How Did China Corner The Market On A Critical Resource Nearly Every Electronic Device We Use Depends On? “60 Minutes” Sunday
March 20, 2015 (Source: CBS News) — Rare earth elements have become critical components in everything from the phones we carry to the cars we drive to the F-35 jet fighter our military says will keep us superior on the battlefield. But an industry born in the U.S. decades ago has gradually shifted to China, where nearly 90 percent of the crucial metals are mined and processed for the rest of the world. Lesley Stahl reports on this troubling trend and the latest news that the biggest rare earth mine and processing facility outside China – is in financial trouble. Her story will be broadcast on 60 MINUTES Sunday, March 22 (7:00-8:00 PM, ET/PT) on the CBS Television Network.
Rare earths are metals that, among other uses, have become a bedrock of the miniaturization process, enabling the electronics we use to be compact and effective. Tiny, super-powerful magnets made from these metals have become crucial in the consumer electronics, green energy and defense industries. The Department of Defense, whose new F-35 contains approximately half ton of rare earths, is just one of a number of advanced weapons systems that rely on them, says former White House official Dan McGroarty. “The guidance systems on weapons…any of the smart bombs – have rare earths in them,” he tells Stahl. “I’d be hard pressed to name anything that we would consider worth building today…that would not have rare earth compound.” Watch an excerpt.
As early as 1992, China’s leadership saw great potential in the rare earths industry. In a little noticed speech, Former Chinese leader Deng Xiaoping indicated they could be a source of strategic power. “The Middle East has oil,” he said, “China has rare earths.” Unlike the U.S., China did not have to factor in the expensive labor costs and environmental consequences of rare earth mining that slowed production in the United States. China also devoted billions of dollars in government subsidies to support their rare earth industry.
A decisive moment occurred when China gained critical technology that the U.S. had developed, after purchasing what was then America’s largest rare earth magnet company, “Magnequench,” in 1995. It was a jolt, says Ed Richardson, president of the U.S. Magnetic Materials Association, “When they bought the factory, they now had the patents…the equipment…Magnequench employees…[to]teach people how to make the products,” he says. “We didn’t get it. Unfortunately, this technology was transferred to China before that technology was appreciated.”
In her story, Stahl visits the Mojave Desert mine where the rare earth revolution began. It’s owned by Molycorp, a Colorado-based company, and it remains the only rare earth mine and processing facility in the U.S. and one of only a few in the world outside China. This week, Molycorp’s own auditor warned that the company might not be able to stay in business.
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