US economy

US warns China halt to rare earths could cause ‘significant shocks’


The US Commerce Department has warned that any halt to China’s rare earth exports would cause “significant shocks” to US and foreign supply chains.

The commerce department said the US was “heavily dependent” on foreign sources of the minerals, which made the country vulnerable to actions by foreign governments.

The department said the US should streamline the permitting process for domestic mining and boost efforts to recycle critical minerals as part of a strategy to boost domestic production.

The report, which was published on Tuesday, comes after warnings by China that it would place controls on its exports of rare earths, 17 elements critical to electronics and electric cars.

China produces over 80 per cent of the world’s rare earths, as well as a majority of the products that use them such as powerful magnets used in electric and hybrid cars.

In 2010 China was reported to have halted exports of rare earths to Japan amid a territorial dispute over the East China Sea.

“If China or Russia were to stop exports to the United States and its allies for a prolonged period — similar to China’s rare earths embargo in 2010 — an extended supply disruption could cause significant shocks throughout US and foreign critical mineral supply chains,” the Commerce Department said.

The report said that Federal permitting and land management policies had “inhibited access” to critical mineral deposits and proposed streamlining the process.

The US also lacked domestic processing and manufacturing capabilities for critical minerals, it said.

That “makes the United States vulnerable to potential geoeconomic and geopolitical actions from foreign governments that may lead to price and demand volatility for specific minerals, as well as potential supply disruptions causing mineral shortfalls,” it said.



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