Thursday, October 1, 2020

President declares emergency over Chinese control of rare-earth metals


Most consumers probably don't know anything about barite or gallium and their uses.

But President Trump does, which is why this week he issued an executive order declaring a national emergency over the supply lines of more than a dozen rare-earth elements for their critical functions in America's military and industry.

Barite is a key component in the hydraulic fracturing industry, from which the nation gets much of its energy.

And gallium-based semiconductors are used in cell phones. Another rare-earth element, graphite, is critical to high-performing batteries.

And China is a major player in the production of all of them.

The president cited the International Emergency Economic Powers Act and the National Emergencies Act in signing the order.

"These critical minerals are necessary inputs for the products our military, national infrastructure, and economy depend on the most. Our country needs critical minerals to make airplanes, computers, cell phones, electricity generation and transmission systems, and advanced electronics. Though these minerals are indispensable to our country, we presently lack the capacity to produce them in processed form in the quantities we need," the president wrote.

"American producers depend on foreign countries to supply and process them. For 31 of the 35 critical minerals, the United States imports more than half of its annual consumption. The United States has no domestic production for 14 of the critical minerals and is completely dependent on imports to supply its demand."

He said the "dependence on the People’s Republic of China for multiple critical minerals is particularly concerning."

"The United States now imports 80 percent of its rare earth elements directly from China, with portions of the remainder indirectly sourced from China through other countries. In the 1980s, the United States produced more of these elements than any other country in the world, but China used aggressive economic practices to strategically flood the global market for rare earth elements and displace its competitors. Since gaining this advantage, China has exploited its position in the rare earth elements market by coercing industries that rely on these elements to locate their facilities, intellectual property, and technology in China."

Trump said the nation's security depends on its ability to function in times when an unfriendly foreign power might oppose its objectives.

"I therefore determine that our Nation’s undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States. I hereby declare a national emergency to deal with that threat."

It's all part of his emphasis on "Buy American," he said, arguing a strong mining and processing industry is necessary for a "healthier and faster-growing economy for the United States."

His order first requires an assessment of the situation, with a report to follow.

Then, every six months a report is required on "the state of the threat posed by our nation's reliance on critical minerals … from foreign adversaries."

Previous administrations also have acknowledged the issue, but little has been done.

Emily de La Bruyer, co-founder of the strategic consulting company Horizon Advisory, said China "has been focused on rare earths for as long as [the industry] has existed. Chinese sources explicitly treat rare earths as tools of power – and coercion – in today's globalized industrial system."

There is no known substitute for many of the elements.


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