We return to a semi-regular topic in these posts, the continuing failure of the U.S. to boost production of critical materials that are rare, whether it is due to market dynamics or physical scarcity. Today we return to rare earth minerals, items needed increasingly for electronics and related high technology. Given the lack of Congressional success in approving legislation to boost domestic production of rare earth elements, the Obama Administration has opted to try and force China to export more of its rare earth minerals.
The Washington Post reported earlier this week that the U.S. will try and get China to loosen its export restrictions via a complaint at the World Trade Organization (WTO). China will contest the action, though the WTO has ruled against China’s rare earth mineral export controls before. China now produces 95 percent of the world’s supply, in part because they did it so cheaply for so long that other countries felt it was cheaper to let China do it than to maintain their own domestic production capacity. The country only has about 30 percent of the world’s reserves, so this market monopoly is something we let happen.
And now we don’t like it. While rare earth minerals prices are falling (H/T Roger Pielke, Jr.), and other production sources are nearly ready to compete with China (if not export to it), we still want to get China to not take advantage of the advantage we ceded to them. At least the U.S. isn’t putting all its rare earth mineral eggs in the WTO basket.