Disturbingly, the reported suspension of exports came just days after the Obama Administration announced it would investigate whether rare-earth export restrictions China has put in place in recent years violate World Trade Organization rules, a step that could lead to the filing of a complaint with the WTO. It also follows China's decision last month to block rare-earth exports to Japan as a result of a territorial dispute. Prices for rare earths have soared this year due to China's export restrictions, increasing sevenfold in one case and doubling in others, driving up costs for American industry.

"China's latest actions have underscored our vulnerability once again," Congressman Lipinski said. "Last month, I cosponsored and helped pass H.R. 6160 to boost domestic production of rare earths so that national security isn't compromised and American companies aren't forced to relocate production to China in order to assure their access to vital raw materials. As I said then, the bill is a good start, but more needs to be done. We should also establish a national stockpile of rare earths and other materials that are critical for America's national security and economic well-being; invest in an aggressive R&D program to develop technologies that reduce or eliminate the need to use rare earths; and increase the recycling of rare earths. I also believe that we should take advantage of next month's G-20 meeting in South Korea to directly address concerns about China's rare earth policy, and to seek common ground with other impacted countries such as Germany and Japan."

Passing legislation directing the Defense Department to begin creating a national stockpile of rare earths and other critical materials would help ensure America is able to adapt to future supply-chain shocks as it works to build domestic sources. While H.R. 6160 authorizes funding to develop and test materials that can be substituted for rare earths, investing in more fundamental research into new technologies could drastically reduce or eliminate the need for rare earths in a variety of products. For example, the federal Advanced Research Projects Agency – Energy is currently funding research at General Electric that involves using nanotechnology to create magnets that use 80 percent less rare-earth minerals and can be used in hybrid vehicles and wind turbines. In general, nanotechnology holds great promise as a way to curtail the need for rare earths.

Japanese companies, which so far have been hit the hardest by China's restrictions, are already working on recycling rare earths from used electronics such as cell phones and computers – including some imported from the United States. America should not overlook its own junked high-tech products as a source of rare earths, and should support expanded recycling of rare earths. At the same time, as envisioned in H.R. 6160, America must move forward with increasing domestic mining and production of rare earths. At one time, the United States was the world's leading producer of rare earths, and it still ranks second worldwide in rare earth deposits.

"If there were doubts about the need for further efforts to reduce our dependence on China for rare earths, its latest actions should put them to rest," Congressman Lipinski said. "It is important to understand that China's reported suspension of rare-earth exports does not follow any protectionist measures by the United States, but rather our announced intention to make sure they play by the rules. We cannot let China use its monopoly to destroy American manufacturing jobs."

Congressman Lipinski’s recommendations were cited yesterday by Bloomberg News. To read the story, click here.

(October 26, 2010)

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