Analyst's note: Rare earths are vital to new technologies, but so far, the majority of mines for these substances are in China and are the source of international tensions and challenges.
"[....] There is still a rush to control precious resources. World prices of so-called "rare earth" metals have soared, in some cases up six-fold. The prices are set by China which controls 97 percent of global output. These are vital to the manufacture of high technology products from consumer electronics to electric cars to precision-guided weapons. China gained its monopoly position by tactics that should have set off alarm bells much earlier. Beijing exported minerals at cheap prices to drive rivals out of business. American mines were further disadvantaged by environmental regulations which China does not have.
[....] Rare earths are not truly scarce; they are just very difficult and expensive to mine. The elements are usually found in small pockets and must be separated and then processed.
The procedure creates salty wastewater, uses huge amounts of electricity, requires toxic materials for the refining process, and occasionally yields dirt that is radioactive. Beijing has been willing to pay the price to win its control of these elements in order to gain an advantage in advanced technology production. Having gained a monopoly position, Beijing started to reduce rare earth exports in 2006 in favor of supplying its domestic manufacturers, a policy that has also been used to leverage foreign high-tech firms to relocate to China to have access to the resources. Beijing has announced another 10-15 percent cut in exports for this year.
[....] The liberal sophistry that arose in the early 19th century about trade being about peaceful international cooperation for the advancement of global welfare has always failed on the first step outside the salon. Yet, the revival of such delusional thinking in the 1990s, and its lingering influence in Washington, explains why the rare earth crisis escaped official attention until a crisis was reached. The "invisible hand" is supposed to take care of these things say the wags, but all that means is that hands elsewhere are making the moves that affect life here. The dangers that arise from such an irresponsible view are unacceptable.
