China uses rare-earth deposits as leverage in dealing with US

Opinion: October 29, 2010 at 12:00a.m.

Kansas City Star: Rare earths are obscure elements with names like terbium that are essential for much of the electronic wizardry we take for granted today, including hybrid motors, wind turbines and crucial military applications. These elements once were supplied by several countries, including the United States.

But now they come almost exclusively from China, which is endowed with rare-earth deposits that are much more accessible and cheaply mined. And China being China, it has been using this leverage in a heavy-handed way.

The Chinese have been dialing back export quotas in general since 2005. In July, already tight quotas were slashed for the remainder of 2010 by 72 percent. The New York Times recently reported that China quietly halted shipments of certain rare-earth elements to the United States.

All this flies in the face of pledges China made when it was allowed to become part of the World Trade Organization, which bans export quotas except in certain cases.

The Chinese deny any sort of embargo is in effect. They claim they are acting for environmental concerns — an effort to “conserve exhaustible resources and maintain sustainable development,” as a Chinese statement put it.

A bill before Congress would authorize loan guarantees to restart rare-earths mining in the United States. That makes sense, but developing new mines will take years.

At the next Group of 20 meeting in November, the Chinese should be reminded that while the world depends on their rare-earth exports, China’s prosperity depends on continued access to the world’s markets.