Digging A Deep Hole: Rare Earths Debacle Puts U.S. Trade Policy Under Scrutiny

by Admin on January 11, 2011

in China, In The Media, Legislation, Rare Earths

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By Mike Alberti – Remapping Debate – Published: January 11, 2011

While the recent controversy surrounding China’s almost complete control over rare earth elements may seem to some like an arcane debate over minerals with hard-to-pronounce names, for many experts and economists it represents a concrete example of a broader long-term failure of United States trade and industrial policy.

Rare earth elements are a set of 17 minerals, some of which are crucial to producing a wide array of high-tech products. They are used in iPads and in flat screen TVs, in wind turbines and in hybrid electric car batteries. These minerals are also needed for the tracking systems of missiles and military drones. Until about 1984, the U.S. mined the majority of the world’s rare earth supply; today it produces almost none. Nearly all of the mining now occurs in China.

From the mid-60’s to the mid-80’s, global rare earth mining was dominated by the Mountain Pass mine in California. The mine closed in 2002, after a series of radioactive wastewater leaks raised environmental concerns, and after increased Chinese production — partially due to state intervention and partially due to a lack of environmental controls — had begun to undercut U.S. prices.

Meanwhile, U.S. manufacturers that relied on rare earths found it easier to be closer to the source, and also relocated. In 2004, a company called Magnequench — a huge producer of permanent magnets that require rare earths and that are crucial components in the guidance systems of cruise missiles — closed its plant in Indiana and moved its facilities to China.

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