The Curious Disjunction of Rare Earth Elements and US Politics: Analyzing the Inability to Develop a Secure REE Supply Chain

Abstract

In late 2010 Paul Krugman of The New York Times piercingly questioned why no one was warning the country about the vital REE issue (Krugman, 2010). Fast forward to 2014 and it is clear that there is widespread recognition of the fact that REE are essential to many of the modern world's technological wonders in military and consumer affairs. Under ideal circumstances, REE would be purely an economic benefit and raw material for the entire world. In the present period however, politics have driven REE into a position where China controls approximately 97 percent of the REE market. China, in the last several years, has made threatening moves that could deny REE to other countries and, in effect, collapse their economies or pressure their domestic businesses to relocate to China for a stable REE supply. The Chinese government's intervention in the REE global market has transformed a simple raw material issue into one of the world's paramount security challenges and risks (Bradsher, 2011). Despite their significant value, the US government has yet to affirm decisively the nation's specific REE policy objectives and means of achieving them. There is no common consensus on how to deal with an extremely unbalanced supply chain that can lead almost instantly to massive economic devastation. It is a strange case of acknowledging REE to be of the utmost importance but then being unable or unwilling to resolve the blatant threat that China poses to the US and world community. Whatever free market principals have been espoused, China has altered the equation by taking advantage of its monopoly and letting politics drive REE production and prices.