Readers may have been in the market this year for a new cell phone or car. Some may have found that there was a supply chain issue centered on manufacturers’ ability to assemble computer parts, particularly the chips that drive the key systems. Toyota, for one example, has been particularly badly affected. Why is this and should we in our wonderful enclave in the Middleburg area be concerned? The simple answer is “Yes”, and very much so. The reason is the supply chain of rare earth elements, critical for every part of our lives, is in jeopardy unless closely protected. Almost everything electronic that you have now and in the future is controlled by these elements.

The same applies at the national level. At the US strategic level let me give you just one example from tens of thousands. The key F-35 stealth aircraft contains more than 900 pounds of rare earth elements. The latter are crucial for the onboard systems that permit communications and critical targeting. Extrapolate this single illustration to the domestic and office levels and the point is clear.

I hesitate to inundate with you a vast myriad of rare earth names and what they do for us all, but to make my concerns real let me provide just a few illustrations. Your LED lights and plasma displays depend on phosphorescent europium, also used in the control rods in nuclear reactors, and your camera lenses need Lanthanum for enhancing clarity, and Neodymium possesses the unique characteristic of having the greatest magnetic power of any substance on our planet. There are 17 total known rare earth metals. Here’s the bad news. We here in the United States depend on these metals, and if you had been in the business of building or acquiring a new jet engine, for just one of innumerable examples, you would be shocked to know that we depend on China providing us with approximately 80 percent of these rare earth materials. 

Until recently China also provided us with more than half of our annual consumption of 31 of the 35 materials assessed to be vital for our national security. It is not all about things to keep us awake at night. There is good news. For example, in southern California there is assessed to be about 40 percent of the world’s supply of lithium, so we are potentially free from any external control of this vital material in all things electronic. 

It is also a wider issue of not just rare earth metals and the other materials in the government’s list of 35 critical materials. The oceans of the world and their rich resources beneath are up for grabs in terms of exploitation in those areas where countries’ exploitation rights are not covered by the United Nations Convention on the Law of the Sea (UNCLOS), typically within a 200 nautical zone around their coastlines. The Arctic for example is assessed to be home of a roughly estimated trillion dollars worth of rare earth metals, besides the rich oil deposits that even in an age when we all want to see the role of oil diminish in a carbon free atmosphere, we know that the Chinese have their eyes seriously set on Arctic exploitation, free from UNCLOS legal constraints. The Chinese have already shown their total disregard for judgments against them by the International Court of Arbitration in The Hague for their territorial violations in the South China Sea. 

We clearly need US domestic supply chains of all these materials that are free of foreign control or interference. It is somewhat shocking to find that currently the Mountain Pass mine in San Bernardino County in California is the single operational rare earth mine in the United States, producing about 10 percent of the world’s supply according to US Geological Survey data. Rare earth metals have to be converted into usable metals employing large amounts of energy and what has been described as “environmentally unfriendly” technologies and procedures, a polite way of saying that if we lived near the processing facilities we would have serious health issues. It is no surprise to find therefore that China dominates the processing market and supply chain simply because it has loose or zero environmental controls that in the United States would be impossible because of our stringent environmental control laws and regulations.

The implications for Chinese control of the rare earth supply chain need no embellishments. China can take retribution on countries it may not like, such as Japan, by simply denying supply. A 2010 Chinese embargo on rare earth metal exports to Japan had major deleterious effects on Japanese cell phone and car manufacturers. China dominates the refining market. This is the key to the future for the United States and our allies and friends. We can create and control our own supply chain of rare earth metals indigenously and with our allies. What we need to do is get into the refining business quickly and effectively. Argonne National Laboratory has produced outstanding reports on the effects of supply chain interference by China. We need to create plans to mitigate the worst effects of Chinese supply denial or restrictions by providing the financial incentives to create indigenous refining centers for all rare earth metals.

This is the Holiday Season and readers will be out there buying all manner of electronic gifts for their loved ones. Dwell a pause and consider the implications of all the above if things went south in the supply chain and refining of rare earth metals. We can overcome all this with our allies and friends and use US finances and brainpower to overcome the somewhat menacing implications of Chinese controls.

I will address all this further in January’s Letter and meanwhile have a wonderful Holiday Season. Be well and be safe. Best Wishes to All. Anthony Wells.

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