The Pentagon: China’s Rare Earth Policy Does Not Threaten America

Taken from Monday’s Global Times, and translated in a rush!

Following one year of research, The Pentagon has finally completed a report on the degree of reliance of the American military on Chinese Rare Earths. According to the report, the Chinese restriction on rare earths exports does not threaten the security of the American nation. Before the publishing of this report, many senators were worried that China’s actions would influence the production of the US military’s guided missiles, RADAR systems and other military equipment. Qinghua University’s He Mengchun, when interviewed by Global Times on October 31 stated that this report shows that America have done a new analysis of the situation regarding the production and supply of rare earths, and will help formulate future American Government policy.

The report believes that China’s restriction on the sales of rare earths led to the price of rare earths rising sharply, causing concern in the both the mobile phone & computer magnetic drives production industries. However the export restrictions have not resulted in a halt in production of RADAR, guided missiles, night vision equipment and other defense related equipment.

The report believes that as the rise in price of rare earths and also worries about the uncertainty of supply has resulted in private industrial investment in rare earth mines located outside of China. This is beneficial for US military demand; US military demand only accounts for 5% of the consumption of rare earths in America. Along with the opening of a rare earth mine by Lynas Corp, an Australian rare earth production company, next year the supply of rare earths will improve.

However the report also discovered, compared to the other 13 rare earths, the demand for those needed in the construction of Mag-Lev and Lasers will likely outstrip supply for some time to come. Moreover, the commercial sector faces rare earth shortages to a much greater degree than the military.

The report calls for subsidies to be provided by the Defence Department to companies such as Molycorp, which produce rare earths within the US. Molycorp has already asked the Government to provide it with a $280 million loan, in order to reopen its mine in California. This mine at one stage satisified the entire world demand for rare earths, but owing to the lower prices of the newer Chinese mines, was forced to close in 2002. Molycorp plans to reopen the mine in 2012. The report states that according to America’s 1950 “Defence Production Law”, the Pentagon can provide this industry with financial stimulus in order to protect the national interest, and boost internal production.

He Mengfang stated: “Rare earth resources are extremely important in the defense of the realm; it is not only satellites and guided missiles that require them, it is also most everyday consumer appliances. The Pentagon’s report assessed the situation regarding rare earths across the entire world, and will be relied upon during the creation of future American Government policy. We have also completed a similar analysis, in order to understand the the amount of rare earths in the world, and the situation regarding their mining, production and export. China, in its management of its rare earths, is not threatening anybody. We need to use rare earths in a scientific and practical manner, in order to have a steady supply for the export market, to extract rare earths at a suitable rate, thus efficiently ensuring the reasonable supply of rare earths throughout the entire world.”

On 31 October, Japan and Vietnam signed an agreement in Hanoi to jointly invest in the production and extraction of rare earths within Vietnam, and help ease demand for rare earths within Japan.

6 thoughts on “The Pentagon: China’s Rare Earth Policy Does Not Threaten America

  1. Thanks for this translation Locusts. It’s absolutely brilliant to get the Chinese perspective on this topic from the Dragon’s mouth, so to speak.

    Pointman

  2. “Uranium prices appear to be bottoming, as China buys major supplies from Cameco (NYSE:CCJ). On June 24, China agreed to buy more than 10,000 tons of uranium oxide – yellowcake – over 10 years from Cameco.

    According to Thomas Neff, a physicist and uranium industry analyst at the Massachusetts Institute of Technology, China is buying unprecedented amounts of uranium. Based on public information, China may purchase about 5,000 metric tonnes of yellowcake this year. That’s more than twice as much as China consumes.

    Clearly, China is building up stockpiles for its long list of new reactors. According to the China Nuclear Energy Association, China plans to build at least 60 new reactors by 2020. The average 1,000-megawatt reactor costs about $3 billion. Loading a new reactor requires about 400 tonnes of uranium to start. Take 60 reactors, times 400 tonnes each. That’s 24,000 tonnes of uranium (over 52 million pounds) – about all of the world’s current output for one year…
    According to the World Nuclear Association, China’s demand for uranium may rise to 20,000 tons a year by 2020. That translates into more than a third of the 50,500 tons mined globally last year. The thing is, all of the world’s current uranium output currently has a market, supplying the existing global demand for nuclear power.
    Now we’re going to see an explosion (no pun intended) of uranium demand from China, on top of the existing user base (plus other new demand from India and numerous other locales in the world).
    Where will China obtain its future uranium? According to China National Nuclear Corp., it’s exploring for the fuel in Niger, Namibia, Zimbabwe and Mongolia. Indeed, we’re just beginning to see the initial stages of China going abroad to buy stakes in uranium mines, similar to what we’re already seeing with China and oil.”

    Read more: Uranium is Heating Up http://dailyreckoning.com/uranium-is-heating-up/#ixzz14yWZeEFV

    NI

  3. Great article! Interesting how the mainstream press goes in one direction while reality goes in another. In reality China hold the door open for still more supply while posing no threat to current levels of supply for all these rare earth products.

    I guess the days of jingoistic Hearst-style newspapers feeling they have a pompous monopoly on starting pointless war for profit are over, thanks to the Net!

    Here is another interesting development, the US showing signs of becoming a net exporter of refined fuels including gasoline or petrol, changing from the days of being importers of 3.5 million barrels per day of petrol. Shows how far we more so than China have gone toward energy independence in th past decade.

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