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China’s Leverage: Supply Monopoly Shapes U.S. Policy

In case you were wondering to what extent foreign powers are shaping domestic policy, the UK’s daily The Telegraph has a great overview piece on how “China’s supply of rare minerals, used in products like the iPhone, is causing a headache for Washington.”

Using one of the most popular telecommunications gadgets – the iPhone – as a case in point to underscore our reliance on foreign mineral resources in general, and specifically the rare earths, The Telegraph goes on to outline the challenges associated with this dependence, which China appears all too willing to exploit, according to recent news reports.

Write Matthew Field and James Titcomb:

“China’s apparent willingness to use these metals as a bargaining tool in negotiations has forced the US to explore the possibility of home-grown production.

(…)

While it is not clear whether China would follow up on its threat to rare earth supplies, their dominance gives them clear leverage.

“By controlling the rare earth industry, the Chinese have a strategic advantage in trillions of dollars of downstream industrial value,” Litinsky says.

The Pentagon has called for responses from miners by the end of the month on how to boost production in the US.

The Telegraph understands miners have been in crunch meetings in Washington DC as officials assess the challenge ahead.

For companies like Apple, this dependence has serious consequences they say:

“While companies like Apple may only use tiny amounts of rare earths in its smartphones, their exposure to a sudden shut down of supply could still have a serious impact, according to analysts. Goldman Sachs told clients that as iPhone production ramps up over the summer, ahead of the next iPhone in September, ‘even a short term action affecting production could have longer term consequences’.

Apple has publicly said it wants to wean itself off volatile supplies of rare earth mines, but it has proved a challenge. The company has designed a recycling robot, dubbed Daisy, that can strip apart 200 iPhones an hour for recyclable parts.

But while it is able to isolate the components with rare earth metals, actually recovering the small quantities themselves has proved more challenging. Earlier this year, the company announced a research lab in Texas, aimed at discovering new recycling techniques that could improve reuse to products like rare metals.”

However, recycling efforts notwithstanding, against the backdrop of the ongoing materials science revolution, the demand for ‘whizzy new features’ will continue to fuel demand for rare earths and other critical metals and minerals.

When it comes to mineral resources, the only way to reduce foreign influence over U.S. domestic policy is to minimize — to the extent possible — our over-reliance on foreign metals and minerals. It appears the message is finally resonating. Sen. Lisa Murkowski’s (R-Alaska) American Mineral Security Act, for example, passed the Senate Committee on Energy and Natural Resources earlier this month.

Here’s hoping policy makers don’t let the momentum for comprehensive reform fizzle. Too much is at stake.

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