China Flexes Its Dreaded Rare Earth Minerals Supply Muscle

GlobeTracker| Every American should gulp this moment. The NYTimes article China to Halt Some Exports to U.S. won’t garner many headlines, but we’re pausing for all the critical details.

It’s alleged that China has been blocking shipments of crucial minerals to Japan for the last month. Industry officials now acknowledge that China has also quietly halted shipments of those same materials to Europe and the United States.

The interruption in rare earth supplies is the latest sign from Beijing that Chinese officials are willing to use their growing economic muscle to make some key points with the rest of the world. After all the blowhard talking heads on the steps of Washington and in America’s right and left-wing medias, it’s time to say … “Houston, we have a problem.”

According to the Japanese, the just-in-time American manufacturing mentality means that our inventories of rare earth minerals to make everything from wind turbines to guided missiles is minimal.We could be at greater risk than they are.

A few rare earth shipments to the West had been delayed by customs officials in recent weeks, industry officials said, but the new, broader restrictions on exports appear to have been imposed Monday morning. They said there had been no signal from Beijing of how long rare earth shipments intended for the West would be held at the docks by Chinese customs officials. Nor is it clear if occasional shipments are still being allowed out of the country, or if all shipments have now been suspended. via NYTimes

Mineral Discoveries in Afghanistan

The US has discovered enormous rare mineral wealth in Afghanistan, about $1 trillion worth of mineral reserves, some of them the rare metals that China now holds hostage. But Afghanistan isn’t our country, and there’s no obvious guarantee that we will have access to their new riches.

For now, China is holding the cards. Most rare earth mining has left the United States, even though we have access to rare minerals on American soil. American companies preferred the cheaper costs of materials and lower environmental regulations in the Chinese market.

We are gasping now, wondering if China could really harm our already fragile economic recovery by cutting us off at the knees. Tom Friedman says we’re all too interconnected for China to inflict too much pain on America. This could be the first big test in a very new game of global business musical chairs that God’s divine-right American nation isn’t accustomed to playing.

More reading:

China Has Near Monopoly On Green Tech’s Key Ingredients

US Discovers Enormous Mineral Wealth in Afghanistan

Environmentally Speaking: Green Geopolitical Crises

The Money Man Behind America’s Rare Earth Minerals Forbes

Rare and Foolish by Paul Krugman NYTimes

You really have to wonder why nobody raised an alarm while this was happening, if only on national security grounds. But policy makers simply stood by as the U.S. rare earth industry shut down. In at least one case, in 2003 — a time when, if you believed the Bush administration, considerations of national security governed every aspect of U.S. policy — the Chinese literally packed up all the equipment in a U.S. production facility and shipped it to China. via Paul Krugman