US Needs a Strong Defense Against China’s Rare-Earth Weapon
US Needs a Strong Defense Against China’s Rare-Earth Weapon
You could be forgiven if you are confused about what’s going on with rare-earth elements. On the one hand, news reports indicate that China may increase production quotas of the minerals this quarter as a goodwill gesture to the Joe Biden administration. But other sources say that China may ultimately ban the export of the rare earths altogether on “security concerns.” What’s really going on here?
There are 17 elements considered rare earths — lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium — and while many aren’t actually rare in terms of global deposits, extracting them is difficult and expensive. They are used across high-tech manufacturing, including smartphones, fighter aircraft and components in virtually all advanced electronics. Of particular note, they are essential to many of the clean-energy technologies expected to come online in this decade.
I began to focus on rare-earth elements when I commanded the North Atlantic Treaty Organization’s presence in Afghanistan, known as the International Security Assistance Force. While Afghans live in an extremely poor country, studies have assessed that they sit atop $1 trillion to $3 trillion in a wide variety of minerals, including rare earths. Some estimates put the rare-earth levels alone at 1.4 million metric tons.
But every time I tried to visit a mining facility, the answer I got from my security team was, “It’s too dangerous right now, admiral.” Unfortunately, despite a great deal of effort by the US and NATO, those security challenges remain, deterring the large foreign-capital investments necessary to harvest the lodes. Which brings us back to Beijing.
China controls roughly 80% of the rare-earths market, between what it mines itself and processes in raw material from elsewhere. If it decided to wield the weapon of restricting the supply — something it has repeatedly threatened to do — it would create a significant challenge for manufacturers and a geopolitical predicament for the industrialized world.
It could happen. In 2010, Beijing threatened to cut off exports to Japan over the disputed Senkaku Islands. Two years ago, Beijing was reportedly considering restrictions on exports to the US generally, as well as against specific companies (such as defense giant Lockheed Martin Corp.) that it deemed in violation of its policies against selling advanced weapons to Taiwan.
President Donald Trump’s administration issued an executive order to spur the production of rare earths domestically, and created an Energy Resource Governance Initiative to promote international mining. The European Union and Japan, among others, are also aggressively seeking newer sources of rare earths.
Given this tension, it was superficially surprising that China announced it would boost its mining quotas in the first quarter of 2021 by nearly 30%, reflecting a continuation in strong (and rising) demand. But the increase occurs under a shadow of uncertainty, as the Chinese Communist Party is undertaking a “review” of its policies concerning future sales of rare earths. In all probability, the tactics of the increase are temporary, and fit within a larger strategy.
China will go to great lengths to maintain overall control of the global rare-earths supply. This fits neatly within the geo-economic approach of the One Belt, One Road initiative, which seeks to use a variety of carrots and sticks — economic, trade, diplomatic and security — to create zones of influence globally. In terms of rare earths, the strategy seems to be allowing carefully calibrated access to the elements at a level that makes it economically less attractive for competitors to undertake costly exploration and mining operations. This is similar to the oil-market strategy used by Russia and the Organization of Petroleum Exporting Countries for decades.
Some free-market advocates believe that China will not take aggressive action choking off supply because that could precipitate retaliation or accelerate the search for alternate sources in global markets. What seems more likely is a series of targeted shutdowns directed against specific entities such as US defense companies, Japanese consumer electronics makers, or European industrial concerns that have offended Beijing.
The path to rare-earth independence for the US must include: Ensuring supply chains of rare earths necessary for national security; promoting the exploitation of the elements domestically (and removing barriers to responsibly doing so); mandating that defense contractors and other critical-infrastructure entities wean themselves off Chinese rare earths; sponsoring research and development to find alternative materials, especially for clean energy technology; and creating a substantial stockpile of the elements in case of a Chinese boycott.
This is a bipartisan agenda. The Trump administration’s strategic assessment of what needs to be done (which goes beyond just 17 rare earths to include a total of 35 critical minerals) is thoughtful, and should serve as a basis for the Biden administration and Congress.
Such a national rare-earths strategy will be only one part of the administration’s complex calculus as it constructs a holistic strategy for dealing with China. Securing a lasting peace in Afghanistan may be part of the solution, although the near-term prospects are not promising.
Finally, rare earths are a perfect example of the nexus between national security and the environment. The administration’s climate envoy, Former Secretary of State John Kerry, has a seat on the National Security Council. It’s the perfect place from which to advocate for a sensible strategy on securing rare earths as they become increasingly vital in the years to come.