When I was a kid a friend gave me a Chinese finger trap – a woven bamboo tube that got wider when compressed and narrower when stretched. These characteristics made it very easy for you to get you fingers into the trap, but very hard to get them out – similar to what we now face with the Chinese domination of rare earth minerals.
You may not know it, but over the last few years we have been subsidizing the growth of a Chinese monopoly over our economy, one hybrid car at a time.
Underneath the hood of your typical hybrid car is a battery and permanent magnets manufactured using materials known as Rare Earth Elements, also referred to simply as "rare earths." Rare earths are made up of 17 elements, including several that are critical in the building of hybrid cars.
There is only one problem: 97% of the world’s production is currently in the People’s Republic of China, along with most of the known accessible reserves.
In that light, now consider the absolutely disastrous logic behind our hybrid policies – so bad only the US government could even conceive it – and then you tell me how it makes sense.
The US Government, deeply in debt, borrows money from China in order to be able to meet its budget obligations. Inside that budget is a tax policy that gives rebates to upper middle class suburbanites for buying a hybrid car. The critical technology that makes that hybrid car possible is reliant on raw materials controlled by a quasi-hostile power – and a country that holds billions of dollars in US debt.
So essentially we are borrowing money from China to subsidize the transition to a foreign oil dependent economy – only to become a Chinese rare earth dependent economy?
Make no mistake – as it currently stands, we are tying most of our renewable dreams to one supplier. Rare earths, and the use of them in batteries for hybrids, solar power and windmills (each turbine uses some 2 tons of rare earths), are at the heart of new renewable technologies. But as we grow more dependent on these technologies we also grow more dependent on China.
And this leaves us economically and strategically vulnerable. As the United States Geological Survey office noted just this past spring, "China’s dominant position as the producer of over 95 percent of the world output of rare-earth minerals and rapid increases in the consumption of rare earths owing to the emergence of new clean- energy and defense-related technologies, combined with China’s decisions to restrict exports of rare earths, have resulted in heightened concerns about the future availability of rare earths."
The Chinese aren’t restricting the use or mining of rare earths, just the exportation of raw minerals. They are, in essence, forcing companies that want to manufacture with rare earths to build their facilities in China – essentially forcing US companies to use Chinese workers on Chinese soil to manufacture the very heart of the alleged future of American transportation.
The Chinese strategy is elegant and effective: it keeps a steady supply of the products produced with rare earths headed to American markets while they use their strategic resource advantage to turbo boost their economy by forcing production – and the jobs that go with them – to stay "insourced."
I am not faulting the Chinese for pressing this advantage. They are capitalizing on the ignorance of the American consumer as to how the hybrid works and where the money is going. Even more, they are even banking on environmentalists not realizing – or admitting – the dirty mining process necessary to produce these so-called "clean and green" cars.
After all, rare earths exist inside rock formations that contain a lot of radioactive material that has to be processed out to mine the needed elements. This process involves a great deal of pollution, including generating air emissions with fluorine and sulfur, wastewater that contains excessive acid, and radioactive waste.
It was environmental issues, including a radioactive spill, that closed the only significant US rare earth mine in California. The last time it produced an ounce was 1998. It is scheduled to come back online in 2012 but even producing at maximum capacity it will make a mere dent in the current demand.
So there you have it: a technology that is only possible with elements mined in a messy way and controlled by a foreign power; products that are only commercially viable when their purchase are subsidized by government policy; and a subsidy only possible with borrowed funds. Sounds like US policy all right.