What do my laptop LCD, your cell phone screen and our fiber-optic Internet feeds - the common devices through which I write, RealClearWorld publishes and you read this article - have in common? Each of them depends on minute bits of one or more of the 17 materials that collectively constitute the "rare earth" elements.
Dysprosium, Yttrium, Europium and Neodymium are hardly household words, but it's no exaggeration to say our modern economy couldn't function without them. The CFL eco-bulb in my closet, the Prius in my neighbor's driveway, the vacuum cleaner in my - well, not sure quite where it is at the moment - all contain critical rare earth compounds.
The same goes for our modern military: That Hellfire missile strapped to the Predator drone loitering far above the mountain passes of Af-Pak, just waiting for you-know-who to pop out of his cave entrance? Steered by magnets fashioned of rare earth elements. The Tomahawk cruise missile serving as a key sea-based element in our nuclear deterrent? Rare earths help give it its deadly accuracy. In the deep black defense world, imagine what the wizards at DARPA are working up with the help of rare earths.
But it's new commercial uses that are driving a rapid demand spike in rare earths - a trend only temporarily suppressed by the global economic downturn: The wind turbines, solar panels and next-gen batteries that are at the core of the Green Energy movement. And there's a devilish dynamic at work: The more one set of researchers strives to decrease the amount of rare earths we need for a given function - the more another bunch thinks up new inventions that become viable with smaller traces of rare earths. Multiply those new uses across tens and hundreds of millions of cell phones, PDAs and whatever new device is destined to come off the drawing boards, and you get the picture. The world is going to need a lot more rare earth compounds than we're producing right now.
Where will we get them? Look at a chart of rare earths production and consumption over the past 50 years, and two trends are immediately clear. The more rare earths the world has consumed, the fewer have been mined here in the United States. In 1985 - before the emergence of the public Internet and in the infancy of the laptop revolution - the U.S. produced half of the world's rare earths supply. By 2000, world production had more than doubled, while the U.S. share dropped below 10 percent.
In 2002, U.S. rare earth production dropped to zero, with the shuttering of the lone rare earths mine in Mountain Pass, Calif. Today, 95 percent of all rare earths produced worldwide come from a single country: China.
It's one thing when a monopolist uses its market advantage to extract a premium for its product. Consumers grumble, then pay up. But it's a different story when the sole supplier won't sell at any price, and that's where China is heading. Each year for the past half decade, China has tightened its export restrictions on rare earths, reserving production to feed its own roaring economy. In addition, China has set its sights on green energy manufacturing, using its near-monopoly on rare earths to require foreign companies seeking access to the elements to locate their factories in China.
As if commercial considerations were not a concern enough, add a growing worry that rare earths may be a weapon in a canny game of resource-politik: In this scenario, China isn't solely interested in its own surety of supply, but is set on acquiring a resource-denial capability it could exercise - or merely threaten to - in the future. China would actively look to co-opt and control non-Chinese sources of rare earths. Case in point: Two promising rare earths projects in Australia. When the global downturn froze Western-sourced investment capital for both projects, Chinese firms came forward with ready cash. Australia's foreign investment authority allowed one investment - a minority stake - to go forward, but stopped the other sale, which would have provided the Chinese purchaser majority control.
In some specialized corners of the U.S. national-security policy community, America's rare earths dependence is beginning to ring alarm bells. This month, The House of Representatives' Committee on Science and Technology held hearings on rare earths, listening to testimony from materials experts and the CEO of the U.S. company seeking to re-start the Mountain Pass mine. Congressman Mike Coffman has introduced a bill he calls RESTART -- the Rare Earths Supply-Chain Technology and Resources Transformation Act. It calls for $1.2 billion in funding to kick-start a U.S. rare earths resurgence - including the establishment of a U.S. Government rare earths stockpile.
So will the U.S. fast-track domestic mine development and start stockpiling rare earths? Whether or not we will - China is. In February, the regional government in Inner Mongolia authorized the creation of a strategic reserve at the Baotou mine, source of nearly half the world's present production of rare earths.
The clock is ticking. Some projections show China's domestic rare earths demand surpassing supply as early as 2012; optimists give us until 2015. And new mines done to modern standards take time to bring online - three to five years, in the case of rare earths projects. Given the current U.S. foreign policy agenda - already overfull with two wars, terror threats, a nuclearizing Iran, resurgent Russia and China-Google cyber-rattling - the last thing we need is a resource issue tossed onto the tinder pile. But the rare earths shortage is coming, ready or not.
And rare earths may be only the beginning. As Congressman Bart Gordon noted during the House hearing: "According to the U.S. Geological Survey, there are 18 other minerals and materials where the United States is completely dependent on foreign sources."
Nearly 20 years ago, Deng Xiaoping is reported to have prophesied: "There is oil in the Middle East. There are rare earths in China. We must take full advantage of this resource." We know how foreign dependence on oil affected U.S. foreign policy and economic development through the second half of the 20th Century. Do we really want to learn how dependence on foreign rare earths will affect us in the 21st?
