April 15th, 2010
06:51 PM ET

China's mineral dominance prompts U.S. security concern

China's dominant position in the production of rare earth minerals has long-reaching implications for the U.S. Department of Defense, according to a recent government report.

The report from the Government Accountability Office was commissioned by Congress amid growing concerns that China's potential reduction of the supply of much-needed rare earth minerals could impact critical military uses.

The GAO says China has secured 97 percent of the production of these minerals, which are used in cell phones, computer hard drives, guided missiles and nearly every electronic device.

"The longer we neglect this, the longer we don't take steps to counter this, the more it becomes a pressing problem," said Dean Chang, research fellow at the Heritage Foundation's Center for Asian Studies.

The minerals include ores, oxides, metals, alloys and semi-finished rare earth products and cannot be reproduced artificially. "It's not like the DOD can just say, 'OK, we won't use them,'" Chang said.

Use of rare earth materials is widespread in defense systems, including precision-guided munitions, lasers, communication systems, radar systems, avionics, night vision equipment and satellites, according to the GAO.

China has decreased output and increased export taxes on all its rare earth materials to a range of 15 to 25 percent, according to the report.

The defense industry's heavy reliance on these minerals has prompted Congress and Pentagon and to examine ways to mitigate should China continue to reduce its exports.

House Armed Services Committee Chairman Ike Skelton, D-Missouri, said he's planning a hearing to discuss the GAO report.

Defense Department spokesman Dave Lapan said the Pentagon has been monitoring this issue for years, and is "looking at options to increase domestic availability of rare earth elements though developing new domestic sources, re-energizing previous domestic sources and transforming the national stockpile to include rare earth materials."

The report describes China as a "rapidly rising military and economic power."

"The fact is that they cornered the market on these rare earth metals that are essential for a lot of our advanced weapons systems as well as a lot of manufacturing in the United States," according to the report.

The United States has a rare earth mineral mine in southern California, which is the largest non-Chinese mine in the world, but the GAO says the mine currently lacks the facilities to process the rare earth ore into finished components such as permanent magnets.

Andrew Lubin spent 30 years importing and exporting Chinese metals and taught economics and export-import operations at the online American Military University. He said Chinese in-country demand has increased greatly in the last 10 years.

"They have a huge middle class that didn't exist 20 years ago," Lubin said. "It's not that they're trying to screw us. They need it for themselves."

But Chang said: "The big step back for this is that the Chinese are taking a very broad-minded view of their national security and national influence. It's not just the number of their submarines or missiles, or even broad economic power. In this case China is using all of these things as tools to influence everybody, including us."

Chang said the GAO report is not all doom and gloom.

"The GAO is not saying all is lost," he said. "You could re-establish a domestic industry, from mining through processing, but that's expensive and also that takes time."

Rebuilding the U.S. rare earth industry could take up to 15 years, according to GAO estimates.

soundoff (2 Responses)
  1. Sam Moorman

    The Chinese have a policy that benefits China. America has a policy of "let people or corporations make money". What is best for America comes in a distant second.

    April 15, 2010 at 8:56 pm | Report abuse |
  2. John Babiar

    I just dont see why Chinese cannot manage their onw mining industry. After all, the British bought up all the iron ore mines in the world and jack up price by 5-7 folds when Chinese in demanding of iron ore and other bese metal resources.

    April 16, 2010 at 7:34 pm | Report abuse |