October 05, 2010

Rare Earths and U.S. National Security: What You Need to Know

If you have been following the news the last couple of weeks, you probably watched the showdown unfold between China and Japan in the East China Sea. On September 7, the Japanese Coast Guard arrested the captain of a Chinese fishing trawler who had been – according to the Japanese – illegally fishing in the waters off the Japanese-administered Senkaku islands and later collided with two Japanese Coast Guard vessels. The standoff between China and Japan lasted through September, with outsiders witnessing mounting tensions as the Chinese suspended high-level diplomatic exchanges with Japan until the Chinese captain was released. Japan capitulated after sixteen days, in part from what appears to be an effort by China to exert economic pressure over Japan by restricting the export of rare earth elements.

According to The Washington Post, on September 23, 2010, “some traders of ‘rare earths,’ 17 minerals that are used in small portions in almost every advanced industrial product, reported that China, which controls 97 percent of the industry, had halted the export of anything that contained traces of the minerals to Japan.” China, of course, denied the allegations. But some analysts were quick to make the link between the export ban and the dispute in the East China Sea, acutely aware that natural resources are playing an increasing role in security and foreign policy affairs.

Mainstream media headlines quickly reported on the rare earths incident, stirring curiosity and raising concerns about rare earth elements, given that, as the Post reported, China controls about 97 percent of the industry, and as The Economist pointed out, they “are among the most sought-after materials in modern manufacturing,” including in key U.S. defense weapons systems. But just how important are rare earths actually to U.S. defense policy and what are some of the key challenges ahead? Well, here’s a quick primer from Christine Parthemore who addressed rare earths yesterday on NPR’s On Point with Tom Ashbrook. Here are some snippets from what she told the audience:      

Getting at the Heart of the Issue: There are No Substitutes for Rare Earths

What’s unique about rare earths from the defense point of view is that they lack substitutes. There are a lot of applications for them, such as permanent magnets in jet engines, that there’s just no viable substitute for. So for a lot of minerals, the United States is 100 percent import dependent or only a few countries in the world produce them. But it’s that critical component of it, that rare earths are irreplaceable in defense applications, that makes them particularly worrisome for the United States.

How Vulnerable is the U.S. defense industrial base?

This gets to part of the problem that we have, and that’s that we don’t exactly know. A lot of exactly how rare earths are used and how important they are in certain applications is proprietary by the companies that make them or it is on the classified level because of the nature of some of these weapons and systems. So we in the public don’t necessarily know exactly how these are used. But what’s even more important is that the Department of Defense doesn’t even necessarily know. Congress about a year ago mandated that the Department of Defense inventory how its uses rare earths in all of its weapons systems and all of its defense supply chains. Because even the Department of Defense, given the private nature of its supply chains and the global nature of those chains in some cases, doesn’t even know exactly how it uses them – and the full extent to which it is dependent on rare earths…some [rare earths] [come] through equipment we procure through NATO partners, some of it we purchase directly from China, some of it comes through equipment that the Japanese produce. But basically even the Department of Defense doesn’t know. They’re still in the early stages of identifying the full extent of what these applications are.

How will these resources affect U.S. defense and foreign policy?

We don’t have a good handle, in the United States here, as defense policy analysts of what the raw materials are in our defense supply chain and how to watch for these warning signs – that a country is cornering the market in a way that might be able to provide them leverage in a tight foreign policy bind, like Japan was in last week, or when it’s just that critical to our defense supply needs that we need be either stockpiling or making sure that we have diplomacy centered on ensuring the smooth operation of these supply chains. We don’t have a good framework for understanding how to watch for when these things are going to become problematic.

This is going to be a foreign policy problem. If it takes 15 years, or even 5 to 10 years, to get new production [of rare earths] online from the United States or Australia or other partners, it puts the weight on our diplomats and those conducting our foreign policy to ensure that the systems – that our relationships are good with the countries that produce it – that our systems of trade with them are as open as possible.

[China] tried to [purchase rare earth deposits] with some of the territories in Australia that are now going up to production. The Australian government decided to make sure that those properties did not get sold to any other countries and that they stayed a national asset. That was a strategic decision for security and foreign policy reasons, but also for their own economic competitiveness. It’s up to individual countries to decide roughly what they’re going to do in these fields. But again, and particularly because we’re in the situation we are now in with China, it’s going to be a foreign policy challenge and a foreign policy issue for the foreseeable future that we’re just going to have to deal with.       

To listen to the full broadcast of yesterday’s show, click here.