U.S.: China's REE Monopoly Not a Threat

Source:

"Supply uncertainties spur private investment in new mines outside of China."

The U.S. Defense Department has concluded that China's monopoly on rare earth elements, used in military hardware such as missile guidance and radar systems, poses no threat to national security, according to a person familiar with a yearlong study by the Pentagon.

The report notes that rising prices and supply uncertainties are spurring private investment in new mining operations outside of China that will help meet American military needs, which require less than 5% of U.S. rare earth consumption.

China now provides 97% of the world's rare earths, a group of 17 metals that includes neodymium, samarium and dysprosium.

Global Trade

China needs to take steps to boost domestic demand rather than let the currency appreciate to improve global trade, said Mexican billionaire Carlos Slim.

Slim, in an interview in New York, also said competitive devaluations "won't succeed" and could spur inflation should commodity prices remain high.

"If China salaries get increased and people work less, they will have more time and more money to spend," Slim, the world's richest man according to Forbes magazine, said. "This domestic demand will also help other countries in the world."

China Pledges Rare Earth Supply

China pledged to supply Japan and other countries with rare earth metals, sales of which were reportedly disrupted last month during a territorial dispute that soured relations between Asia's two largest economies.

Chinese Premier Wen Jiabao made the vow during a trilateral meeting with counterparts from Japan and South Korea, Kim Hee Jung, a spokeswoman for South Korean president Lee Myung Bak, told reporters in Hanoi Oct. 29. All three are attending meetings in Vietnam hosted by the Association of Southeast Asian Nations.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe