Stock News Press: U.S. will rue forcing China's hand on rare earths
America's rare earth mineral dependence is a long-standing issue.
US companies are years away from challenging Chinese dominance of rare earth minerals due to a lack of domestic processing facilities, ensuring the Asian nation will maintain its near-monopoly on refining and powerful leverage in trade talks.
According to the US Geological Survey, from 2014 to 2017 the United States imported 80 percent of its rare earth compounds and metals from China.
China on Wednesday issued a blunt warning to the United States over the trade war between the world's two largest economies, saying it could limit exports of rare earths to the United States - and adding that "Don't say we didn't warn you!"
"The country accounted for at least 71 percent of mined output past year, with the percentage for processed rare earth compounds even higher, and the U.S. sourced 80 percent of its rare earth imports from China from 2014 to 2017, according to statistics from the USA government", the Global Times said in a report.
"The department continues to work closely with the president, Congress and the industrial base to mitigate USA reliance on China for rare earth minerals", Air Force Lieutenant-Colonel Mike Andrews, a Pentagon spokesman, told Reuters.
China may take the drastic step of restricting exports of rare-earth elements to strike back at the United States, as the trade war between the world's two biggest economies continues to intensify.
"The U.S. can't tell Apple or other industrial companies what to do, but they can tell companies how to manufacture products for government agencies to use", Anthony Marchese, Texas Mineral Resources' chairman, told Reuters.
In a commentary headlined "United States, don't underestimate China's ability to strike back", the official People's Daily noted the USA "uncomfortable" dependence on rare earths from China.
"The department recently submitted a Defence Production Act III rare earth mineral report to Congress, demonstrating the department's continued focus on reducing reliance on China,"Andrews said". It is not the first choice of China's offensive weaponry, the report said.
The Pentagon has repeatedly flagged its concerns about American reliance on China for rare earth minerals, including in a 2018 report on vulnerabilities in the United States defence industrial base.
Stocks of rare earth miners surged during morning trade on Wednesday after Chinese state-linked media said that Beijing may weaponize the exports of the vital materials amid an escalating trade war with the US.
The newspaper also stressed that China would prioritise its domestic demand on rare earth elements, which it billed as the "vitamin for industries". Now China needs to tighten management of rare-earth enterprises, especially foreign-invested companies, to make smuggling absolutely impossible. The U.S. was, in fact, once the largest supplier of rare earths.
The Manchin-Murkowski bill would hand $23 million a year though 2027 to a rare earth extraction pilot project run by the West Virginia University and National Energy Technology Laboratory. Economists say President Trump could have to boost trade with Australia, South Africa and Russian Federation to find a new source of minerals. "Congress is working now on the 2020 defense bill, with signs that there will be legislation directing the Pentagon to act to incentivize US rare earth production".
China only controls about 40% of the world's estimated rare earth mineral reserves, which means there's an opportunity for other countries to gain market share.
Still, he isn't optimistic about the U.S.
By: Scott Gibson
Source: Stock News Press