US vulnerable to Rare Earth Supply Disuptions even as China raises 2011 Export Tax on REE

Rare Earth Metals promise to be a continuing geopolitical drama for the coming few years as Chinese monopoly over these crucial raw materials continues.Japan has already been at the receiving end of a Chinese exports embargo once and has its companies scattering to secure rare  earth mineral resources in varied places like India,Mongolia, Kazakhstan, Vietnam.Hitachi is looking to increase recycling of rare earth minerals while other companies too are looking to optimize and reuse these metals.USA is currently less susceptible to rare earth disruptions as its requirements are quite low and anyway it imports most of the products using rare earth in finished form.

However rare earth minerals are crucial to the Defense Industry as well as the Green Industry.An Energy Department report has warned the government about this vulnerability even as China has severely reduced export quotas.The Chinese are even going to raise the export taxes on rare earth metals along with a host of other commodities.Unlike other countries,China’s policy making is centralized and strategic in nature  and it wants to preserve commodities.This helps in promoting the exports of value added products as compared to raw materials.

U.S. at risk of rare earths supply disruptions

The United States risks major supply disruptions of rare earth metals used in clean energy products unless it diversifies its sources of the minerals, the Energy Department warns in a report due to be released later on Wednesday.

“The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes,” U.S. Energy Secretary Steven Chu said in a report, due to be unveiled on Wednesday at a rare earth metals conference at the Center for Strategic and International Studies.