A recent report from Rice University’s Baker Institute for Public Policy suggests that policymakers in the United States and allied countries should start bolstering raw materials supply chains to reduce the country’s dependence on rare earths from China.
The dossier notes that the China Rare Earth Group, a merger of three of China’s state-owned enterprises into one mega-conglomerate, controls up to a quarter of global mineral-bearing rare-earth elements. Combined with China’s overall dominance in rare-earth minerals and materials—roughly 60% of world production—the merger grants Chinese central planners significant pricing power and influence over world supply.
“Whether China would weaponize their leverage over rare-earth supply chains in direct conflicts with the US and/or its allies is a matter of speculation and debate,” the document reads. “However, one thing is for sure: In such an event, the US must minimize China’s ability to limit sanctions and other collective global responses against potential coercive action.”
According to the authors of the report, the covid-19 pandemic and Russia’s invasion of Ukraine have highlighted fragilities in global commodity supply chains and trade flows—as well as tensions among competing world powers.
“They serve as sobering reminders that relying on dominant suppliers and revisionist actors for vital commodities can create significant pitfalls,” the researchers point out. “In particular, rising trade and geopolitical security tensions with China could threaten REE supply, potentially influencing up to $1 trillion of goods.”
They argue that despite how important it is to strive for a domestic or less risky supply chain, convincing American voters to support more assertive raw materials policies will be a challenge for government and industry decision-makers.
“It is not certain that voters will accept the burden of ‘de-risking’ a broad swath of raw materials and technology-oriented industrial policies,” the experts wrote. “Defense planners, in particular, must be ready to deal with those outcomes.”
Source: MINING.COM – Read More
