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Rare Earths Are China's Most Potent Weapon In A Trade War

Authored by Llewellyn King via,

In October 1973, the world shuddered when the Arab members of the Organization of Petroleum Exporting Countries imposed an oil embargo on the United States and other nations that provided military aid to Israel in the Yom Kippur war. At the same time, they ramped up prices.

The United States realized it was dependent on imported oil — and much of that came from the Middle East, with Saudi Arabia the big swing producer. It shook the nation. How had a few foreign powers put a noose around the neck of the world’s largest economy?

Well, it could happen again and very soon. The commodity that could bring us to our knees isn’t oil, but rather a group of elements known as rare earths, falling between 21 and 71 on the periodic table.

This time, just one country is holding the noose: China.

China controls the world’s production and distribution of rare earths. It produces more than 92 percent of them and holds the world in its hand when it comes to the future of almost anything in high technology.

Rare earths are great multipliers and the heaviest are the most valuable. They make the things we take for granted, from the small motors in automobiles to the wind turbines that are revolutionizing the production of electricity, many times more efficient. For example, rare earths increase a conventional magnet’s power by at least fivefold. They are the new oil.

Rare earths are also at work in cell phones and computers. Fighter jets and smart weapons, like cruise missiles, rely on them. In national defense, there is no substitute and no other supply source available.

Like so much else, the use of rare earths as an enhancer was a U.S. discovery: General Motors, in fact. In 1982, General Motors research scientist John Croat created the world’s strongest permanent magnet using rare earths. He formed a company, called Magnequench.

In 1992, the company and Croat’s patents were sold to a Chinese company.

From that time on it became national policy for China to be not just the supplier of rare earths, but to control the whole supply chain.

For example, it didn’t just want to supply the rare earths for wind turbines; it insisted that major suppliers, such as Siemens, move some of their manufacturing to China. Soon Chinese companies, fortified with international expertise, went into wind turbine manufacture themselves.

“Now China is the major manufacturer of wind turbines,” says Jim Kennedy, a St. Louis-based consultant who is devoted to raising the alarm over rare earths vulnerability.

A new and important book, “Sellout” by Victoria Bruce, details the way the world handed control of its technological future to China and Kennedy’s struggle to alert the United States.

At present, the rare earths threat from China is serious but not critical. If President Donald Trump — apparently encouraged by his trade adviser Peter Navarro, and his policy adviser Steve Bannon — is contemplating a trade war with China, rare earths are China’s most potent weapon.

A trade war moves the rare earths threat from existential to immediate.

In a strange regulatory twist the United States, and most of the world, won’t be able to open rare earths mines without legislation and an international treaty modification. Rare earths are often found in conjunction with thorium, a mildly radioactive metal, which occurs in nature and doesn’t represent any kind of threat.

However, it’s a large regulatory problem. The Nuclear Regulatory Commission and the International Atomic Energy Agency have defined thorium as a nuclear “source material” that requires special disposition. Until these classifications, thorium was disposed of along with other mine tailings. Now it has to be separated and collected. Essentially until a new regime for thorium is found, including thorium-powered reactors, the mining of rare earths will be uneconomic in the United States and other nuclear non-proliferation treaty countries.

Congress needs to look into this urgently, ideally before Trump’s trade war gets going, according to several sources familiar with the crisis. A thorium reactor was developed in the 1960s at the Oak Ridge National Laboratory in Tennessee. While it’s regarded by many nuclear scientists as a superior technology, only Canada and China are pursuing it at present.

Meanwhile, future disruptions from China won’t necessarily be in the markets. It could be in the obscure but vital commodities known as rare earths: China’s not quite secret weapon.


tmosley BarkingCat Sun, 08/06/2017 - 16:16 Permalink

>Rare Earths are a weapon in anti-US trade warThat might be true, IF we manufactured any significant amount of high tech equipment! All that shit is made in China!If they want to really hit the US hard, they would ban the export of electronic components to the US.Not to mention that the US has "rare" earth deposits out the yinyang, we just don't exploit them because of Chinese dumping and overly restrictive environmental protections. An embargo+rolled back regulations would create a new industry overnight. Go a little further and all thorium nuclear power, and you would have a YUUUUUGE customer for one of the hardest to deal with byproducts of RE mining.

In reply to by BarkingCat

LibertarianMenace BarkingCat Sun, 08/06/2017 - 16:22 Permalink

That would have been 1996. This was the "read my lips" globalist mafia. They are the real reason behind the current Deepest State hooliganism. The latter, the "I did not have sex with that woman" side of the cartel merely carries water for their bosses in the former. No words of wisdom from the Booshes, these days, very telling.

In reply to by BarkingCat

Bring the Gold LibertarianMenace Sun, 08/06/2017 - 17:08 Permalink

As much as I hate Bush crime family protege Bill Clinton. It was HW Bush who was president ALL of 1992. However, Dems were in control of both the Senate and the House. Really partisanship is silly since the Uniparty has been in control since at the ABSOLUTE latest the Halloween Massacre when Ford fired all the Nixon guys and replaced them with HW Bush, Cheney and Rumsfeld. HW Bush has been the go to concierge for old money since he was made head of the CIA. I love when Troglodytes, try and appeal to Partisanship especially in 2017 where it couldn't be more obvious it's the Oligarchs who control both parties vs the rest of us true Americans.

In reply to by LibertarianMenace

eh_geee_gmail Sun, 08/06/2017 - 15:36 Permalink

Australians need to start voting for revolution in their government.How is Australia not one of the two or three richest countries?By these production numbers it should be far ahead of every country except the oil polluters (Middle East and USA) and the air polluters (Asia and USA.)p.s. Just looking at Inconvenient Sequel, in terms of CO per person, the USA should be paying a national carbon tax to the rest of the world.  It doesn't need to build a wall to keep people _in_ that country.  And Australia should be fortifying itself to keep its neighbors from blending borders and coming up with these obviously intentional merging of regions with vague, invented boundaries like Oceania.  The world is facing threats of resources beyond air and clean water, but simply dry land ... Australia has a "lucky country" abundance of all natural resources, but the invasion is already well advanced.

raybies eh_geee_gmail Sun, 08/06/2017 - 20:36 Permalink

If Australia was run as a ME emir, then we would probably be the richest people in the world. However while we have vast natural resources, these are in private hands and the government derives a small royalty. Anyone who tries to either increase this royalty or change the status quo is immediately dispatched.We have a huge number of well paid parasitic public servants (politicians) who's sole goal is to preserve the status quo. The real power is not in this political elite's hand but in international (bankers) hands. So the real wealth is distributed to off shore share holders while the local population is subjected to high taxes and usury, obviously those who support the status quo are also handsomely rewarded...Aussies are generally too small minded to revolt, or even understand how the system works. Here you're likely to appear on the 6 o'clock news for going 150km/h or snorting a line of coke.

In reply to by eh_geee_gmail

VWAndy Sun, 08/06/2017 - 15:36 Permalink

 The only reason China has that power is government regulations here. We have pleanty of rare earth elements we just got cockblocked by goons with badges.

VWAndy nmewn Sun, 08/06/2017 - 15:59 Permalink

 Yes they do! They got a dumb plan and are sticking too it. Between me an you its a stupid plan thats going to blow up right in their faces. I just hope Im around long enough to see it. Maybe even light the fuse myself! That would be a goal woth living for.

In reply to by nmewn

just the tip VWAndy Sun, 08/06/2017 - 16:22 Permalink

we may have plenty of supply, but we don't have the capability of building/assembling anything listed in the article.  so what good are the rare earths going to do us?  why don't they make iphones in detroit?fucked forwards, then they turn us around and fuck us from behind.  some don't even have stinking badges.if you need any help with that fuse, gimme a holla.

In reply to by VWAndy

VWAndy just the tip Sun, 08/06/2017 - 16:32 Permalink

 The regulations are also why we aint building shit here either. Back in 1969 in the LA area we made great stuff. Bigblock Camaros,great movies,aircraft,spaceships,you name it we made it. All of it was regulated out of the state. Try to manufacture in cali and you will find no friends in government unless its some kind of toxic product. Like Tesla.

In reply to by just the tip

Bring the Gold DivisionBell Sun, 08/06/2017 - 23:32 Permalink

Thorium is very dangerous, however it can also be useful. Idiot's in the 1940's/50's went with Uranium reactors that created Plutonium waste over Thorium reactors which is very stable, doesn't have meltdowns, leaves far less dangerous spent fuel and is all around better. Sadly, the desire to create nuclear weapons lead to a need for Plutonium hence our horrible mistake of going with dangerous Uranium reactors over Thorium reactors. It's not too late to switch and this solves REM mining issues in one fell swoop.

In reply to by DivisionBell

BritBob Sun, 08/06/2017 - 15:59 Permalink

 China is a member of the UN C24 Decolonization Committee and gives support to Argentina's mythical Malvinas claim. So much for the human and democratic rights of the Falkland Islanders and so much for that so-called sovereignty claim (Argentina has never legally owned the islands).Falklands: 1833 Usurpation & UN Resolutions: Meanwhile Taiwan supports the islanders right to self-determination.Viva democracy!

HardlyZero Sun, 08/06/2017 - 16:08 Permalink

Actually "rare earths" is somewhat a misnomer.They exist everywhere on the planet.However, Australia also has a high concentration.They just take effort (and if radioactive special precautions).  The Rare Earthss have old mines in the United States too, but put off to other countries to minimize ecological impact at home.Despite their name, rare-earth elements are – with the exception of the radioactive promethium – relatively plentiful in Earth's crust, with cerium being the 25th most abundant element at 68 parts per million, or as abundant as copper. They are not especially rare, but they tend to occur together in nature and are difficult to separate from one another. However, because of their geochemical properties, rare-earth elements are typically dispersed and not often found concentrated as rare-earth minerals in economically exploitable ore deposits.

SantaClaws Sun, 08/06/2017 - 16:13 Permalink

Let China withhold rare earth minerals from the U.S.  We'll require Walmart and similar U.S. buyers to stop purchasing goods from China.And while we're at it, let's require the same complete prior technology disclosure from Chinese firms selling here as China requires from non-Chinese firms selling products in China.Who will blink first?  Won't be the U.S., as billions of Chinese find themselves out of work.

osolomio Sun, 08/06/2017 - 16:18 Permalink

while I am sure you could just dig it up in your backyard for5$ a pound you might be better off buying stock inGreenland Minerals and EnergyGGG AustraliaGDLNF over the counter USAYes I am accumulatingcurrently 11 cents a shareHuge resourceTip to Yen Cross so far you are wrong but we shall see what the future brings

kelee877 Sun, 08/06/2017 - 16:19 Permalink

I notice on the list they do not have Canada, I lived in a small town old mining town..well they have lots of RE elements...they are waiting till the price goes up..It is in with low grade uranuim..They have done the tests surveys,bought up all the old mining rights..comapny is called Pelee Mines..I read everything I could about it, so Canada will be safe for the long on RE elements

root superuser Sun, 08/06/2017 - 16:28 Permalink

I am surprised nobody sees this for what it really is. Western countries are buying up huge quantities of REM from China in exchange for useless FRN. We have milked middle east oil dry, we are milking China's REM dry. When NWO hits in about a decade or so, these countries will never recover from this. They surrendered their resources for small temporary gains.