Beijing’s promise not to use rare earths as a diplomatic weapon, made during the East Asia Summit in Hanoi, was an easy assurance to give. As we noted earlier, China’s current near monopoly on the supply of these metals that go into so many high tech products including weapons is most likely a passing one. Now, Bloomberg reports, the U.S. Defence Dept. has concluded that China’s grip on the market poses no threat to U.S. national security. America’s military needs account for less than 5% of the U.S.’s rare-earth consumption. The Pentagon has apparently decided that new sources of supply that will be coming on stream will be sufficient to meet its needs.
The Pentagon’s report has yet to be made public, but Bloomberg adds:
The study recommends, among other steps, an examination of how the Defense Department could aid companies such as Molycorp, which has applied to the Energy Department for $280 million in U.S. government loan guarantees to help finance restarting its open-pit, rare-earths mine in Mountain Pass, California, in the Mojave Desert. The mine once met almost all the world’s demand for rare- earth metals. It shut down in 2002 due to competition from cheaper Chinese supplies. Molycorp plans to resume production by the end of 2012.
That would potentially remove the issue from the realm of superpower security scares and put it back in the more familiar territory of a subsidies trade dispute.