China mineral dominance concerns U.S.

Discussion in 'Economics' started by TraderTactics, Apr 16, 2010.

  1. China's dominant position in the production of rare earth minerals has long-reaching implications for the U.S. Department of Defense, according to a recent government report.

    The report from the Government Accountability Office was commissioned by Congress amid growing concerns that China's potential reduction on the supply of much-needed rare earth minerals could impact critical military uses.

    China has secured 97 percent of the production of these minerals, which are used in nearly every electronic device, cell phones, computer hard drives and guided missiles.

    "The longer we neglect this, the longer we don't take steps to counter this, the more it becomes a pressing problem," said Dean Chang, Research fellow at the Heritage Foundation's Center for Asian Studies.

    The minerals include ores, oxides, metals, alloys and semi-finished rare earth products and cannot be reproduced artificially. "It's not like the DOD can just say, 'OK, we won't use them,'" said Chang.
    There is widespread use of rare earth materials in defense systems, including precision-guided munitions, lasers, communication systems, radar systems, avionics, night vision equipment, satellites and more, according to the GAO.

    China has decreased output and increased export taxes on all its rare earth materials to a range of 15 to 25 percent, according to the report. [full story here]