Detsch 1

Andrew Jackson Detsch V

IAFF 3180: Globalization & National Security
Final Research Paper
Professor Celina Realuyo
Monday, April 25
th
, 2011

Reversing Chinas Chokehold on Rare Earth Elements

On September 7
th
, 2010, a collision between a Chinese fishing vessel and a
Japanese Coast Guard patroller near disputed waters surrounding the Senaku and
Diaoyuti Islands in the East China Sea sent seismic tremors through global politics,
resulting in a protracted diplomatic standoff between Beijing and Tokyo.
1
The global
supply chain of rare earth elements (REEs) was chiefly impacted. Beginning on
September 21
st
, Japanese importers reported that China had halted trade of the metals,
crucial in the development of high-tech products that are vital to the global economy:
from mobile phones to jet fighter engines and hybrid automobile batteries.
2
Beijing also
sought to assert its power as a supplier of REEs to the West, expanding the embargo to
the United States and Europe through a 30% cut in trade quotas. Policymakers accused
the Chinese of attempting to use their resource wealth as a political weapon.
3
Beijing

1
Richard C. Bush III, China-Japan Security Relations, Brookings Institution Press,
October 9, 2010, accessed March 30, 2011,
http://www.brookings.edu/~/media/Files/rc/papers/2010/10_china_japan_bush/10_china_
japan_bush.pdf.
2
Mari Yamaguchi, China rare earth exports to Japan still halted, Bloomberg
Businessweek, October 21, 2010, accessed April 7, 2011,
http://www.businessweek.com/ap/financialnews/D9J02PF01.htm.
3
Keith Bradsher, China Said to Widen Its Embargo of Minerals, The New York Times,
October 19, 2010, accessed April 23, 2011,
http://www.nytimes.com/2010/10/20/business/global/20rare.html?_r=1.
Detsch 2
countered that the cut was implemented on the grounds of environmental protection and
resource conservation.
4

Between 2006 and 2009, according to the U.S. Geological Survey, the United
States was 100% dependent on foreign sources for rare earth supplies, with China
supplying 92% of inputs.
5
Indisputably, Beijings status as a dominant producer gives it a
tactical economic weapon against Washington: using its rare earth monopoly as a
chokehold, China can adversely affect national security, damaging American
manufacturing of green technology and increasing our dependence on foreign sources of
oil, allowing capital to flow towards anti-American dictators around the world, such as
Hugo Chavez and Colonel Muammar al-Qaddafi. It has also hurt the bilateral relationship
between the two countries, vital to curbing Iranian nuclear power and moderating
tensions between Pyongyang and Seoul on the Korean Peninsula.
Continual reduction in Chinas REE supply quotas is due to increased domestic
demand, which has nearly quadrupled since 2000. Direct control of the industry allows
the Politburo to accomplish its own central goals: consolidation of their domestic supply
of REEs serves to stoke a green development drive and expedite the creation of
strategic supply reserves to ascertain their dominance in the marketplace.
6
These
aggressive behaviors clearly demonstrate Beijings intent: to take a larger slice of the

4
John W. Miller and James T. Areddy, Trade Judges See Flaw in China Policies, The
Wall Street Journal, February 18, 2011, accessed April 20, 2011,
http://online.wsj.com/article/SB20001424052748703561604576150301821467250.html.
5
Rare Earths Factsheet 2011, U.S. Geological Survey, accessed April 6, 2011,
http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/mcs-2011-raree.pdf.
6
Steve LeVine, Is Chinas rare earth power play really such a big deal? Foreign Policy,
October 21, 2010, accessed April 1, 2011,
http://oilandglory.foreignpolicy.com/posts/2010/10/21/is_chinas_rare_earth_power_play_
really_such_a_big_deal.
Detsch 3
overall global market place for rare earths and to vault up the supply chain, using export
tariffs and boosting exports with the sale of valuable finished goods to other countries.
7

Chinas chokehold on the supply chain of rare earths is forcing governments to look
internationally to diversify supply in a race for resources and hurting cooperation
between Washington and Beijing on issues of mutual importance. The United States must
globalize: collaborating with a variety of producers in order to diversify supply and
ramping up domestic production to sustain economic growth.
Importance of the Supply Chain to U.S. National Security
For the United States, the battle over rare earth elements is a vitally important one
for several reasons. First, Chinas strategic control of REE resources could cut into
economic growth and international trade at a time when markets are still emerging from
the tremors of economic recession. With the supply chain continually short-circuited,
Washington would also be unable to plan strategically for its national security needs.
8

REEs have a myriad of defense uses, including guidance and control, optics, fuel
efficiency, surveillance and detection, communications, and lasers.
9
Jack Lifton, a rare
earths expert, argues that Americas green industry, a national security priority for the
Obama Administration, stands to suffer the most from a shutdown, as it depends on REEs

7
The Difference Engine: More precious than gold, The Economist, September 17,
2011, accessed March 30, 2011, http://www.economist.com/blogs/babbage/2010/09/rare-
earth_metals.
8
Valerie Bailey Grasso, Rare Earth Elements in National Defense: Background,
Oversight Issues, and Options for Congress, Congressional Research Service, March
31, 2011, accessed April 17, 2011, http://www.fas.org/sgp/crs/natsec/R41744.pdf.
9
Military Applications for Rare Earth Technologies, Rare Earth Industry and
Technology Association, accessed April 6, 2011,
http://www.reitausa.org/storage/downloads/Military%20Applications%20Pyramids.pdf
Detsch 4
as a startup technology,
10
necessary in constructing components of wind turbines and
electric vehicles, as the strategy rightly acknowledges.
11
Prolonged disruption in REE
supply would force the U.S. to continue to rely heavily on petroleum, giving producers
such as Venezuela and Russia increased capital in international politics, diminishing
Washingtons national security prospect. Chinas erratic behavior in rare earth markets is
deeply rooted in their foreign policy motivations: by building a strategic chokehold on
the commodity, Beijing can build its way up the supply chain to re-assert their
diminishing status as the dominant exporter to the West.
12

The murky state of rare earth markets reflects the lack of candor in the U.S.-
Chinese relationship: while American officials publicly said they had sought assurances
that China would continue to supply rare earths to the West before President Hu Jintaos
visit to Washington in January 2011, the joint statement issued after the meeting of
Presidents Obama and Hu made no mention of the matter.
13
Speaking at a press
conference with his counterpart, President Obama called Americas bilateral relations
with the Chinese positive, constructive, and cooperative and lauded Beijings role as a
partner in foreign policy, cooling tensions between Pyongyang and Seoul on the Korean

10
Steve LeVine, Is Chinas rare earth power play really such a big deal? Foreign
Policy, October 21, 2010, accessed April 1, 2011,
http://oilandglory.foreignpolicy.com/posts/2010/10/21/is_chinas_rare_earth_power_play_
really_such_a_big_deal.
11
Blueprint for a Secure Energy Future, The White House, accessed March 31, 2011,
http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf.
12
Joe Weisenthal, Chinas Trade Surplus Tumbles in December as Export Growth
Collapses, Yahoo! Finance, January 10, 2011, accessed March 17, 2011,
http://finance.yahoo.com/tech-ticker/china's-trade-surplus-tumbles-in-dec.-as-export-
growth-collapses-535792.html?tickers=FXI,PGJ,EPP,EEM,EWH,EWT,EWY.
13
Keith Bradsher, China Seizes Rare Earth Mine Areas, The New York Times, January
20, 2011, accessed March 27, 2011,
http://www.nytimes.com/2011/01/21/business/global/21rare.html.
Detsch 5
Peninsula and supporting sanctions against Iran on the United Nations Security Council.
14

While the Presidents rosy language is not a perfect portrait of reality, one thing is clear:
tensions over rare earth markets have the potential to derail any progress in the U.S.-
China relationship, damaging national security prospects for both nations.
Rare Earth Market Picture
The worlds most dominant producer of REEs, China was responsible for an
estimated 95% of global production in 2010, increasing from 27% in 1990 despite
controlling only 36% of total global reserves.
15
The idea that REEs are actually rare is
something of a misnomer: although somewhat abundant near the earths crust, they are
not concentrated enough in any specific area to make them easily obtainable at a
reasonable price.
16
In total, there are seventeen REEs, which are primarily divided into
two categories: light and heavy (See Figure 1).
17
Light rare earths (yttrium, lanthanum,
and neodymium) can be used as light aluminum-scandium alloy for aerospace
components, high refractive index glass, and computer memories, while heavy rare earths
(terbium, dysprosium, and ytterbium), less abundant and more expensive, are used in

14
Transcript of the Obama-Hu News Conference, The Wall Street Journal
Washington Wire, accessed April 20, 2011,
http://blogs.wsj.com/washwire/2011/01/19/transcript-of-the-obama-hu-news-conference/.
15
Anil Das, Facts of Chinas rare earth reserves Commodities and Futures,
International Business Times, March 3, 2011, accessed March 30, 2011,
http://www.ibtimes.com/articles/118284/20110303/rare-earth-minerals-china-u-s-
geological-survey.htm.
16
Marc Humphries, Rare Earth Elements: The Global Supply Chain, Congressional
Research Service, September 30, 2010, accessed April 1, 2011,
http://www.fas.org/sgp/crs/natsec/R41347.pdf.
17
Rare Earths Factsheet 2011, U.S. Geological Survey, accessed April 6, 2011,
http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/mcs-2011-raree.pdf.
Detsch 6
rare-earth magnets, x-ray machines, infrared lasers, and PET scan detectors (See Table
1).
18

Stabilization of rare earth markets over the long term will be critical. In the short
term, because there are no rare earth mines operating in the United States, Washington
will need to pair with international allies and a myriad of suppliers to ensure free flow of
supply.
19
Chinas export tariffs, designed to keep rare earths within the domestic market,
have caused global prices to skyrocket, with the value of exports jumping from $232.5
million in 2009 to $630.5 million in 2010 (See Figure 2).
20
This year, the situation could
worsen: some of the most significant elements in the supply chain, including neodymium,
lanthanum and cerium will be moved to the 25% tariff bracket.
21
A new tax imposed on
heavy rare earths in March by the Chinese Commerce Ministry sent further shockwaves
through tenuous global markets, after prices had already hit $34,000 per ton, up from
2010s average of $14,405 per ton.
22

Global demand is estimated at 134,000 tons per year, with global production
around 124,000 tons annually. The difference is covered by readily available, above
ground stockpiles. Demand is projected to increase rapidly in the short term to 180,000

18
John Neuman, Rare Earth Materials in the Defense Supply Chain (paper presented
at briefing for congressional committees, Washington, DC, April 1, 2010).
19
Lara Crigger, Jack Lifton: US Has Been Foolish On Rare Earth Metals, Technology
Metals Research, September 4, 2010, accessed April 16, 2011,
http://www.techmetalsresearch.com/2010/09/jack-lifton-us-has-been-foolish-on-rare-
earth-metals/.
20
Rare earth metals prices vs. gold, Reuters, accessed April 7, 2011,
http://graphics.thomsonreuters.com/F/10/CMD_RAREPRC1010.gif.
21
Bloomberg News, China Raises Export Taxes of Some Rare Earths to 25%,
Bloomberg Businessweek, December 16, 2010, accessed April 6, 2011,
http://http://businessweek.com/news/2010-12-16/china-raises-export-taxes-of-some-rare-
earths-to-25-.html.
22
Michael Montgomery, Rare Earth Prices Jump and a New Tax is Imposed, Rare
Earth Investing News, March 28, 2011, accessed March 30, 2011.
Detsch 7
tons annually by 2012, and exceeding 200,000 tons per year by 2014.
23
Chinas
production output will only reach 160,000 tons per year by 2014 (See Figure 3).
24
This
means that, unless another supplier is to account for the rest of the demand, a shortfall of
40,000 tons per year will occur, although the USGS estimates that global reserves and
potentially undiscovered resources will be enough to meet demand, making
diversification an economic and national security necessity.
Rethinking the Global Supply Chain
The Senaku incident, which highlighted Chinas chokehold on the global supply
chain, is proof that rare earth exploration has become a significant driver of globalization,
as it resulted in increased interest in diversification of the supply around the globe.
25

For the United States, this will be important in sustaining national security and economic
prosperity. While there is no current production of REEs in the United States, it boasts at
least 13.0 million metric tons in reserves.
26
Colorado-based Molycorp Minerals owns a
rare earth mine in Mountain Pass, California which is slated to be ready for full-time
production of 20,000 tons of rare earths per year by 2012, equaling 16% of Chinas total
production output in 2010.
27
Modicums of rare earth supply also exist in Wyoming,

23
Ibid.
24
Dudley J. Kingsnorth, Rare Earths Supply: Alternatives to China (presentation at
SME Annual Meeting, Sydney, Australia, February 4, 2008).
25
Damon van der Linde, The Rise in Global Demand for Rare Earth, International
Business Times, March 24, 2011, accessed March 27, 2011,
http://www.ibtimes.com/articles/126245/20110324/the-rise-in-global-demand-for-rare-
earth.htm.
26
Jack Lifton, A Rare Earth Crisis? (presentation at the American Enterprise Institute
for Public Policy Research, Washington, DC, April 6, 2011).
27
Brett Hartke, Racing for Heavy Rare Earths, Resource Investor, December 30, 2010,
accessed April 20, 2011, http://www.resourceinvestor.com/News/2010/12/Pages/Racing-
for-Heavy-Rare-Earths.aspx.
Detsch 8
Idaho, and New Mexico, but they are still being explored and could take up to 15 years to
become fully viable (See Figure 4).
28

Internationally, Australias Lynas Corporation has also taken a vested interest in
using Malaysia as a potential supplier and refiner of rare earths, investing $230 million to
build a rare earth refinery in the port city of Kuantan, which will process neodymium and
yttrium from the Mt. Weld depository.
29
Canada, which has larger deposits of heavy rare
earths than the United States, has projects in Hoidas Lake, Saskatchewan, which may
contain reserves of up to 1.5 million tons of REEs,
30
and at Thor Lake, in the Northwest
Territories, containing indicated mineral resources of up to 57.46 million tons of REEs.
31

Japan, which felt the brunt of Beijings supply quota cuts last fall, forged a significant
supply deal with Vietnam on October 31
st
, 2010, making Tokyo an important investor in
rare earth element exploration in the Northwestern Lai Chau province.
32
Additionally, a
consortium of Japanese and South Korean firms recently sought a $2 billion dollar deal to
buy a stake in a Brazilian mining company to explore for alternative sources of REEs.
33

Greenland has also emerged as a potential game changer in rare earth markets with the

28
United States A Summary of Domestic Deposits and a Global Perspective, U.S.
Geological Survey, accessed April 1, 2011, http://pubs.usgs.gov/sir/2010/5220/.
29
Keith Bradsher, Taking a Risk for Rare Earths, The New York Times, March 8, 2011,
accessed March 30, 2011, http://www.nytimes.com/2011/03/09/business/energy-
environment/09rare.html?ref=science.
30
Hoidas Lake, Saskatchewan, Great Western Minerals Groups Ltd., accessed April 24,
2011, http://www.gwmg.ca/html/projects/hoidas-lake/index.cfm.
31
Thor Lake Introduction, Avalon Rare Metals Inc., accessed April 20, 2011,
http://www.avalonraremetals.com/projects/thor_lake/thor_lake_intro/.
32
Rare earths supply deal between Japan and Vietnam, BBC News, accessed March 24,
2011, http://www.bbc.co.uk/news/world-asia-pacific-11661330.
33
Japanese and Korean firms look to Brazil for rare metals, BBC News, accessed April
10, 2011, http://www.bbc.co.uk/news/world-south-asia-12631102.
Detsch 9
Kvanefjeld multi-element project, containing 14% heavy-rare earth minerals.
34
Estonias
Silmet Factory produces 3,000 metric tons per year of REEs as a refiner of Russian
ores.
35
Finally, Great Western Minerals Group expects to see output of 2,700 tons per
year from its Steenkampskrall mine, 250 miles northwest of Cape Town, South Africa
once it is brought online in 2013.
36

Overall, at least 40% of the worlds rare earth reserves are located in the United
States or in ally nations, with many of these expected to be available between now and
2013 (See Figure 5).
37
Diversification and globalization of the rare earths supply chain is
not just of political importance: it is an economic necessity. By 2012, Chinas domestic
consumption will outpace domestic production, forcing the U.S. and its allies to diversify.
By 2015, China is expected to become a net importer of rare earth elements as it struggles
to compensate for domestic demand.
38
When the U.S. Department of Defense announced
last year that Afghanistan hosted deposits of untapped mineral resources, including
deposits of rare earth elements valued at $7.4 billion, China jumped at the opportunity.

34
Rare Earth Elements at Kvanefjeld, Greenland Minerals and Energy Ltd., accessed
April 22, 2011, http://www.ggg.gl/Rare-Earth-Elements/Rare-Earth-Elements-at-
Kvanefjeld.htm/.
35
Anneli Reigas, Estonias rare earth break Chinas market grip, AFP, November 30,
2010, accessed April 10, 2011,
http://www.google.com/hostednews/afp/article/ALeqM5itXbI57zv-
lwfcaFdBdh7UZXuVuA?docId=CNG.a00f68010092a06189a0276c763e93a4.141
36
Wendell Roelf, Great Western sees S. African rare earth production, Reuters,
February 9, 2011, accessed March 30, 2011,
http://af.reuters.com/article/investingNews/idAFJOE7180ER20110209.
37
TMR Advanced Rare-Earth Projects Index, Technology Metals Research, accessed
April 7, 2011, http://www.techmetalsresearch.com/metrics-indices/tmr-advanced-rare-
earth-projects-index/.
38
Gareth Hatch, Will China Become A Net Importer of Rare Earths By 2015?
Technology Metals Research, February 27, 2011, accessed April 6, 2011,
http://www.techmetalsresearch.com/2011/02/will-china-become-a-net-importer-of-rare-
earths-by-2015/.
Detsch 10
As China attempts to move up the supply chain and build dominance in the export of
finished goods to global markets, it will look to increase its hold on mineral supplies
elsewhere, potentially making access more difficult for the United States and its
international partners.
Current Strategies
Washington has not shied away from the challenges present in rare earth markets:
a myriad of responses from the legislative and executive branches have cut to the heart of
the problem. Most recently, on April 6
th
, 2011, Representative Mike Coffman,
Republican of Colorado, introduced the Rare Earths and Critical Minerals
Revitalitization Act of 2011 (RESTART). Coffmans bill hopes to reestablish competitive
domestic rare earths production, refining, and magnet industries by expediting the
permitting process for such projects, and strengthen the supply chain by formally creating
a stockpile of rare earths in the Defense Logistics Agency of the Department of Defense
and legally designating rare earths as vital to U.S. national security.
39
These are critical
steps, but more international diversification is needed, in both the short term and long
term, to ensure the free flow of rare earths to domestic markets. To that end, RESTART
fails: while it authorizes the Secretary of the Interior to collaborate with international
partners to ensure supply, it does not insist upon any formal mechanism of doing so,
which is badly needed.
The U.S. Department of Energys comprehensive strategy on rare earths, the 2010
Critical Materials Strategy, is an effective evaluation of Americas position in the market
and a decent policy blueprint for the future. It emphasizes the creation of an integrated

39
H.R. 1388, Government Printing Office, accessed April 24, 2011
http://www.gpo.gov/fdsys/pkg/BILLS-112hr1388ih/pdf/BILLS-112hr1388ih.pdf.
Detsch 11
research plan with respect to REEs and encourages Washington to work closely with
allies in Japan and Europe to reduce disruptions and address critical needs, cutting to
issues at the heart of the problem, such as information gathering, permitting and
financing for production, stockpiling, recycling, and diplomacy.
40
Additionally, the
D.O.E.s fiscal year 2012 budget supports the creation of an innovation hub to pursue
research and development efforts in rare earth elements, including environmentally safe
and responsible extraction, and mineral recycling and reuse.
41
While the Critical
Materials Strategy covers a broad base of issues, its focus is too narrow: concentrating on
the clean tech uses of rare earths while omitting major commercial and military uses.
Additionally, a cohesive plan to assist private mining companies in permitting and
extraction is needed.
Internationally, the United States is mounting legal challenges to Chinas
adversarial policies. On March 1
st
, a confidential, preliminary World Trade Organization
(WTO) report rebuked Chinas report that export restrictions on rare earth materials
served the purpose of environmental protection and conserving scarce resources.
42
This
came on the heels of several challenges from international actors: in 2009, the United
States, Mexico and the European Union sued China at the WTO on the basis that rare
earth export restrictions through quotas discriminated against global manufacturers,

40
2010 Critical Materials Strategy Summary, U.S. Department of Energy, accessed
April 24, 2011,
http://www.energy.gov/news/documents/Critical_Materials_Summary.pdf.
41
U.S. Department of Energy FY 2012 Budget Summary, U.S. Department of Energy,
accessed April 4, 2011, http://www.gpoaccess.gov/usbudget/fy12/pdf/BUDGET-2012-
BUD-10.pdf.
42
John W. Miller and James T. Areddy, Trade Judges See Flaw in China Policies, The
Wall Street Journal, February 18, 2011, accessed April 20, 2011,
http://online.wsj.com/article/SB20001424052748703561604576150301821467250.html.
Detsch 12
giving Chinese producers an unfair edge.
43
While Washingtons efforts to use to
international forums to address the rare earth quandary are admirable, President Obama
needs to play hardball with Beijing in order to command the attention of the Politburo.
He must threaten protectionist measures against China and contain market disruption by
building a wide coalition of international allies to insulate the United States from further
national security threats.
Policy Recommendations
To rebuild its shaky position in rare earth markets, Washington could use a
number of effective policy tools. Internationally, cooperation and mediation will be vital.
The Obama Administration should look to Japan to help gather signatories for a formal
treaty agreement to address rare earth exploration, procurement, and trade between a
myriad of suppliers and demanders. This would include Russia, Brazil, Australia,
Canada, India and South Africa, among others, expanding on the grey areas of
RESTART and the Critical Materials Strategy. Acting in tandem, this coalition could
work to reduce supply from China. Washington must also engage its vast resources in the
private and public sector to assist the development of this industry internationally:
sending analysts for the U.S. Department of Interior and private engineers abroad to
conduct comprehensive geological surveys to verify the capacity of reserves and build the
mining and refining infrastructure necessary to promote greater global exploration and
get alternative markets up and running. To this end, joint investments on mining and

43
Juliane von Reppert-Bismarck, WTO opens China to rare earth challengesources,
Reuters, March 1, 2011, accessed March 30, 2011,
http://af.reuters.com/article/metalsNews/idAFLDE72029E20110301?sp=true.
Detsch 13
refining, such as those made by Malaysia and Australia for supply from the Mt. Weld
mine, must become commonplace.
44

As Beijing shifts to a demander, Washington could eventually build its position as
the hub of a global rare earth supply cartel, fairly moderating supply and prices in the
market with the help of its allies, ensuring national security prospects for the long term.
Washington must also continue to lead the charge against China in the WTO, pressing
Beijing on vital issues of worker safety and environmental degradation. With their
leverage in markets reduced as a result of this policy, China will be forced to comply.
Domestically, the Obama Administration and Congress could promote a host of
initiatives to get the industry back on track. Working with state governments to provide
tax incentives to lower the cost of exploration and mining in the short term, as companies
climb out of the red, could give the industry a much-needed boost. Additionally, the U.S.
Department of Energy and the U.S. Department of the Interior should look to formally
establish a governors conference on rare earths, giving states a formal mechanism by
which to come to crucial agreements on mining and refining, and engaging the productive
engine of the entire country. Congress must also look to develop a legislative strategy to
implement rare earth substitution and recycling programs domestically, taking the
pressure off suppliers and moderating market prices in the short-term. Finally, the

44
Marc Humphries, Rare Earth Elements: The Global Supply Chain, Congressional
Research Service, September 30, 2010, accessed April 1, 2011,
http://www.fas.org/sgp/crs/natsec/R41347.pdf.
Detsch 14
Department of Energy will need to work in tandem with the Environmental Protection
Agency to reduce the ecological impacts of mining.
45

Conclusion
Last Septembers Senaku incident demonstrated the dangers of Americas
dependence on Chinese sources of rare earths, which are necessary to sustain economic
growth in the tech sector and defend Washingtons interests at home and abroad.
However, though Beijing undoubtedly strengthened their chokehold on the global supply
chain during the incident, their position in rare earth markets in the medium term is far
from secure: with domestic demand rapidly increasing and the government keen on
keeping supply within Chinas borders in order to create and sell finished goods to
international markets, they are set to become an importer of rare earths by 2015.
Additionally, as production ramps up globally, other states will compete with China in
the sale of finished goods by refining rare earths themselves.
In Washington, the Obama Administration and Congress have taken steps in the
right direction on this issue: encouraging domestic production of rare earths and keeping
pressure on Beijing through the World Trade Organization. Further approaches, both
formal and informal, to build relationships with suppliers around the world, will be
necessary for the United States to remain a competitive economic player on the global
stage and successfully emerge from recession. In this light, greater globalization of the
marketplace can only benefit Washington.

45
Katherine Bourzac, Can the U.S. Rare-Earth Industry Rebound? Technology Review,
October 29, 2010, accessed April 4, 2011,
http://www.technologyreview.com/energy/26655/?p1=MstCom&a=f.
Detsch 15
Finally, as the Senaku collision demonstrated, there is much at stake in the battle
for supply of rare earths for both China and the United States: acrimony could derail the
tenuous security relationship between Beijing and Washington, and cast a pall of
uncertainty over the fate of some of the Obama Administrations most important strategic
interests, such as the stability of the Korean Peninsula and further sanctions against Iran.
The strategic importance of unimpeded access to rare earths is manifold: developed
countries depend on these materials to drive economic growth through commercial
technologies and to build clean energy alternatives, breaking dependence on oil. For the
United States, these rightly remain pillars of national security policy.
Present developments show that the Senaku incident was perhaps just a taste of
what is to come: the geopolitical competition between the United States and China will
continue to intensify in the near future as Washington steps back from the brink of fiscal
recession, and attempts to counter Beijings political weapon by building global rare
earth partnerships.

















Detsch 16
Maps, Graphs, and Statistics:

Figure 1

Source: U.S. Geological Survey

Table 1: Examples of Rare Earth Elements Used in Commercial Products
Rare Earth Element Used Commercial Product
Neodymium, praseodymium, dysprosium,
terbium, lanthanum, cerium
Hybrid electric motors and hybrid batteries
Neodymium, praseodymium, terbium,
dysprosium
Computer hard drives, mobile phones, and
cameras
Promethium Portable x-ray units
Scandium Stadium lights
Europium, yttrium, terbium, lanthanum Energy Efficient light bulbs
Europium, yttrium Fiber optics
Cerium, lanthanum, neodymium, europium Glass additives
Source: GAO analysis of government and industry data

Figure 2

Source: Thomson Reuters Datastream, Asian Metals
Detsch 17

Figure 3

Source: Dudley Kingsnorth/Industrial Minerals Co. of Australia

Figure 4

Source: U.S. Geological Survey









Detsch 18
Figure 5

Source: U.S. Geological Survey/Reuters

























Detsch 19
Bibliography

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Detsch 20
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Detsch 21
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Detsch 22

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Detsch 23
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