China Might Halt Rare Earth Exports

The New York Times reports: “China Said to Halt Some Mineral Shipments.”

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said on Tuesday.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further ratchet up already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese officials are willing to use their growing economic muscle.

China had previously signaled that they were going to be keeping increasing amounts of the rare earths (a misnomer, they are abundant just expensive to refine), though halting exports is quite different. Might this be retaliation for the continued attacks politicians have been making towards China, the currency accusations and more recently the investigation over illegal green-energy subsidies?

The irony is that the United States used to be the largest producer of rare earths in the world, at the Mountain Pass rare earth mine in California. Wikipedia claims that the mine closed due to China’s entrance into the market (and low environmental standards, etc.), though an article featuring the owner of Molycorp Minerals (the company that owns the mine) indicates that the mine closed in 2002 because of little demand for rare earths and environmental concerns. The mine is expected to re-open in 2011.

However this plays out, the U.S. might want to reconsider the ramifications of continually pushing an economy we are interdependent on.