- The Washington Times - Wednesday, October 13, 2010

China’s rare-earth controls

The diplomatic dispute between China and Japan over the Senkaku Islands has died down, but the incident involving a detained fishing boat captain has raised new fears within the U.S. government over China’s use of economic warfare, namely, its control over exports of rare-earth minerals needed for high-technology manufacturing.

“It isn’t about scarcity but rather China’s virtual lock on production capacity,” said a U.S. official who monitors the issue. “Other countries have rare-earth mineral deposits but aren’t exploiting them to the same degree.”

Japanese diplomatic sources confirmed — contrary to denials from Beijing — that China shut off or slowed exports of rare earths last month after Tokyo detained a Chinese boat captain who rammed his vessel into two Japanese coast guard ships near the Senkakus, which are Japanese territory but claimed by China and Taiwan.

Japan’s Ministry for Economy, Industry and Trade conducted a survey recently of 31 Japanese companies dealing with China on rare earths and found that all were facing official and unofficial problems in getting shipments out of China since early September. The slowdown hit some companies that already had obtained Chinese licenses to export rare earths.

A North Korean missile on a carrier is part of a massive military parade Sunday to mark the 65th anniversary of the communist nation's ruling Workers' Party in Pyongyang, North Korea. This year's celebration came less than two weeks after Kim Jong-il's re-election to the party's top post and news that his 20-something son, Kim Jong-un, would succeed his father and grandfather as leader. (Associated Press)
A North Korean missile on a carrier is part of a massive ... more >

Rare earths include 17 elements that contain unique properties that are essential for high-technology goods. They are used in batteries, lasers, computer hard drives, magnets and other electronics.

Experts say China since the 1990s has taken steps to try to lock up the market for these difficult-to-extract metals. Starting in 2006, China began cutting exports by 5 percent to 10 percent annually, driving up prices amid growing demand.

Estimates are that China holds 35 percent of the world’s reserves of rare earths and it supplies between 93 percent and 95 percent of demand.

Gareth P. Hatch, a specialist on rare earths with Technology Metals Research, said the Chinese tightening of rare- earth exports should be a wake-up call.

“I’m not sure I believe that there is a high probability of the U.S. losing access to the raw materials, semifinished and finished rare-earth products that its defense contractors need, for the devices and weapons systems that are used by the Department of Defense,” he said. “On the other hand, should such a scenario occur, the effects would very likely be devastating, and I would argue that this is an unacceptable risk.”

Non-Chinese production reportedly will begin in the next several years in California, which produced some rare earths until 2002, and in Australia, India and Vietnam. According to the Economist magazine, the only rare-earth producer outside Asia that is not dependent on Chinese ore is the Estonian company Silmet, which is being sought by customers worried about Chinese controls.

Did he or didn’t he?

The Army is looking to the Pentagon’s top investigator to settle a lingering question: Did Army Lt. Gen. Thomas Bostick, deputy chief of staff for personnel, equate those who oppose open gays in the ranks with those who opposed racial integration?

At least three people who attended the general’s talk in Europe last summer say he did. But Gen. Bostick and an Army spokesman who checked notes of the unrecorded sessions in Stuttgart, Germany, say he did not, reports special correspondent Rowan Scarborough.

A probe by the Pentagon’s inspector general was requested by Army Secretary John McHugh, and Army Chief of Staff Gen. George Casey after inquiries from Congress. Politico disclosed the probe this week. An Army spokesman referred questions to the IG’s office, which declined comment. But a Pentagon official confirmed that an IG review is under way.

Story Continues →