Jun 2, 2019

China's rare earths saber-rattling

Illustration: Sarah Grillo/Axios

"Don't say we didn't warn you." With these words, China has signaled that its next step in the trade war might be to cut off America's access to rare earth minerals — a key component in everything from cellphones to missile systems.

The impact: China exports about 80% of the rare earths imported by the U.S., and a boycott could cripple much of American high-tech manufacturing.

  • China doesn't dominate this industry because it has unusually large deposits of rare earths; it doesn't. (As every story about rare earths has to mention, they're actually very common.)
  • Rather, China simply has a greater willingness than most other countries to do the filthy job of mining these minerals — a job that generally involves hundreds of nasty acid baths, a lot of pollution and even quite a bit of radioactive waste.

Flashback: In 1991, Lawrence Summers, then the World Bank's chief economist, signed his name to a notorious "pollution memo" that was leaked to the environmental community. The memo made perfect economic sense, even if it was politically rash.

  • "Health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages," Summers wrote. "The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity."
  • Summers wasn't entirely serious. But the memo does a good job of explaining how China ended up mining most of the world's rare earths.

By the numbers: The Rare Earths Monthly Metals Index, a price gauge created in 2012 at a level of 100, stood at just 19 in May — surprisingly low after almost a year of worries that China could cut off supplies. If American businesses have been warned, they haven't shown any signs of stockpiling the precious supplies they need.

Go deeper: Why rare earth minerals matter in the U.S.-China trade war

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 5 p.m. ET: 1,260,104 — Total deaths: 69,082 — Total recoveries: 258,588Map.
  2. U.S.: Total confirmed cases as of 5 p.m. ET: 331,151 — Total deaths: 9.441 — Total recoveries: 16,848Map.
  3. Federal government latest: Surgeon general says this week will be "our Pearl Harbor, our 9/11 moment." The USDA confirms that a Bronx zoo tiger tested positive for coronavirus.
  4. 2020 latest: "We have no contingency plan," Trump said on the 2020 Republican National Convention. Biden says DNC may have to hold virtual convention.
  5. States updates: New York Gov. Andrew Cuomo said the state is "literally going day-to-day" with supplies.
  6. World update: Queen Elizabeth II urges the British people to confront pandemic with "self-discipline" and "resolve" in rare televised address.
  7. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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