Mamula reports that for the past decade, the U.S. dependence on rare earths has conjured up considerable attention, fascination, and concern regarding their importance. This has caused a cascading effect to create interest and investment in other rare metals, critical minerals, ore deposits, mining, and the American mineral endowment—all related to U.S. technology manufacturing, national security, military readiness, geopolitics, and trade, particularly with China. Rare earth elements have become the poster child for critical minerals, especially those for which we are now100 percent import dependent—the vast majority of which come from China.
What’s Really at Stake
The connection between rare earth elements, technology metals, and corresponding supply chains and the U.S. high-tech manufacturing sector, renewable energy, and military readiness is now very well-established. They all require rare earths in large quantities. For the world’s largest economy, largest energy renewables market, and most powerful military—the stakes cannot be higher. Yet, the U.S. has not invested enough money or attention to guarantee an adequate supply of rare earth elements.
Despite the crisis of confidence occurring in the rare earth trade space outside of China, during the decade between 2008 and 2018 the U.S. government spent less than $25 million on solving what a GAO report referred to as a “bedrock national security issue.” Japan, having already been directly affected by a rare earth embargo, spent more than $1.5 billion, but was still just as dependent on China for rare earths as it was in 2010.
Since 2002, the key U.S. technology and defense sectors have been 100 percent reliant on China for all imported rare earth materials. Simply stated, for almost two decades the American “critical minerals credit card” has been maxed out with high-interest accruing yearly to China!
Because of American dependence on imported rare earths and the Chinese supply chain, the United States’ technology companies will need to continue moving to China—compromising the intellectual property of cutting-edge technology—fulfilling China’s well-earned reputation for violating intellectual property. Another significant reason that companies are moving is cost: foreign companies using Chinese rare earths to manufacture items in China for export are not hit with quotas or charged export or value-added taxes.
Perhaps the best example of the impact of China’s dominant position in rare earths has to do with the most ubiquitous of all manufactured products today—the smartphone. It certainly appears that Apple was forced to manufacture its iPhone and other electronic products in China in order to maintain access to a steady supply of rare earths.
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