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   UNDERSTANDING THE LARGER ISSUES

THE ISSUES

 

 

 

 

 

 

HOW DID CHINA GET ON TOP?

 

How Did China Establish Its Global Monopoly?

 

Even the most transitory review of history shows that it was the misapplication of regulations that sparked China’s monopoly.  With this fact as a starting point, Molycorp was a most improbable solution because it was never a key player in the historical supply chain for the most critical technology resources: heavy rare earths.  Molycorp’s primary business was selling low value and abundant Lanthanum to W.R. Grace, to be used by the petroleum industry. 

 

The critical resources, the rare earths with higher atomic numbers, came from many other suppliers.  In fact, rare earth resource production was never a problem for the U.S.  Most of our nation’s rare earth resources were, and continue to be, a byproduct of some other mined commodity. 

 

Today the U.S. mining industry extracts rare earths at a rate equal to 85% of global demand.  Unfortunately these resources are intentionally discarded due to a misguided U.S. & international regulatory snafu that took hold in the 1980s when the Nuclear Regulatory Commission (NRC) and the International Atomic Energy Agency (IAEA) began to enforce regulations specific to the nuclear fuel industry across all areas of mining. 

 

By misapplying these regulations the NRC effectively classified all of our nation’s historical heavy rare earth resources as “source material due to the companion element thorium.  Historical byproduct rare earth producers found it more expedient to discard these resources than face the regulatory and economic burdens of becoming a “source material” producer.

 

Without the flow of high-value heavy rare earths from the byproduct producers, China gained control over the flow of these critical materials.  Once in control, China instituted onerous export taxes on these heavy rare earth resources - thus restricting the competitiveness of non-Chinese producers of metallurgical and other value-added rare earth products.  As these U.S. (Japanese and French) rare earth value chain firms struggled to compete, China began a generous, state sponsored program of acquisition and relocation. 

 

The Chinese government referred to this state sanctioned technology acquisition in the historical military context of “Treasure Hunting Ships".

Learn about the link between Rare Earths and Thorium. Watch Video

Reviewing the hazards of maintaining the current U.S. Thorium policiy. Watch Video

Why Rare Earths Define Our Future?

Rare Earths & The Broader Economy

 

Rare earths are not just a defense issue.  The future of the U.S. economy is ultimately tied to the control and utilization of these materials.  China understands this and uses its monopoly as a geopolitical weapon to capture technology, industry, jobs. 

 

Today China’s rare earth monopoly lends itself to direct and indirect control over $7 trillion in value added goods around the world.  This amounts to 10% of the global economy, but more specifically it represents the highest growth and widest margin businesses – a position traditionally controlled by the U.S., Germany and Japan. 

Left unanswered, China will continue to strip technology companies and multinational defense contractors of their intellectual property and manufacturing as they are forced to move to China in order make sure they have access to critical rare earths.  This is resulting in an ever increasing level of control over the integration of ‘Western’ defense programs and the dwindling of national tax bases.

 

The U.S. has no place in a modern economy if we cannot lead with the most advanced products and green technologies, all based on advances in material science that are largely dependent on rare earths.

 

In short, China is on a path of global economic and technological hegemony. 

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