Strategic Minerals

Whether you believe we are on an inexorable path to war with China (we are) or merely observing them as they rise benevolently to friendly and helpful world neighbor status, one thing is certain: we are engaged in a peer level competition, at the moment, and in such a competition you don’t want to find yourself dependent on anything that your competitor has a monopoly on.

We learned this the hard way when we were dependent on Middle East oil and those oil producing countries were able to dictate prices, manipulate our economy, and create financial and societal disruptions that led to gasoline shortages and long lines for what gas there was.  We have since become largely energy independent to our significant betterment.

China, it turns out, has a monopoly on rare earths and minerals that we need for weapons manufacture.  The Trump administration initiated a study and report on the defense industry from a strategic viewpoint.  The results were previewed in a Breaking Defense article. (1)

“The review promises to be the most thorough look at the entirety of the manufacturing and production of defense materials ever attempted, involving several government agencies, surveys of large and small players in the supply chain, and a study of foreign materials used in the production of American weaponry.” (1)

The results are disturbing.

“China will likely loom large in the report, given the country’s dominance of the rare earth minerals market so critical to the U.S. defense industry, the pumping of billions in Chinese investments into U.S. tech startup firms, …

Last month, Ellen Lord, the Pentagon’s Undersecretary for Acquisition and Sustainment, said that once her team started taking a hard look at the reliance the American defense industry has placed on China for critical minerals, the results were “quite alarming…we have an amazing amount of dependency on China.“

“The United States defense industry relies on Chinese producers for 100 percent of its rare earth materials …” (1)

For example, Gallium and Germanium, used in the production of radars, infrared devices, and fiber optics, are sole sourced from China, according to the article. (1)

How bad is the situation?

“The entire global market now flows through China, and “China can always underprice competitors,” he told me, as “they view this as part of their global industrial and defense policy. This is part of their industrial and defense strategy. No matter how many rare earth mines you open up, China can undercut them on price.” (1)

“Rare earth metals are so critical and in so many defense components for guided missiles, smart bombs, targeting lasers, sonar, radar, night vision and high temperature resistant metals for military jet engines, that if China cut us off, the U.S. could not replace or build most of our advanced weapon systems.” (2)

“These materials are also found in smart phones, small electric motors, sensors and catalysts in automobiles, computers, commercial aircraft and most green technology. If China embargoed these materials the U.S. would be forced to shut down all or most of our nation’s technology manufacturing assembly lines.” (2)

Was this always the case?  No.

“Rare earth materials are the byproduct of almost all normal mining activities, and while they can be mined and produced in the United States — which until the 1980s was meeting all of its domestic needs — a series of rules, and Chinese moves to undercut the market, dried up most domestic production.” (1)

The reality is that we are already at war with China – or, at least, they are at war with us.  China views war as the totality of a nation’s actions, unlike the US, and holding a monopoly on defense-critical rare earth minerals is just another weapon in China’s war chest.  It doesn’t take much imagination to see that the threat of being cut off from our sole supplier of critical defense manufacturing resources makes it very difficult for us to take actions in other areas such as trade, tariffs, patents, cyber espionage, etc.  In other words, China’s monopoly makes it difficult for us to act in our own best interests.

This monopoly needs to be broken and decisively so.  We had production capacity once and we can re-establish it again.  The Trump administration has taken the first, vital step of recognizing the problem.  Whether you like Trump or not, his investigation into this area is of vital national strategic importance.  He has done what several previous administrations have failed/refused to do.

The Obama administration, for example, failed badly, as noted in the article.

“The focus of the Obama administration when it came to rare materials was “reduce, reuse, recycle,” he added, “what was missing was production.” (1)

Make no mistake, China will use our dependence against us.  It is a matter of national security to break China’s monopoly over us.  We must begin taking the same view as China regarding the totality of war and start fighting back on every front.  Trump is quite correct on this issue.  It’s not even debatable.  It’s a matter of national security not politics.

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(1)Breaking Defense website, “DoD, White House Likely To Fight Chinese Monopoly on Rare Earth Minerals”, Paul McLeary, 18-May-2018,

https://breakingdefense.com/2018/05/dod-white-house-likely-to-fight-chinese-monopoly-on-rare-earth-minerals/

(2)The Hill website, “China's secret trade war option: A rare earth embargo”, Victoria Bruce, 2-Apr-2018,

http://thehill.com/blogs/congress-blog/politics/381282-chinas-secret-trade-war-option-a-rare-earth-embargo