Obama Regulations Hand a Strategic Mining Monopoly to…China
April 4, 2012 - 9:50 am
The administration’s harsh regulatory environment is harming yet more sectors of the American economy, rare earth minerals mining and electronics manufacturing. We use these minerals every day in cell phones, high tech industries and leading edge medical tech, even jet engines. DoD uses them in some of our most sophisticated information systems and weapons. American businesses want to purchase these minerals from domestic sources, and the US is among the world’s leading sources of rare earth minerals. A huge new source for one rare earth element, niobium, was announced in Nebraska just this week.
It currently takes up to five times longer to get approval to mine for minerals here than it does in other countries, driving investment, production and jobs away from America. From the time a project request is submitted to the time a final ruling is made, a decade can slip by and paperwork as much as 6 feet high filed and reviewed – repeatedly. Not surprisingly, when investors are ready to move on a project, they turn to countries that are ready to do business, rather than tackle the Byzantine regulatory review process here in the United States.
One of those countries is China, which also possesses large quantities of these minerals. American businesses are finding it easier to do business with the ChiComs than with the American government to get these minerals. Democrat Sen. Bob Casey of Pennsylvania writes that China is leveraging its position (and the Obama administration’s regulatory hostility to mining) to hold a monopoly.
How does China maintain its control over rare earth elements? For one thing, it controls production. The only mine currently producing rare earths is based in China. They also ensure that most of the supplies remain in China by deliberately limiting exports through strict quotas and stiff duties. These illegal measures operate to chill exports and drive global prices through the roof.
As a consequence, today American manufacturers struggle with ever-escalating costs of production, compromising the ability of American companies to compete and create jobs.
One example is the tungsten market:
The world tungsten supply is dominated by Chinese production, with 85 percent of the world’s supply mined in China. In recent years, China has been steadily raising the prices on these products, which directly impact manufacturers’ costs of production. These companies can’t be expected to continue to compete on the current terrain.
So we must ask — what do we do for our manufacturers? These are the exact trade practices China committed to give up when they joined the World Trade Organization. We have to level the playing field. That is why I have encouraged swift action on multiple fronts to stop China’s cheating.
That makes sense. So does getting our own regulations into line with reality.
Rare earth minerals are strategic economic and national security assets.
China’s hold on the rare-earth minerals market has raised concerns that the U.S. is too reliant on the country for materials that are necessary for complex weapons systems. The Pentagon last fall, in a report to Congress, warned lawmakers about the U.S. military’s dependence on the raw materials and recommended alternatives to Chinese supplies.
We have an alternative. The United States has an estimated $6.2 trillion in rare earth minerals under our own soil. But our own government’s policies plus Chinese cheating force our high end industries to go to our competitor to get those necessary minerals.
This is regulatory madness.