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Famine, food, and Rare Earths in Asia

A sad, but not surprising, news story made its way across the wires this morning.  North Korea’s Kim Jong Il has approved a swap of sorts with its northern neighbor, China. The agreement will bring Chinese fertilizer and corn to his country’s famine-ravaged Hermit Kingdom in exchange for ceding to China rights to develop North Korea’s Rare Earths deposits.  As the source commented, “It’s quite a profit for China….”

How soon new North Korean supplies will factor into rare earths production is not known. What is clear, however, is that China continues to seek new means to leverage its existing near-monopoly over a critical metal.  How will the U.S. and the world’s industrial democracies respond?