production because of Environmental Protection Agency regulations.
 
Senator Lisa Murkowski (R.-Alaska), blasted the Environmental Protection Agency during the conference for “cranking out regulation after regulation,” obstructing rare earth mining in the United States, and called its proposed regulations a “train wreck.”
 
“When you look at the trends in our foreign mineral dependence, and when you look at the crush of new regulations that really threatens to set domestic mining back so very significantly, it’s hard to argue that everything is okay,” she said.
 
“This is not just a prospective situation, China is now exporting rare earths at such a low level that in 2011 this year, there will be global shortages of rare earth estimated between 25,000 and 30,000 tons, meaning by the end of this year there will be between 25,000 and 30,000 tons of demand for rare earth that are not likely to be met by Chinese exports,” Molycorp’s Sims said. 
 
Congressman Doug Lamborn (R-Colo.), chairman of the House’s energy and mineral resources subcommittee and a member of the Armed Services Committee, is author of the National Strategic and Critical Minerals Policy Act that aims to identify the barriers preventing the U.S. from meeting its mineral needs with the metals and minerals mined on U.S. soil.
 
The development of our vast mineral supply would stimulate the U.S. economy, have an immediate positive effect on job creation, and is fundamental to a strong manufacturing sector, said Rep. Lamborn.  The U.S. will continue to shift jobs overseas, to China, and forfeit our economic competitiveness unless we take steps to develop our own mineral resources.
 
 “The war for resources is a war for the ability to live a decent life in the 21st century.  Our children and grandchildren are going to suffer accordingly, and the American way of life is going to suffer,” said Leeb of Leeb Capital Management.
 
Rep. Mike Coffman (R.Colo.) is author of the RESTART (Rare Earths Supply-Chain Technology and Resources Transformation) Act, which would direct the Defense Logistics Agency to expedite a permanent permitting process.
 
The challenge will be in bringing the House and Senate together to agree on legislation addressing domestic minerals that will be signed into law by the President.
 
As President Obama pushes the green agenda as a way to champion energy independence and create jobs, the U.S. will grow increasingly energy dependent due to the lack of rare earth minerals necessary for all green energy technology.  Furthermore, the shift of scarce rare earths to green energy technologies threatens the available inventory of rare earth needed for critical military and aerospace technologies.

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