White House to Press WTO on China’s Rare-Earth Minerals Exports

By March 13, 2012Energy

Today the White House announced that they would press the World Trade Organization to open talks with China over their export policies of rare-earth minerals.   The NAM applauds this initiative, and particularly the fact that it is being done in conjunction with the European Union and Japan. Having the three economies do this together keeps this from being a bilateral tit-for-tat situation and increases the pressure on China.  The U.S. recently won a WTO case against China’s export restrictions on nine other industrial inputs, and China should get the message this case will be won as well – and they are better off by ceasing this trade-distorting practice rather than having to go through the WTO procedures.  China is now the world’s largest exporter, and needs to adhere to its global WTO obligations.

Also today, Senator Lisa Murkowski (AK-R) spoke to the Tech and Rare Earth Metals Forum about the importance of rare-earths. Politico reported that she said, “It’s one thing for the President to recognize these minerals are critical, it’s another thing to recognize we have opportunities in this country and we should be doing more to try to access them.”

Rare-earths consist of 17 elements that are important for numerous manufacturing applications, such as: renewable energy products, chemicals, catalysts for petroleum refinery, defense applications, consumer electronics, wind turbines, and hybrid car batteries to name just a few uses.

Although these minerals are called “rare,” they are abundant and can be widely found in many countries. In comparison to other minerals, however, a rare earth mineral is hardly ever found in one concentrated form. These elements are found in the earth crust but must be extracted and processed at great expense.  Until a decade ago, the United States was 100 percent self-reliant, with domestic companies producing enough to supply U.S. manufacturers.  Over time, however, U.S. production was halted, as it became economically and environmentally cost prohibitive and as Chinese mining and production came on line. While a few nations produce rare earth minerals, China currently produces 97 percent of the world’s supply. China is also a major user, consuming roughly 60 percent of what it produces.

Generally, there are no alternatives for these minerals.  Manufacturers are facing some supply chain shortage of these minerals and they have experience significant cost increases over the last 18 months. Companies in various countries are looking at reopening closed mines (especially in the U.S. and Australia) and developing new deposits, but these efforts will take a number of years to fully come on line. There are several companies in the U.S. that are looking to restart rare-earth operations but these companies face considerable regulatory and financial hurdles. 

For the time being we can get most of what we need from China but at some point we need to be more self-sufficient and not rely on others for materials that are so critical to so many different aspects of our lives. Our current situation is not unlike our situation with oil. Yes we can purchase it from foreign sources but wouldn’t we all feel better if we could meet our own needs or at least a portion of our needs? We need our leaders in government to take a long term view of our natural resources needs. It is not a spigot that we can easily turn on and off.  We must make a commitment to utilize our resources in a way that protects the environment and provides manufactures with the raw materials they need. The time for talking is past. It is time to do something about this critical need. If manufacturers are going to continue to creates jobs and be a leading force in the economy we need to have access to raw materials and have a government that works with us and takes a longer term view of the economy.

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