In recent days, China has been banking on their dominance in the rare earth minerals market as their hedge against the trade war with the United States. They went so far as to issue their strongest threat, “Don’t say we didn’t warn you.”
Before you disregard the threat as passing, it’s important to note they’ve only used the threat twice before and both times resulted in war.
Smartphones, electric vehicles, and certain advanced weaponry components all rely on rare earth minerals. China has been the dominant force in rare earths since they became important. The Pentagon has even submitted a report to Congress detailing how they intend to mitigate the damage from a prolonged trade war should China choose to play their trump card and withhold exports of rare earth minerals.
“The department continues to work closely with the president, Congress and the industrial base to mitigate U.S. reliance on China for rare earth minerals,” said Lieutenant Colonel Mike Andrews, a spokesman.
But how bad off would the United States be if China used rare earth mineral exports as a tool to pressure President Trump to back down on tariffs? Experts seem mixed on the prospects. On one hand, rare earth minerals are crucial and China holds most of the cards. On the other hand, the United States has been reliant on China because of their abundance, not out of necessity. But there’s another important factor to consider. Even if current plans to mine our own rare earths continue as planned, processing them is essentially monopolized by he Chinese. They have the facilities and expertise. We do not.
If it becomes necessary to expedite the establishment of processing facilities and more mines in the United States due to actions by China, it will not be received well by environmental groups. However, current plans for rare earth processing facilities at Mountain Pass in California are on schedule to open next year while two others are slated for 2022. It may not come soon enough, at which point we may have to look to Australia, Estonia, and Myanmar to step up exports to us.
Even if China cuts us off, we currently have 1.4 million tons of rare earth minerals on reserve. It’s not a huge amount but it can sustain us for years if necessary.
The bottom line is this: We depend on China for rare earth minerals today, but our reliance can be made temporary relatively quickly. China may end up waking up a sleeping giant in the rare earths market, namely the United States.
We are currently forming the American Conservative Movement. If you are interested in learning more, we will be sending out information in a few weeks.
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