The United States teamed up with the European Union and Japan in a complaint to the World Trade Organization against China over its rare earth export (REE) policies. While it would be nice if China would stop hoarding their minerals, wouldn’t it make more sense to start doing more mining of our own resources? At The Enterprise Blog, Michael Mazza and Lara Crouch pointed out something that’s worthy of attention. [Emphasis added]
The truth is, the market is adjusting on its own to correct the distortions resulting from China’s export quotas. Derek Scissors makes this argument convincingly: “China’s extreme dominance can only last as long as it is willing to offer REEs at below-market prices … As soon as Beijing stopped undercutting market prices, price rose and the hunt for alternatives began—which has started to bring prices down.” In other words, global market forces reacted to high prices throughout 2010 and much of 2011, and prices have dropped precipitously in the latter half of 2011. Additionally, as Scissors points out, China may control 90 percent of current supply, but it only has 50 percent of current REEs reserves, which means there is plenty of opportunity for other producers, miners, and manufacturers along every point of the complex REEs supply chain to enter the market. This will allow all nations to decrease their dependence on China for REEs.
Shouldn’t that be the goal here? Why would we want to remain dependent on China?
American Resources Policy Network principal Daniel McGroarty discussed this on CNBC. Via a reader who emailed, some of his key points:
- China’s near total rare earths monopoly (97% of global output) is largely homemade, as we have chosen not to explore and develop our own reserves.
- The slow-moving WTO process is not the right way to address our supply issues, in part because:
- due to the limitations of international law, it remains questionable if China would feel compelled to comply with any WTO decision.
- “once a shot is fired, it can ricochet in any number of directions” – and the larger issue of a trade war with China looms
- Creating a policy environment conducive to developing our own mineral resources would be the appropriate way to ensure future mineral supplies driving our economic and strategic future.
- One of the key obstacles policy makers in Washington must address is our rigid and outdated permitting process, which has us ranking last among the top 25 mining countries.
The video of the interview can be found here.
As usual, the same people who want to keep us from extracting our own oil and natural gas are also conspiring to keep us from mining our own minerals.
Cross Posted at Right Wing News