[WSMDiscuss] China and the Geopolitics of Rare Earths
Aplaneta
Aplaneta at protonmail.com
Sat Aug 28 08:51:26 CEST 2021
thanks, Sajai!
I can translate it into Spanish
in solidarity
Martin Mantxo (aplaneta.org)
Sent with [ProtonMail](https://protonmail.com/) Secure Email.
‐‐‐‐‐‐‐ Original Message ‐‐‐‐‐‐‐
On Saturday, August 28th, 2021 at 04:58, Sajai Jose via WSM-Discuss <wsm-discuss at lists.openspaceforum.net> wrote:
> https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5
>
> https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5
> also see
> https://www.project-syndicate.org/commentary/china-critical-minerals-new-geopolitics-by-sophia-kalantzakos-2020-10
>
> How China Came to Dominate the Rare Earth Industry
>
> Sophia Kalantzakos
>
> DOI:10.1093/oso/9780190670931.003.0005
>
> Abstract and Keywords
>
> Once a leader in the production and trading of rare earths, the United States relinquished the reins to China in the 1990s. The People’s Republic of China declared rare earths “protected and strategic materials” and proceeded to control production and processing, introduced export quotas, and sought to dominate the supply chain for crucial applications. It also made investments in mines worldwide. The 2010 crisis caused a parabolic rise in prices, leading the United States, the European Union, and Japan to file a complaint against China at the World Trade Organization, in 2012, and to launch trilateral cooperation workshops, starting in 2011, to promote recycling, substitution, and innovation. China lost its WTO appeal and removed the export quotas in May 2015. The market corrected itself, and it may seem today that China lost an initial battle; but closer examination indicates that it may not have lost the war.
>
> Keywords: [rare earths](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=rare%20earths), [WTO](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=WTO), [quotas](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=quotas), [trilateral workshops](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=trilateral%20workshops), [magnets](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=magnets), [recycling](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=recycling), [substitution](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=substitution), [innovation](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=innovation), [mines](https://www.universitypressscholarship.com/search?f_0=keywords&q_0=mines)
>
>> Improve the development and application of rare earth, and change the resource advantage into economic superiority.
>>
>> —CHINA’S PRESIDENT JIANG ZEMIN, 1999[1](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-413)
>
> []
>
> The United States was initially the leader in producing and trading rare earths, and in finding ever advanced technological uses for them. The discovery of rare earths at Mountain Pass, California, in 1949, had been an important event for the US science community. Russia and the United States, the two world superpowers, were in the process of creating a balance of fear through the threat of nuclear weapons. To achieve this, however, both countries needed uranium. It was a radioactive signature associated with a mountain outcrop that led to the discovery of Mountain Pass. Prospectors thought they had “struck” uranium, and after analyzing the materials, laid claim to the deposit. The ore they had discovered was identified as flourocarbonate bastnaesite, and the radioactive material was thorium (in small amounts) with only very minor traces of uranium.[2](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-414) By 1953, the mine had come to be owned by the Molybdenum Corporation of America, which had begun producing bastnaesite. It was initially designed for the separation of europium, which quickly became an important element in making color televisions.[3](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-415) Molycorp, as it was known, also extracted lanthanum, cerium, neodymium, and praseodymium, and scientists quickly began to [](p.118) discover new uses for these additional materials. The Molycorp mine dominated rare-earth production and exports for the next few decades, until China began to discover the full potential of its own resources.
>
> New applications that required rare earths led to a growth of demand. One such application was the use of rare earths in mischmetal (alloy of rare earths) used extensively for the Alaskan oil pipeline. In the late seventies, prices for the elements increased significantly in line with inflationary pressures in the United States. Double-digit inflation after 1978 in combination with high energy prices pushed rare-earth prices upward, in line with operational-cost increases that impacted the mining industry.
>
> Prices stabilized as a result of the US economic recovery. One curious exception at the time was the price of scandium, which was mainly produced in the Soviet Union. In 1984, the USSR ceased exports of scandium on account of “laser research.” Its price, according to a US Geological Survey report by James B. Hedrick, skyrocketed to $75,000 per kilogram.[4](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-416) This anomaly ended when US production of scandium was brought online.
>
> Other exogenous factors also impacted the rare-earth market. New environmental legislation that reduced the lead content in gasoline dampened the demand for the elements in petroleum fluid-cracking catalysts, where rare earths were used extensively. The result was a sharp decline in prices. Production in the United States was cut to offset the price decline, which resulted in supply shortages and caused prices to rebound. Overall, rare-earth prices were volatile in the 1980s and 1990s. They became dependent on the type of rare-earth element that was in demand. High-purity products, such as neodymium and dysprosium, began to see price increases because there was a growing demand for neodymium iron boron magnets in which the two elements were used.[5](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-417) The next impact on rare-earth prices was caused by China’s dynamic entry into the market.
>
> []
>
> China Realizes the Importance of Its Rare Earth Resources
>
> Ding Daoheng, a well-known Chinese geologist, discovered a wealth of rare-earth deposits in Bayan Obo, in inner Mongolia, in 1927.[6](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-418) A few years [](p.119) later, it was confirmed that the deposits contained bastnaesite and monazite. The Chinese built a mine in the 1950s and began recovering rare earths in the process of producing iron and steel.[7](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-419) In the 1960s, China also discovered bastnaesite deposits in Weishan County, Shandon, and in the 1980s, more basnaesite in Mianning County, Sichuan. The recovery of rare earths, especially from Bayan Obo, became a major priority for the Chinese, and they hired technical personnel to help develop and advance their methods of recovery. They invested heavily in the research and development of rare-earth technologies. Production levels increased with growing demand. Between 1978 and 1989, China averaged an increase of 40 percent annual production, thus becoming one of the world’s largest producers.[8](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-420) During the 1990s, its exports grew rapidly, causing prices to plummet, a strategy that either put competing companies out of business or drove them to greatly curtail operations.
>
> Bayan Obo is the world’s largest REE resource.[9](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-421) It is estimated that the total reserve of iron in that region stands at 1.5 billion metric tons, with an average grade of 35 percent. The same deposit is estimated to include 48 million tons of rare-earth oxides, with an average grade of 6 percent. It contains close to one million tons of niobium, with an average grade of .13 percent. Considered the most valuable rare-earth production site in the world, in 2005, it accounted for 47 percent of the total rare-earth production of China, and 45 percent of that of the world. In addition, the rare earths in Bayan Obo occur primarily in monazite and bastnaesite, and contain very high REE content (6%) and extremely high LREE to HREE ratios.[10](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-422)
>
> In 1990, the Chinese government declared rare earths a “protected and strategic mineral.”[11](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-423) This was clearly a strategic move on the part of a state that had begun to understand the potential that the rare-earth industry had for China. Since then, China has sought effective ways to increase centralized control over the industry, create a higher market value for the elements, build supply chains inside China, develop technical knowhow, and attract high-tech companies using rare earths to manufacture final products inside the PRC.
>
> From the moment China declared rare earths to be a “protected strategic material,” it meant that foreign investors could participate in rare-earth [](p.120) smelting and separation only as part of a joint venture with Chinese firms. Foreign investors were also prohibited from mining rare earths. Smelting and separation projects similarly required Chinese state approval. Joint ventures, moreover, needed the approval of the Chinese State Development and Planning Commission as well as that of the Ministry of Commerce.[12](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-424)
>
> []
>
> China First Captures the Magnet Industry
>
> With regard to the supply chain, China sought first to capture the magnet market—as samarium became a key ingredient for supermagnets made of samarium cobalt. Today, magnetic technology is perhaps one of the most important uses of rare earths both commercially and militarily. Permanent magnets that utilize rare earths not only provide greater magnetic power, but they also can be much smaller in size. The issue of size is critical in applications like computers. The samarium cobalt (SmCo) magnet and the neodymium-iron-boron (NdFeB) magnet are the two leading REE magnets on the market. They are particularly useful for military applications such as missile-guided systems because of their thermo-stability.[13](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-425)
>
> The neodymium-iron-boron (NdFeB) magnet was introduced in the 1980s. The story behind the NdFeB magnet is revealing of the Chinese modus operandi with respect to controlling the REE industry and an important indication that China attempted to corner the market for rare earths by design. When these magnets were created, two companies, General Motors and Hitachi, acquired patents. GM patented the “rapidly solidified” magnets, and Hitachi the “sintered” magnets. GM then proceeded to establish a company to produce the magnets for its vehicles. It was named Magnequench. In 1995, two Chinese groups[14](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-426) joined forces with a US investment firm and attempted to acquire Magnequench. The US government approved the acquisition after a review, and the deal was allowed on condition that the Chinese agree to keep the company in the United States for at least five years. The day after the deal expired, the company shut down its US operations; employees were laid off, and the entire business was relocated to China.
>
> [](p.121) The deal was a strategic mistake on the part of the United States, because when the business left, so did the technology. In 1998, 90 percent of the world’s magnet production was in the United States, Europe, and Japan. Within a decade, the bulk of the magnet industry had moved to China. Today, China continues to try to corner the magnet industry. Chinese producers have turned their attention to Japanese companies, which hold the majority of the rare-earth magnet patents when China is in fact the producer of nearly 90 percent of the global supply. In 2014, for example, seven Chinese rare-earth companies took Hitachi Metals to court in the United States, claiming that after its patent expired Hitachi was creating unfair market barriers preventing them from exporting independently and had violated international patent law.[15](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-427) This is another indication that China seeks to add value to its economy in line with the “Made in China 2025” targets that the government has set in motion to comprehensively upgrade Chinese industry. The plan as it has been described by the State Council aims to raise domestic content of core components and materials to 40 percent by 2020 and 70 percent by 2025. It calls for an emphasis on green development and the use of innovation, emphasizing quality over quantity.[16](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-428)
>
> []
>
> Seeking to Buy into Other Rare Earths outside China
>
> By the same token, China has consistently attempted to monopolize REE resources worldwide. It ventured to acquire Molycorp and the Mountain Pass Mine. From 1978 onward, the company was owned by Union Oil Company of California (UNOCAL), a major American petroleum explorer and marketer. In 2005, the China National Offshore Oil Corporation (CNOOC) submitted a bid of $18.5 billion cash to purchase UNOCAL. The Chinese company outbid Chevron by a half-billion dollars.
>
> The CNOOC bid raised concern in the United States about energy security and the deal did not go through.[17](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-429) During the heated political debate over the issue, arguments for the need to defend national security [](p.122) prevailed. James Woolsey, former director of the Central Intelligence Agency under President Clinton, weighed in at a hearing of the House Armed Services Committee stating emphatically, “This is a national security issue. China is pursuing a national strategy of domination of the energy markets and strategic dominance of the Western Pacific.”[18](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-430) Little attention was paid to the fact that had the deal gone through, the Chinese would have acquired Mountain Pass as well, solidifying their monopoly over REEs worldwide.
>
> China also attempted, in 2009, to acquire a 51 percent stake in the Lynas Corporation, which is in possession of the Mount Weld mine in Western Australia, considered the richest deposit of rare earths outside China. The Chinese company attempting the purchase, China Nonferrous Metal Mining Company (CNMC), terminated its $505 million bid for a controlling stake in Lynas, citing the stringent demands of Australia’s Foreign Investment Review Board, which had stipulated that the CNMC reduce its ownership share to below 50 percent and hold a minority of seats on Lynas’s board.[19](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-431) The Chinese did not welcome the decision. “For a long time, China has had an open policy when it comes to foreign companies investing here. We hope other governments can take the same position when it comes to Chinese firms,” Foreign Ministry spokeswoman Jiang Yu said in September 2009.[20](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-432) Once again, had this deal materialized, the world’s dependence on China would have been nearly complete.
>
> The minutes from the review board meeting, on September 23, 2009, gave voice to these strategic concerns. The sale of a controlling stake in Lynas was considered to be against Australian national interest.[21](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-433) “We have concluded that they would not be able to exclude the possibility that Lynas’s production could be controlled to the detriment of non-Chinese end users,” the minutes show. That would have been “inconsistent with the government’s policy of maintaining Australia’s position as a reliable supplier to all our trading partners and hence potentially contrary to national interest.”[22](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-434) The Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co., however, did acquire a 25 percent stake in Arafura Resources, which owns the Nolans Bore mine in Northern Australia.[23](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-435)
>
> [](p.123) Nonetheless, China continued to consolidate and strengthen its dominance over the rare-earth industry, a strategy that progressively led to the production of permanent magnets, oxides, and alloys moving there as well. This relocation of production to China resulted in the United States giving up its position as the leading researcher in the field of REEs.[24](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-436) The erosion of technical expertise is viewed as even more serious than the question of resumption of production in the United States, because China dominates all the rest of the steps in the rare-earth supply chain.
>
> Though China made efforts to strategically control its power over the REEs and their applications, it thought that prices were too low and failed to reflect the scarcity of the resources and the damage their extraction and processing caused to the environment. Furthermore, in the first decade of the twenty-first century, the PRC emphasized the goal of developing downstream industries within the country and also promoted the goal of high-tech manufacturing by the Chinese. These targets were reflected in the twelfth five-year plan. Announced in May 2011, the list included such downstream industries as magnets, phosphors, hydrogen storage materials, and abrasive polishing materials. This twelfth five-year plan contained ambitious targets for not only improving energy efficiency and reducing carbon emissions, but also for investing and transforming China into the leading producer of renewable energy. Given the Chinese decision to diversify the country’s energy mix by including vast amounts of renewables, rare earths have now become a key ingredient for the success of their green-energy applications. “Rare earths are the vitamins of modern industry and they are China’s 21st century treasure trove of new materials,”[25](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-437) Wang Min, vice minister at the Ministry of Land and Resources said in 2011.
>
> Even now, after the rare-earth crisis, the most recent thirteenth five-year plan continued to build on these priorities—that is, conservation, environmental governance, protection and restoration of ecosystems, emissions control, the accelerated shift to renewable energy, and a further emphasis on an innovation economy.[26](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-438) According to the 2017 REN21 (Renewable Energy Policy Network for the 21st Century) report, China was already the global leader for new wind power installations in 2016. [](p.124) Asia overall represented about half of the added wind capacity. Moreover, while wind power installation expanded to new markets globally, Europe and North America accounted for most of the rest of installed capacity in 2016.[27](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-439) Already, China is the global leader in the solar sector.[28](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-440) In fact, it also now boasts the top capacity of power generation from wind as well.[29](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-441) An earlier report by the Chinese Renewable Energy Industries Association (CREIA), the Chinese Wind Energy Association (CWEA), and the Global Wind Energy Council (GWEC), clearly indicated the rapid growth of wind power installation over the last several years in China.
>
>> The Chinese wind industry installed 16,089 MW in 2013, an increase of 3,130 MW over 2012, for annual market growth of 24%. At the end of 2013, the cumulative installed capacity in China was 91,413 MW, an annual market growth rate of 21%. In 2013, wind power generated 134.9TWh of electricity, making wind the third largest power generation source in China after thermal power and hydropower, providing 2.5% of China’s electricity. This is less than the EU’s 8%, but an increase of 25% from 2.0% in 2012.[30](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-442)
>
> In 2016, the total installed wind-power capacity in gigawatts for China was 168.7 (GW), compared to a total of 153.7 GW for the EU and 82.1 GW for the United States.[31](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-443) China’s solar capacity at the end of 2016 stood at 77.4 gigawatts (GW). The new domestic priorities of the PRC’s five-year plans for the future speak to concerted government intervention in the rare-earth industry to build the particular high-growth economic sector of renewables and high-tech applications.[32](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-444)
>
> []
>
> China Seeks to Add Value to Its Rare-Earth Industry: Quotas, Taxes, and the Supply Chain
>
> Already, in August 2009, there was a draft report from China’s Ministry of Industry and Information Technology indicating that exports would be banned within the next five years. This alarmed those in both military [](p.125) and commercial industries that were dependent on the Chinese. Given the potential resource scarcity that suddenly reared its head in the international rare-earth industry, there was renewed interest in exploring new REE supplies in other areas of the world. A handful of Canadian mining companies began doing just that in South Africa, Brazil, and the United States while also moving forward with existing projects.
>
> “There has been increased interest to look into ways to mine rare earth out of China, especially given the protectionism China is applying to its resources,” said Frederic Bastien, an analyst at Raymond James in answer to a question asked by the New York Times in September 2009.[33](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-445) Canadian companies looking for rare-earth resources outside China included Great Western Minerals Group, Rare Element Resources, Avalon Rare Metals, and Neo Material Technologies. Though the signs of China’s intentions were clear in 2008, it was in July 2010, after China drastically reduced exports and was accused of withholding shipments to Japan over the two countries’ geopolitical dispute in September, that the surprise over the extent of the disruption fully registered. This reaction then shook the rare earths industry and triggered an unanticipated and exorbitant rise in REE prices through 2011.
>
> On July 9, 2010, Bloomberg News, for example, raised an alarm, “China, the world’s largest rare-earths producer, cut export quotas for the minerals needed to make hybrid cars and televisions by 72 percent for the second half of the year, raising the possibility of a trade dispute with the U.S.”[34](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-446) Looking more specifically at the figures, the overall reduction of quotas of rare earths from 2005 to 2010 were over 50 percent (see Table [4.1](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-chapter-5-tableGroup-4)).
>
> Table 4.1. Export Quotas 2005–2010a
>
> Year
>
> Tons of Rare Earth Oxides
>
> Annual change
>
> 2005
>
> 65,580
>
> –
>
> 2006
>
> 61,070
>
> −6.9%
>
> 2007
>
> 59,643
>
> −2.3%
>
> 2008
>
> 49,990
>
> −16.2%
>
> 2009
>
> 48,155
>
> −3.7%
>
> 2010
>
> 30,259
>
> −37.2%
>
> aSOURCE: USGS
>
> The abrupt reduction in the allowed quotas of REEs from China also accelerated changes by the entire chain of the REE industry and gave rise to concerns that had political implications encompassing issues of national security.
>
> In 2011, exploration projects continued to multiply, as did investment and interest in rare-earth projects. According to the US Geological Survey,[35](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-447) in 2012, economic assessments were ongoing in North America at Bear Lodge in Wyoming; Diamond Creek in Idaho; Elk Creek in Nebraska; Hoidas Lake in Saskatchewan, Canada; Kipawa in Quebec, Canada; Lemhi Pass [](p.126) in Idaho-Montana; and Nechalacho (Thor Lake) in Northwest Territories, Canada. In other locations globally, economic assessments took place at Dubbo Zirconia in New South Wales, Australia; Kangankunde in Malawi; Mount Weld in Western Australia, Australia; Nolans Project in Northern Territory, Australia; and Steenkampskraal in Western Cape, South Africa.[36](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-448)
>
> The three quota systems that China implemented vis-à-vis the rare-earth industry included the production quota issued from 2006 by the Ministry of Land and Resources, the smelting and separating quota issued by the Ministry of Industry and Information Technology that went into effect in 2010, and the export quota issued by the Ministry of Commerce. The latter was removed in 2015 in compliance with the WTO ruling (see below in section China and the WTO).
>
> []
>
> Quotas, Allocations, and Their Repercussions across the Board
>
> On December 27, 2011, the Chinese Ministry of Commerce announced its first set of rare-earth export quotas for 2012. This first round of quotas was set at 24,904 tons.[37](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-449) The Ministry issued separate quota allocations for light rare earths and medium/heavy rare-earth products. For the first time, rare-earth companies were separated into two groups, one made up of those with confirmed allocations and the second group with provisional [](p.127) allocations. The criterion for being placed in the first group was being able to demonstrate progress toward implementing new pollution control regulations. Those with provisional quotas would receive them only if they met various requirements by July 2012. Failure to do so would mean that their quotas would be reallocated to compliant companies. The quota of 24,904 tons of rare earths announced by the government was revised in May 17, 2012 to 25,150 tons and represented 80 percent of the allocations for 2012. This was an indication that the total for 2012 would be only slightly higher than the 2011 quotas, which had stood at approximately 30,996 tons. It is worth underscoring that 87.5 percent of the 2012 quota was made up by light rare earths, which are the most abundant elements and considerably lower in price.
>
> “On December 27, 2012, the Foreign Trade Division of the Chinese Ministry of Commerce (MOFCOM) announced the first round of allocations of rare-earth export quotas for 2013. A total of 15,499 t of export quotas was allocated in this first round, comprising 13,561 t of light rare-earth (LRE) products and 1,938 t of medium/heavy rare-earth (M/HRE) products.”[38](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-450) This was the second time that the allocations had been broken into the categories of light and medium/heavy rare earths. The first round of announced quotas for 2013 was considerably smaller than that of 2012 but the final allocation ended up being approximately 30,999 tons. One interpretation of this was that China would adjust its final quota in a way that would maintain stable price levels and control over the global supply. Moreover, in 2014, the proportion of M/HRE to total allocations was 11.8 percent. This compares to 11.7 percent for 2013 and 12.5 percent for 2012, the first year that the quotas were split in this way.
>
> Furthermore, discussions were underway for the initiation of a central-government policy to attract processing plants to China, creating a more profitable downstream processing sector by reaping added value and by gaining technological expertise in the process. Consolidation,[39](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-451) moreover, became a critical goal in order for the Chinese government to restrict rare-earth mining operations to state-owned enterprises. The Baotou Mine has been the center of the consolidation scheme, and the plan was for Baotou Steel[40](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-452) to have exclusive rights to mine in the region. At the [](p.128) time, China Daily wrote that the central government has been planning to reduce rare-earth mines from 123 to fewer than 10; and processing firms, from 73 to 20.[41](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-453) In the most recent announcements, of 2015, it was reported by the Xinhua News Agency that China’s natural resource ministry had declared that “plans consolidating the rare industry into six firms have been approved . . . The plans involve miners and processors in the industry consolidating under six firms—China Aluminum Corporation, Xiamen Tungsten Co Ltd, Inner Mongolia BaoTou Steel Union Co Ltd, China Minmetals Corporation, Ganzhou Rare Earth Group Co Ltd and Guangdong Rare Earth Industrial Group Co Ltd.”[42](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-454)
>
> The first batch of mining quota announced for 2016 was a combined 52,500 metric tons of rare earths of which medium/heavy rare-earth minerals amounted to 8,950 metric tons.[43](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-455) The six Chinese companies that are owned by the state produced 99.9 percent of China’s rare-earth production quota for the first half of 2016 according to the Ministry of Industry and Information Technology.[44](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-456)
>
> Five of these Chinese companies are listed and have produced 74 percent of the production quota for the first half of 2016. While their market value is estimated at approximately US $23.4 billion, this number does not accurately reflect the market value for the rare-earth industry because these companies do not produce rare earths exclusively but other materials and products as well (such as steel and aluminum). Moreover, the value of the other ten global rare-earth companies combined stood at $409 million. Given that both Molycorp and the Great Western Minerals Group have now gone bankrupt, this estimate should be readjusted downward. Lynas, which continues to operate, had a market cap of $145.6 million in October 2016.[45](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-457) Arafura, the second mine in Australia in which the Chinese have a large stake had a market cap of approximately $25.1 million, also in October 2016.[46](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-458)
>
> These figures may not seem significant enough to warrant such focus on rare earths. Nonetheless, the companies for which rare earths are indispensable, such as Apple and Samsung, boast a market capitalization of $614.6 billion and $216.2 billion respectively. Even Xiaomi, the Chinese smartphone producer, is now estimated to be worth $50 billion.[47](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-459)
>
> [](p.129) China’s plans for the rare-earth industry also included the implementation of a unified pricing mechanism. This action was aimed at cracking down on illegal mining and at stabilizing the market. China began requiring separator companies to produce documentation that they were buying legal feed. Illegal feeds[48](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-460) may be bought at much lower prices, but companies with high standing in China would not risk their positions and would only dare to buy rare earths legally.[49](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-461) Finally, China is said to have created a large stockpile of strategic reserves in the north of the country.[50](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-462) More specifically, on August 5, 2014, Bloomberg reported that China had in fact “bought 10,000 metric tons of rare earths” for its stockpile.[51](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-463) According to Peng Bo, an analyst at China Merchants Securities, whom Bloomberg quotes, “China is facing imminent pressure to abolish the export quota, so stockpiling is part of the policy reaction to help prop up prices and keep more of the resources at home for future use.”[52](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-464) According to Huan Chen, an analyst at Beijing Antaike Information Development Co., the government bought the rare earths at higher-than-market prices and are holding onto them in anticipation of increases in internal demand from domestic industry in the future.[53](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-465)
>
> In 2012, Mark A. Smith, then the CEO of Molycorp, made some interesting observations on his blog about the 2012 REE quota announcement by the Chinese. In his view,
>
>> China’s consolidation of its rare earth separations companies enables it to exercise much tighter control on what ultimately gets produced, consumed internally and exported . . . and allows for more effective control of what it considers “illegal” production. All this points to future constraints on global rare earth supply out of China.[54](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-466)
>
> He also underscored the fact that, by withholding quotas to twenty companies until they complied with the new environmental regulations, China demonstrated its seriousness about cleaning up the environment. He did, however, add that the new requirements would increase production costs in China while also putting “pressure on China’s ability to increase its own production in line with increasing rare earth demand in China.”[55](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-467)
>
> [](p.130) Additionally, Mark Smith pointed out that the novelty of the announcement lay in the way the Chinese government categorized REEs into “light” versus “medium/heavy” for purposes of the split in export quotas. This was particularly interesting since, if an REE changes category from light to medium/heavy, it means that it will be in smaller supply, given that quotas in the heavy category were always lower.
>
> Smith used didymium, which is a combination of neodymium and praseodymium, and itself a critical element in the production of high-powered, permanent rare-earth magnets, to illustrate the point. If didymium were to be placed in the new middle/heavy category with tighter quotas, it could result in supply constraints. According to Smith, “Processors in northern China will use their heavies export quotas for didymium exports, while processors in the South will not have enough heavy quotas and will need to seek to purchase those from the North.”[56](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-468) Finally, he indicated that supplies of terbium and dysprosium would be tight. Because of these developments, Molycorp, according to Mark Smith, would be focusing on substitution in downstream technologies that rely less on these scarcer rare earths. For companies such as Molycorp those higher prices initially provided space in which to grow and to look for ways to remain competitive in the rare-earth industry while China turned its attention inward. What initially looked like a hopeful scenario has today been proven an illusion inasmuch as Molycorp has gone bankrupt.
>
> China’s goals in mapping out this strategic approach to its rare-earth industry can be viewed as twofold, with the underlying aim of adding value to this important resource. First, it can be argued that China sought to ensure that it could service its domestic REE needs and Chinese consumers at prices lower than those exported. Second, that it also aimed to continue to provide access to international companies that would move and maintain their manufacturing facilities in China. These companies would be required to pay more than Chinese consumers, but prices would still be lower for them than for the rest of the world. With such focused domestic priorities, international consumers would need to find other sources for purchasing rare earths.[57](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-469)
>
> [](p.131) In 2011, prices for rare earths went through a correction. From 2012 and the beginning of 2013, there has been a period of market fluctuation following the initial period of alarm. Reasons for this include the economic downturn, the promise of new projects, and the continued high smuggling rates of rare earths from China. Nonetheless, prices remain substantially higher than they were before the crisis and China began adjusting its output to stabilize them.
>
> The issue of price volatility was immediately addressed by industry leaders. In 2011, the Lynas CEO at the time, Nicholas Curtis, spoke at the company’s general meeting in Australia saying that the 2010–2011 price explosion for rare earths had given rise to extraordinary media attention. The high prices, he conceded, helped to create investor interest in the sector. Nonetheless, he had to admit that these prices could not have been sustained by the industry. He went on to explain the correction, its aftereffects, and the industry’s prospects.
>
>> Since August 2011 there has been a substantial retracement in Rare Earths prices and a consequent readjustment of equity market valuations in line with a much more sober global economic outlook. We believe this price retracement is healthy for the industry. Prices are still very satisfactory but much more sustainable for our customers. Our job is to grow the overall market for Rare Earths. This is difficult at unreasonably high prices. In fact, earlier in the year a number of upstream industrial recycling processes were implemented and this has led to a one-time reduction in demand for Rare Earths. However, with these process changes now in place, the industry is now poised for renewed growth in demand and we are committed to growing with our customers by providing Rare Earths at prices that are sustainable for both customers and suppliers alike.[58](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-470)
>
> Figures [4.1](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-chapter-5-figureGroup-6), [4.2](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-chapter-5-figureGroup-7), and [4.3](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-chapter-5-figureGroup-8) show the price fluctuation of a number of rare earths and rare earth oxides.
>
> [How China Came to Dominate the Rare Earth Industry]
>
> Figure 4.1 Price changes of select rare earth oxides 2008–2016
>
> SOURCE: Rare Earths Prices, January 31, 2008–January 31, 2016, via Bloomberg LP, accessed September 28, 2016
>
> [How China Came to Dominate the Rare Earth Industry]
>
> Figure 4.2 Price changes of select rare earth oxides 2008–2016
>
> SOURCE: Rare Earths Prices, January 31, 2008–January 31, 2016, via Bloomberg LP, accessed September 28, 2016
>
> [How China Came to Dominate the Rare Earth Industry]
>
> Figure 4.3 Price changes for neodymium oxide and neodymium 2008–2016
>
> SOURCE: Rare Earths Prices, January 31, 2008–January 31, 2016, via Bloomberg LP, accessed September 28, 2016
>
> The steep price hikes gave both industry and the government[59](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-471) much cause for concern, especially given the numerous reports that [](p.132) [](p.133) raised alarms for at least five of the elements that were vital for clean-energy applications—dysprosium, neodymium, terbium, europium, and yttrium.[60](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-472) These five elements are used in magnets for wind turbines and electric vehicles, as well as phosphors, in energy-efficient lighting.
>
> China attempted to address international concerns. While conceding that prices had significantly increased, a white paper published by the government in 2012 argued that there had been, for many years, a “severe divergence between price and value.”[61](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-473) It stood by its assertion that it was time for China to protect its reserves and enforce strict environmental regulations for extraction and processing.
>
> []
>
> The World Reacts to the Realization of the Growing Scarcity of REEs
>
> It took an aggressive move on the part of the Chinese for the international community and world industry to fully grasp what dependence on one supplier of rare earths might mean in the high-tech race. As Cindy Hurst [](p.134) put it, “The world was seemingly asleep as China grew to become a goliath in the rare-earth industry. It took the rest of the world nearly 20 years to suddenly wake up to the realization that the future of high technology could be in the hands of this one supplier.”[62](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-474) One might find particularly surprising the extent to which the world seemed to have been unprepared for these developments and unable to see their stark dependency. In hindsight, closer scrutiny of Chinese policies should have made China’s intentions and goals more readily apparent.
>
> In the initial critical period in 2010, the United States, the EU, and Japan—all primarily dependent on accessible and affordable rare-earth supplies—joined efforts to address the situation. Each of these industrial powers designed and implemented a number of internal domestic strategies and policies to respond and adjust to the challenges caused by the supply disruption and the realization of China’s inordinate market power. Two significant initiatives, however, stood out from the rest. First, the US, the EU and Japan filed a complaint against China with the WTO; second, they began joint collaborations through a series of trilateral workshops[63](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-475) to work on substitution, diversification, conservation, reuse, and recycling as a way to lessen their dependence on Chinese rare earths.
>
> Both initiatives, however, were undertaken with considerable delay. The first of three trilateral workshops took place one year after the crisis had erupted, starting in October 2011. The case against China at the WTO was filed in 2012, almost two years after the height of the crisis. The case brought against China with the WTO raises questions about the timing, intent, and efficacy of the complaint itself, when it is a well-known fact that WTO disputes require from one to three years to be settled. Why did the United States, the EU, and Japan resort to tools of economic statecraft so long after the fact? In 2012, when the affected parties decided on this plan of action, prices had already dropped significantly from their all-time high in 2011. Dysprosium oxide, for example, which had reached $1,903/kilogram[64](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-476) in July 2011 was being sold for approximately $627/kilogram in February 2012, and even for less than $400/kilogram by December 2012.[65](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-477) What kind of message did the big industrial powers intend to send China by proceeding in unison and with such fanfare if the problem was [](p.135) short-lived? As expected, the WTO case produced a final verdict in 2014, four years after the beginning of the crisis. It was only on May 1, 2015 that China eliminated the controversial export duties to comply with the verdict.[66](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-478) Ahead of that date, in April 2015, the Ministry of Finance announced a resource tax on rare earths based on “sales value instead of production quantity.”[67](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-479) Accordingly, taxes on light rare earths were set at “11.5%, 9.5%, and 7.5%, respectively in Inner Mongolia Autonomous Region, Sichuan Province, and Shandong Province, while for medium and heavy rare earths it is generally set at 27%.”[68](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-480)
>
> Before taking a closer look at the most prominent, but delayed initiatives taken against China by the United States, the EU, and Japan, it might be helpful to give an overview of how each of these major industrial actors responded internally vis-à-vis the rare earths crunch. They clearly chose from a predictable array of options that were at their disposal attempting to weather the storm, vocalize their dissent, and develop a level of resilience. Looking back more closely, however, it becomes apparent that many of the initiatives either fizzled out or never came to pass. Part of this can be explained by the different regulatory traditions that impacted the focus of their strategies vis-à-vis the formulation of a critical minerals policy. Nonetheless, this shortsightedness may seem all the more perplexing since all three powers remain particularly dependent on rare earths for their high-tech, defense, and green applications.
>
> Europe’s twenty-first-century ambition, for instance, has been to complete its transformation into a knowledge society, an innovation society, and an inclusive low-carbon economy. To achieve these objectives, Europe has identified specific targets for diversifying its energy mix with renewables and has increasingly invested in new green technologies. These goals have been in line with a political decision to lead the fight against climate change through international cooperation and to exchange best technological solutions and best practices, as well as to champion the development of legally binding agreements.
>
> These objectives have allowed Europe to deliver a new paradigm for growth in a zone that has seen its economy contract since the 2008 global economic downturn and the prolonged debt crisis that has ensued. The [](p.136) “green economy” has provided Europe with an area for new growth that is also aligned with the desires of its citizens for climate action. Manuel Barroso, the president of the EU Commission in 2010 had argued, “The crisis wiped out years of economic and social progress and exposed structural weaknesses in Europe’s economy. In the meantime, the world is moving fast and long-term challenges—globalization, pressure on resources, ageing—intensify. The EU must now take charge of its future. We need a strategy to help us come out stronger from the crisis and turn the EU into a smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion.”[69](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-481)
>
> To achieve this vision and develop its high-tech sector, however, Europe has had to increasingly rely on imports of many critical raw materials. Sustained availability of these minerals and metals is critical for its economy, and when the rare-earth crisis erupted, this issue became a pronounced concern. In the words of Antonio Tajani, commissioner for industry and entrepreneurship in 2011, “Without assured access to critical materials, the deployment of European cutting-edge technologies will not be possible. European companies need to have a secure, affordable and undistorted access to raw materials. This is essential for industrial competitiveness, innovation and jobs in Europe.”[70](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-482)
>
> European output of metallic minerals has been low, making Europe particularly vulnerable to disruptions and increasingly reliant on a global matrix of supply chains. According to the EU Critical Raw Material Report of 2014, Germany’s contribution to the global critical raw materials supply was 1 percent, while for France and Italy the contribution was 0 percent.[71](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-483) Already in 1975, the European Economic Community (EEC), as it was then called, had begun to address the need for uninterrupted access to important materials and it had drafted a raw materials report. This report pointed out the many vulnerabilities, such as insufficient diversification of supply, political instability in supplier countries, and insufficient knowledge of the current and future outlook of material usage. The report put forward a series of policy suggestions, including propositions meant to tackle bottlenecks and price volatility through long-term contracts, stockpiles, and international agreements.
>
> [](p.137) The shock of the rare-earth crisis made these vulnerabilities particularly apparent. These minerals were critical inputs for the realization of Europe’s energy-technology policy launched in 2008. The SET-plan (Strategic Energy Technology Plan), as it is known, was designed to help accelerate knowledge development and technology transfer and uptake, maintain EU industrial leadership on low-carbon energy technologies, foster science for transforming energy technologies to achieve the 2020 Energy and Climate Change goals, and contribute to the worldwide transition to a low-carbon economy by 2050.[72](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-484)
>
> The SET-Plan is meant to work in tandem with the European Industrial Initiatives (EIIs)[73](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-485) to quickly develop key energy technologies at a European level. The European Energy Research Alliance (EERA) has sought to align R & D activities across Europe to the priorities of the SET-Plan and to establish a joint-programming framework across the continent. The SET-Plan, with an estimated budget of approximately €71.5 billion,[74](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-486) provides the framework from which Europe’s 2030 climate and energy policy goals are to be realized.[75](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-487) These goals reflect the EU’s intention to reduce greenhouse-gas emissions by 80 to 95 percent below 1990 levels by 2050.
>
> With so much at stake, the EU first responded to the rare-earth crisis through the EU Raw Materials Initiative in 2010. The report was intended to help industry prepare for all eventualities by identifying the most critical materials having a high economic importance, yet also increasingly facing potential supply risks. Rare earths were prominent on the list.[76](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-488) This was not the only initiative, however. It was coupled with the launch of a “rare earths diplomatic offensive”[77](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-489) to restore access to these valuable minerals. Germany was the most vocal of European countries, speaking up repeatedly about the shortage of these critical elements. Germany raised the issue at the G20 talks in October 2010.[78](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-490) Although not publicly released, a letter to the G20 was written by a broad coalition of businesses from North America, Europe and Asia underlining the repercussions of potential rare-earth shortages and asking that China not impose further restrictions on their export.[79](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-491) In fall 2010, both the EU and the WTO had stated that they were addressing Germany’s concern over Chinese restrictions on rare-earth exports. The EU, furthermore, had that same year [](p.138) weighed the possibility of taking legal action against China’s policy. In the end, however, it chose to join the United States and Japan in filing the joint complaint with the WTO in 2012.
>
> Andrea Maresi, the press officer to Antonio Tajani, the EU industry commissioner at the time, reported that Europe had begun to stockpile rare earths, in order “to better profit from the material that we have in the EU.” Maresi added, “We are trying to improve our sourcing and reduce our dependence on China.”[80](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-492) Later, in November 2011, he stated that “European companies need to have a secure, affordable and undistorted access to raw materials. This is essential for industrial competitiveness, innovation and jobs in Europe. Today’s report (i.e.: on critical raw materials 2010) highlights that we are on the right track with our raw materials strategy.”[81](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-493)
>
> In fact, following the commission’s report on critical materials in 2010, the Joint Research Center[82](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-494) scientists found that five metals essential for manufacturing low-carbon technologies were at risk of serious shortages. The JRC scientists produced a list of recommended actions that would allow the SET-Plan to move forward smoothly to deploy and develop low-carbon applications.[83](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-495) The metals identified were neodymium, dysprosium, indium, tellurium, and gallium. The recommendations in the JRC report included reuse, recycling, and, whenever possible, substitution with less critical materials, alternative technologies, and increasing Europe’s primary production by opening new or dormant mines.[84](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-496)
>
> In October 2010, Germany’s economy minister, Rainer Bruederle, reiterated, “The most important domestic source of raw materials is more recycling. We need to utilize the valuable potential of our own residual waste.”[85](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-497) At present, Germany has the highest commitment to a low-carbon economy of the EU industrial nations. Germany imports raw materials worth about 80 billion euros each year. Recycling is being widely talked about and discussed, especially among industrial nations that are wary of rare-earth shortages. But such a tactic faces many challenges, both technological and in terms of cost-efficiency. If prices are high, then recycling becomes a financially attractive alternative. If prices are low, the cost of recycling is prohibitive. Nonetheless, recycling figures remain very low, [](p.139) and that is why the issue continues to be a top EU priority. Germany, for example, recycles only 1 percent of its natural resources. If that percentage were to rise to 10 percent in the next five years “that would be a very good achievement,” said Harald Elsner, a senior geologist at the Federal Institute for Geosciences and Natural Resources.[86](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-498)
>
> Taking a further proactive approach to the crisis, the German government signed an agreement with Kazakhstan, on February 7, 2012, to form a “partnership in the raw materials, industrial and technological spheres,” focusing on rare earths.[87](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-499) The drive to secure uninterrupted access to rare earths in response to price hikes has led countries like Germany to look for opportunities to invest in prospecting, in the acquisition of mining rights, in the construction of processing plants and to extend credit guarantees. These agreements for “priority access” were accompanied by technology-transfer arrangements that are vital for developing countries like Kazakhstan. This particular agreement, furthermore, represented a public-private partnership endeavor for the Germans. When industry initiated the negotiations with twelve of Germany’s largest industrial concerns, forming the Alliance for Raw Material Supply Security, the government stepped in to assist. Economic relations between the two countries have been growing in recent years. Today, Kazakhstan is Germany’s third largest crude-oil supplier. Agreements totaling approximately $4 billion came after Germany had also signed an agreement with Mongolia, another nation with untapped rare-earth reserves. Clearly, Germany has taken a leadership role within the EU to avoid China’s restrictions hampering its own economic and industrial objectives.[88](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-500)
>
> As Manuel Barroso pointed out, in 2010, when he described how Europe was planning to proceed to fulfill the Union’s strategic objectives in the aftermath of the economic crisis plaguing its members, “The crisis is a wake-up call, the moment where we recognize that “business as usual” would consign us to a gradual decline, to the second rank of the new global order. This is Europe’s moment of truth. It is the time to be bold and ambitious.”[89](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-501) The emphasis on mineral diplomacy, efficiency in production, and waste-management policies and initiatives reflected the new thinking that has entered the equation since the rare earths crisis.
>
> [](p.140) Sustainability is a key goal in Europe’s vision in the Anthropocene, and it means more than just diversifying its energy mix. It also marks a transition to an innovative knowledge-based, low-carbon economy that supports the EU’s growth strategy. It means job creation heralded by politicians as a win-win proposition for the Union. “Solar, wind and biomass technologies have progressed most rapidly . . . Europe’s renewable energy sector added 320,000 jobs between 2005 and 2009 . . . In all, the employment potential from developing the renewable energy sector is estimated at three million jobs by 2020 [and] . . . in Germany alone, employment in the renewable energy sector is forecast to rise from 400,000 today to 600,000 by 2020,”[90](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-502) said Connie Hedegaard (former EU Commissioner) in 2012. According to the 2016 renewable energy and jobs review published by International Renewable Energy Agency (IRENA), the total number of green jobs across the EU was estimated at 1.17 million in 2014.[91](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-503) According to the same review, the wind industry accounted for the majority of these jobs, with Germany, the United Kingdom, Denmark, Sweden, Greece, and Austria making the most significant contributions in this area. Uninterrupted access to critical minerals is, therefore, essential if the EU is to continue to achieve these goals.
>
> The rare-earth crisis, therefore, prompted a long overdue examination of how to weather supply disruptions of valuable materials for its economy, especially given its transition to a low-carbon future. The 2014 EU Report on Critical Raw Materials indicated that China was in fact the most influential country in terms of the supply of the twenty most critical minerals. Included on this list of imports from China are antimony (87%), coking coal (51%), fluorspar (56%), gallium (69%), germanium (59%), indium (58%), magnesite (69%), magnesium (86%), natural graphite (69%), phosphate rock (38%), (heavy) REEs (87%), silicon metal (56%), and tungsten (85%).
>
> The continent’s resource poverty in the past was offset by expansion and colonialism, which ensured the acquisition of vital materials. Today, Europe relies on international trade. The EU’s initial consensual style of looking for the most effective means of addressing the rare earths crisis has not been strong enough, however, because it has left more practical [](p.141) matters and new exploratory projects to its member states. Seemingly, the prevailing attitude is that industry is largely responsible for ensuring access to raw materials and for finding solutions to supply-chain vulnerabilities. In fact, the most recent Report on Critical Raw Materials for the EU,[92](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-504) gives evidence that the few national strategies of member states that were included, in large part, reflected this notion of industry and individual member state responsibility.
>
> France (2010), Finland (2010), Germany (2010), the Netherlands (2011), the United Kingdom (2012), and Sweden (2010) were among the countries that produced reports on their raw material strategies. Sweden and Finland, for example, aimed at strengthening their mining positions and incorporating sustainability into the management of their resources. The others focused mainly on resource risk strategies; the United Kingdom emphasized “a framework for business action to address resource risk,” something that Germany also underscored. The EU has mainly focused on providing the regulatory framework to help avoid bottlenecks, level the playing field, and help to maintain fair market conditions.
>
> Throughout this period, Europe tried to maintain a balance in its relationship with China. The PRC provides a strong export market for Europe’s goods, invests in Europe, and holds significant amounts of European debt. Unlike the United States, as we shall soon see, though Europe desires to maintain a powerful say on the global playing field, engaging actively in how the world works, it is not positioning itself as the rival power to China. Furthermore, in the case of the EU, the question of access to rare earths has not been so strongly linked to the vulnerabilities in the defense industry; instead, the emphasis has been on high-tech and renewable applications overall.[93](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-505) Nonetheless, if the crisis once again becomes as intense as it was in 2010 and 2011, Europe will not have set up an effective centralized plan that is sufficient to disentangle itself and its industries from China’s powerful hold on rare earths.
>
> When it became clear, in 2009, that the supply or rare earths would begin to be problematic, Japan, a major importer of rare earths, began to take steps to prevent shortages in their industries. Yukio Edano, Japan’s trade minister in 2012 said, “It is important that the consuming countries [](p.142) and supplying countries . . . develop a global supply chain so that we are not dependent on one source, . . . If we cannot access these resources, it will slow the transition to renewables. This is not acceptable.”[94](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-506) While Japan’s imports from China were particularly high it was believed—and strongly alleged by China—that perhaps up to a fifth of the REEs entering Japan came from a black market network[95](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-507) that had been thriving in China.
>
> The Japanese government was thus forced into action because of the resource crunch and complicated geopolitical tensions. As a highly industrialized economy, Japan’s different product supply chains are spread all over the world. This fragmentation, characteristic of the global industrial economy, in combination with its own resource poverty and an increasingly tense geopolitical environment, put Japan in an extremely vulnerable position. This is why, even though Japan’s industries are expected to address and manage supply disruptions and ensure uninterrupted access to vital inputs, the state also takes an active role by working with businesses to help offset adverse impacts on the supply chain from regional rivalries.
>
> Japan’s REE industry is intrinsically linked to China. Forty percent of China’s REE exports go to Japan, in comparison with 18 percent to the United States. Japan, which boasts an exceptional high-tech industrial base, uses REEs in polishing (20%), metal alloys (18%), magnets (14%), and catalysts (12%). In 2011, 82% of its REEs originated from China.[96](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-508)
>
> During the escalation of the rare earths crisis, Japan’s strategy included increased support for mining development in foreign countries and infrastructure development in surrounding areas. Japan also promoted active technology transfer and environmental conservation. Although Japan has been energetic in the area of urban recycling of metals from compact electronics, such as cell phones and digital cameras because of their significant rare-earth content, it understands the limited viability of this effort when rare-earth prices are low. “Recycling can’t be implemented immediately as it takes time for it to be a viable business. But there is no doubt it has to be done,” said Naohiro Niimura, a partner at Tokyo-based research and consulting firm Market Risk Advisory Co.[97](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-509)
>
> [](p.143) Given Japan’s acute supply vulnerabilities, in February 2004 the government integrated two agencies, Japan National Oil Corporation (JNOC) and Metallic Minerals Exploration Financing Agency of Japan (MMAJ) to establish the Japan Oil, Gas and Metals National Corporation (JOGMEC). It assumed its predecessors’ respective roles as independent administrative institutions in order to secure a stable supply of oil and natural gas and of nonferrous metal and mineral resources. JOGMEC manages Japan’s stockpiles of petroleum and liquid petroleum gas. It also manages the country’s national stockpiles of rare metals to ensure stable economic conditions. In addition, JOGMEC periodically reviews Japan’s commodities in reserve and stockpiles rare metals to ensure stable economic conditions; rare-earth elements have been designated as meriting close observation.[98](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-510)
>
> JOGMEC has agreed to partner with India to more actively explore for new rare-earth resources and to establish a processing facility. This includes exploration of seabed minerals, which constitutes a new high-tech frontier for mining. The model by which Japan pursues these kinds of partnerships is by backing the endeavors of Japanese firms in these regions. India and Japan have embarked on a larger strategic partnership, in addition to their September 2014 agreement, on the commercial contract between Indian Rare Earths Limited and Toyota Tsusho Corporation for the exploration and production of rare earths.[99](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-511) Japanese firms are particularly interested in the raw stage of rare earths, so they seek mining projects outside China in which to invest. Examples of such projects include the collaboration between Sumitomo Corporation and Kazakhstan’s National Mining Company—Kazatomprom—which have formed a joint venture to produce LREEs. Toyota Tsusho and Sojitz partnered with Vietnam’s Dong Pao project to produce LREEs.
>
> JOGMEC also invested in the Lynas Corporation of Australia[100](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-512) in 2011. Specifically, Sojitz Corporation and JOGMEC provided a total of US$250 million[101](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-513)—through loans and equity—to receive over a period of ten years 8,500 tons of rare-earth products for Japan. The Foreign Investment Review Board in Australia approved the investment in April of 2011. Japan’s proactive investment has helped to keep Lynas operational. [](p.144) The mine, one of only two significant rare-earth mines outside of China, has faced many challenges in trying to stay afloat since the rare-earth crisis. Its counterpart in the United States, Molycorp, has already gone bankrupt.
>
> Japan clearly recognizes the geostrategic implications the rare-earth crisis signifies given its growing and increasingly heated rivalry with China especially because of how it has itself been impacted. This is why its strategy reflects a sense of urgency as it seeks concrete and practical ways of weathering another possible crisis and shortage. Relying on imports, Japan’s primary focus is to ensure that it does not become dependent on one supplier, and especially not China. Its emphasis, as we have seen, has been on research, recycling, and substitution as responses to the problem, in addition to seeking investments in other viable foreign projects. These endeavors have produced some positive results for Japan. Since the rare-earth crisis, Japan has been able to somewhat increase its rare-earth imports from other sources, but its imports of rare earths from China have also increased. According to figures from the Japanese Finance Ministry, (see Figure [4.4](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-chapter-5-figureGroup-9)), in 2008 Japan imported 31,097 tons of rare earths from China representing approximately 91 percent of its imports. In 2010, it imported 23,311 tons, which represented 81.6 percent of its imports. By 2014, Chinese imports stood at 13,303 tons, representing 59.6 percent of its imports. Still, the imports from China were significantly up from 9,084 tons in 2013. Increases in supply from elsewhere helped offset Japan’s dependency, but the 2014 increase of rare earths coming from China indicates that though the overall percentage may be lower, imports from China are again growing, as are the total imports of rare earths into Japan. Earlier, low overall imports of rare earths may have been attributable to the recession, the illegal feed of rare earths coming into Japan, stockpiling during the crisis, and also technological improvements in substitution and efficiency. The data also indicates that breaking away from China’s stranglehold will not be an easy task in the future.[102](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-514)
>
> [How China Came to Dominate the Rare Earth Industry]
>
> Figure 4.4 Japanese rare earth imports from China and worldwide
>
> SOURCE: Trade Statistics of Japan, Ministry of Finance
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> In the United States reactions to the perceived rare-earth crisis took place at many levels, but mainly within the context of the growing geopolitical rivalry between the two powers and their economies. The climate [](p.145) at the time was riddled with alarmist and bold statements over Chinese intentions. According to Clyde Prestowitz, former US trade negotiator,
>
>> The mantra in the US ever since the late 1990s has been that globalization will make everybody rich. By being rich, they will all become democratic. By being democratic, they will all be peaceful. Well, globalization is working in a somewhat different way. China is getting rich and India is getting rich. But China’s not getting democratic. We’ve seen in the recent case of China embargoing the export of rare earths that it’s a kind of a mercantilist economy. The economy is being run for strategic purposes in ways that we didn’t anticipate.[103](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-515)
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> Similarly, then US Representative Ed Markey stated, “I am troubled by this recent turn of events and concerned that the world’s reliance on Chinese rare-earth materials, in combination with China’s apparent [](p.146) willingness to use this reliance for leverage in wider international affairs, poses a potential threat to American economic and national security interests.”[104](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-516)
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> Nonetheless, during the rare-earth crisis, the United States, like the EU and Japan, kept its responses within a limited range of options. US disquiet was first expressed at a high level in 2010 during Secretary Clinton’s seven-nation tour of the Asia-Pacific region in November 2010. Clinton discussed the United States’ growing apprehension over Chinese restrictions of rare-earth exports with her Australian counterpart Kevin Rudd and also with Japanese foreign minister Seiji Maehara. She described the rare-earth crisis as a “wake up call” for the United States and its allies to diversify their sourcing.[105](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-517)
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> The United States joined the other industrial nations in seeking solutions to resource scarcity, emphasizing the need for research, development, and education in rare earths to help facilitate investment in domestic production facilities and to promote international collaboration in the field.[106](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-518) The difference between Europe, Japan, and the United States, however, was that the United States has considerable rare-earth reserves in its territory and could therefore underscore the possibilities of developing its own resources instead of actively seeking mining opportunities abroad.
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> Moreover, and in line with the United States’ tradition of innovation, researchers in private and public industries have been pursuing the development of alternative solutions.[107](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-519) In spring 2010, the US Government Accountability Office[108](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-520) submitted a report to the Committees of the Armed Services and the Senate and House of Representatives on rare earths used in the defense industry and its supply chain. The fact that rare earths became associated with matters of defense added a level of urgency to dealing with the crisis and piqued the interest of legislators in Washington.[109](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-521) Through the report, it became abundantly clear that rare-earth materials must go through a number of processing stages before they can be used in an application. Because the US Department of Defense uses rare earths in critical defense systems, the report mapped out the steps needed to mine and produce rare earths, showing that the process is long and arduous, time consuming, and capital intensive. It became evident [](p.147) that the production of rare earths could not effectively be established overnight.[110](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-522)
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> Following the flurry of reports and the alarm over resource scarcity and its impact on defense and security, a number of legislative bills were introduced in Congress. Congressional gridlock, however, ensured that none of them were ever voted into law. On March 13, 2012, Senator Lisa Murkowski (R-AK), in her keynote address at the Technology and Rare Earth Metals (TREM) Center’s 12th Annual Conference, highlighted both the urgency of the situation, congressional efforts, and the frustration that she, too, had experienced having introduced the Critical Minerals Policy Act.
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>> Minerals are the building blocks of our nation’s economy. From rare earths to molybdenum, we rely on minerals for everything from the smallest computer chips to the tallest skyscrapers. Minerals make it possible for us to innovate and invent—and in the process they shape our daily lives, our standard of living, and our ability to prosper . . .
>>
>> There is no question that a stable and affordable supply of minerals is critical to America’s future competitiveness. And yet—despite that—our mineral-related capabilities have been slipping for decades. Rare earths garner most of the headlines, but we are 100 percent dependent on foreign sources for 17 other minerals and more than 50 percent dependent on foreign sources for some 25 more. For years, the government has been content to report on those facts—without doing much to change them.[111](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-523)
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> Murkowski, along with nineteen bipartisan cosponsors, had introduced the Critical Minerals Policy Act (S. 1113) in 2011. According to Murkowski’s statements during the conference, “The Senate Energy and Natural Resources Committee still has not allowed the bill to be marked up, in part due to misperceptions about its permitting and resource assessment provisions.”
>
> The Senator went on to say that while the problem had drawn the attention of legislators, none of the bills introduced at the time had even come [](p.148) close to becoming the law of the land. “In the Senate alone, twenty-four different Senators—nearly a quarter of those serving—are supporting legislation to address some aspect of this problem . . . So far, those efforts have fallen victim to the new normal in Congress: they’ve gone nowhere. Not one bill on this topic has been reported from a Senate committee—even when the votes are likely there to do so.” The following is a list of legislative initiatives that drew attention but did not become law, highlighting the inconsistency between declared objectives and the realities on the ground.
>
> -
>
> • On March 17, 2010, the RESTART Act (H.R. 4866) was introduced by Representative Mike Coffman (R-CO) regarding the stockpiling of rare earths and the establishment of rare earths production facilities in the United States. According to the 2011 Department of Energy report on critical materials,[112](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-524) the goal of this bill was to “reestablish a competitive domestic RE minerals production industry; a domestic RE processing, refining, purification and metals production industry; a domestic RE metals alloying industry and a domestic RE-based magnet production industry and supply chain in the Defense Logistics Agency of DOD.” No further legislative action has been taken since November 28, 2011. In effect, this bill, too, “died” by being referred to committee.[113](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-525)
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> -
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> • In the Senate, the Rare Earths Supply Technology and Resources Transformation Act of 2010 (S.3521) was introduced by Senator Murkowski. The Senator herself pointed out that this piece of legislature has gone nowhere.[114](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-526)
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> -
>
> • In September 2010, the House of Representatives passed H.R. 6160, a bill that directed the Department of Energy to support new rare-earth technology through public- and private-sector collaboration and coordination with the European Union. The same bill called for loan guarantees for rare-earth-related investment. The bill was introduced to the House by Representative Kathleen Dahlkemper (D-PA). The bill died because it was never passed by the Senate.[115](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-527)[] (p.149)
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> -
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> • On March 8, 2011, Representative Brad Miller (D-NC) introduced H.R.952, Energy Critical Elements Renewal Act of 2011, to develop a rare earths material program, to amend the National Materials and Mineral Policy, Research and Development Act of 1980, and other purposes.[116](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-528) The bill was never enacted.
>
> The rare-earth crisis may have died out in the news, but individual members of Congress keep trying to draw attention to the inability of the US to devise a long-term solution. From the point of view of the legislative process, nothing has come of these efforts except an indication that the particular problem has not been resolved satisfactorily. In 2014, Steve Stockman of the House of Representatives introduced Bill HR 4883 that sought to establish a “Thorium-Bearing Rare Earth Refinery Cooperative as a federal charter to provide for the domestic processing of thorium-bearing rare-earth concentrates as residual unprocessed and unrefined ores.” The bill further required the “Cooperative’s Board to establish a refinery and a Thorium Storage, Energy, and Industrial Products Corporation to develop uses and markets for thorium, including energy.” It also “directed the Secretary of Defense (DOD) to coordinate with other federal agencies to advance and protect domestic rare-earth mining, the refining of rare-earth elements, basic rare-earth metals production, and the development and commercialization of thorium.” The bill went on to mandate that “beginning in January 2020, all purchased or procured weapon systems to contain only U.S. or North Atlantic Treaty Organization (NATO) member nation produced and sourced rare-earth materials, metals, magnets, parts, and components.” It also called for the prohibition of “any rare earth materials that originate or pass through a non-NATO member nation and barred any waivers from being granted unless the lead contractor can demonstrate that it has pursued all possible corrective actions, including direct investment into the supply chain.”[117](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-529) The bill would need to pass by both the House and Senate in identical form to then be signed by the president to become law. It was never enacted.
>
> The list of legislative initiatives included H.R.761 National Strategic Minerals Production Act of 2013 that was received, read twice, and [](p.150) referred to the Committee on Energy and Natural Resources.[118](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-530) It too was never passed by the Senate. H.R 1937: National Strategic and Critical Minerals Production Act of 2015 passed the House on October 22, 2015, but was never passed by the Senate.[119](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-531) Moreover, the White House issued a statement in which it expressed the administration’s opposition to the bill arguing that while it “strongly supports the development of rare earth elements and other critical minerals, [it] rejects the notion that their development is incompatible with existing safeguards regarding uses of public lands, environmental protection, and public involvement in agency decision-making.”[120](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-532) In summary, repeated attempts at legislative action to respond to United States’ dependence on rare-earth imports from China have yet to produce any concrete results.
>
> In searching for the appropriate domestic response to the crisis, the Department of Energy put together a report for the development of a Critical Materials Strategy in 2010. The main objectives were threefold. First, to mitigate supply risk, the United States would need to diversify its global supply chains. Second, it would have to develop both material and technology substitutes. Third, it would need to promote recycling, reuse, and efficiency of use in order to lower dependence on critical materials. Although the report included other critical materials as well, it was prompted by the rare-earth crisis. The Department of Energy updated its report, publishing its [Critical Materials Strategy in December 2011](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-355).[121](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-533) In the strategy itself, it became clear that the department was particularly concerned about how rare-earth shortages could impact clean-energy technologies. There was acknowledgment throughout the report that while demand for critical materials had increased over a decade, there were factors that had prevented the supply from catching up. Capital constraints, long lead times, trade policies, the complexities of coproduction and byproduction, as well as the market’s lack of transparency and size, were contributing factors to its lack of efficiency.
>
> In any event, and as David Sandolow, assistant secretary for policy and international affairs at the Department of Energy, underscored, on March 17, 2010, at the Technology and Rare Earth Metals Conference in Washington DC, “Supply constraints aren’t static. Strategies for addressing [](p.151) shortages of strategic resources are available, if we act wisely. We can invest in additional sources of supply. We can develop substitutes. We can re-use materials and find ways to use them more efficiently. We can consider use of stockpiles and strategic reserves.”[122](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-534)
>
> Domestically, the United States once again turned its attention and focus toward research and innovation, which is why it also decided to fund an Energy Innovation Hub that could produce solutions to domestic shortages of critical materials such as rare earths should these ever occur again.[123](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-535) The Critical Materials Institute limits its focus to “research and development efforts leading to technologies that can diversify the sources of critical materials; provide substitutes for materials that are in short supply; or improve the utilization of existing resources through enhanced efficiency in manufacturing and improved recycling . . . We measure our progress by the advancement of the relevant technologies, and our success by the adoption of our technologies by the commercial sector.”[124](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-536)
>
> Correspondingly, although there was considerable hand-waving at the Department of Defense very little progress in addressing possible shortages has materialized. The United States created the first National Defense Stockpile in 1939. The stockpile was meant for use during situations of national emergency, and the goal was to maintain and manage strategic and critical materials for just such an eventuality.[125](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-537) According to the “Reconfiguration of the National Defense Stockpile (NDS) Report to Congress” (2009),[126](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-538) the Department of Defense determined that its stockpile was in excess of its needs. Congress authorized disposing of more than 99 percent of the stockpile’s material and earmarked the money from the sales for various defense programs, primarily military health and retirement benefits. The stockpile did not contain rare earths, and revenue from the sales amounting to more than $5.9 billion between 1993 and 2005 have also been used as a tool to strengthen relations with countries with which the United States was seeking to build relationships.[127](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-539)
>
> In its 2008 report, the Department of Defense defined what “criticality” means for its mission. “The “criticality” of a material is a function of its importance in DOD applications, the extent to which DOD actions are required to shape and sustain the market, and the impact and likelihood of supply [](p.152) disruption.”[128](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-540) In a report to Congress, in April 2012, entitled “Rare Earth Elements in National Defense: Background, Oversight Issues, and Options for Congress,” Valerie Bailey Grasso, a specialist in defense acquisition, proposed that “Congress could require a strategic rare earth elements stockpile. Stockpiles might possibly increase the security of the domestic U.S. supply for rare earths.”[129](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-541) In its 2013 Strategic and Critical Materials Report on Stockpile Requirements, the Department of Defense recommended stockpiling $120.43 million of HREEs. The Strategic Materials Advisory Council went one step further to urge the Department of Defense to “create and nurture a U.S. based rare earth supply chain.”[130](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-542) According to the US Geological Survey report of 2016, the United States did not stockpile rare earths.[131](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-543)
>
> In February 2016, the US Government Accountability Office submitted a report to congressional committees about rare-earth materials. It found that six years after the crisis, the Department of Defense had not yet developed a “comprehensive approach for ensuring a sufficient supply of rare earths for national security needs—one that can establish criticality, assess supply risks, and identify mitigating actions—[that] would better position DOD (Department of Defense) to help ensure continued functionality in weapon system components should a disruption occur, even though supply disruptions in rare earths have not occurred over the last several years.”[132](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-544) Furthermore, and according to the same report, the Department of Defense had not reached an agreement on what in fact “constitutes ‘critical’ rare earths. While various organizations’ definitions of critical may be similar, DOD has identified 15 of the 17 rare earths as critical over the last 5 years.”[133](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-545)
>
> The Obama Administration was slow to respond as well. Two years after the crisis and just three days after announcing the decision to take China to the WTO, President Obama, acting in his capacity as Commander in Chief of the Armed Forces, went on to sign an executive order on resources preparedness. The order included a substantial section on the expansion of productive capacity and of supply, and it called for loans, loan guarantees, subsidies, and more. There was a particular focus on critical and strategic minerals.
>
>> Sec. 306. Strategic and Critical Materials. The Secretary of Defense, and the Secretary of the Interior in consultation with the Secretary [](p.153) of Defense as the National Defense Stockpile Manager, are each delegated the authority of the President under section 303(a)(1)(B) of the Act, 50 U.S.C. App. 2093(a)(1)(B), to encourage the exploration, development, and mining of strategic and critical materials and other materials.
>>
>> Sec. 307. Substitutes. The head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303(g) of the Act, 50 U.S.C. App. 2093(g), to make provision for the development of substitutes for strategic and critical materials, critical components, critical technology items, and other resources to aid the national defense.[134](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-546)
>
> After the initial crisis erupted, analysts tried to explain the timing of these decisions. Many attributed them to tensions with Iran that could potentially lead to an all-out conflict, and this was seen as a way for the administration to put China on notice. Others interpreted the decision as a tacit acknowledgement that the US military was in fact vulnerable to China’s monopoly of rare earths, including its control of the supply chain.
>
> That same month, the US government moved even more aggressively with two targeted decisions with economic repercussions. The United States, on March 21, 2012, ruled to add a customs tax on China’s solar panels. The decision followed a long investigation into Chinese state subsidization of the solar industry, which had brought prices down by approximately 30 percent since the PRC began to move robustly into their manufacture. In 2011, the United States imported $3.1 billion in solar panels from the Chinese. The United States’ taxation of Chinese solar companies would be determined by the level of subsidy thought to have been given by the PRC government. Examples of the tax levels imposed were a 2.9 percent tax on China Suntech; whereas Changzhou Tina was taxed at 4.73 percent. Other companies were taxed at 3.61 percent. The EU followed suit with more modest taxation. These consecutive actions were aimed at putting pressure on China to desist from trying to control the renewables industry in which both the EU and the United States had a growing stake.
>
> [](p.154) The Chinese side, of course, did not remain silent as US reactions escalated. Chinese companies argued that the United States also offers subsidization for its companies. The Chinese government counteracted US actions by declaring that it would launch its own investigation into the United States’ renewable energy practices. In retaliation, the PRC decided to tax polysilicon, the main ingredient in solar production, which the United States exports to China.[135](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-547)
>
> These vocal and forceful initiatives, undertaken by the United States within a single month, were meant to signal two things. First, they fired a number of warning shots to encourage the Chinese government to curtail or rethink its strategic designs at not only an economic but also a geostrategic level. It also reflected a growing US interest in having a role in the production and deployment of renewables. President Obama made that plain in his [State of the Union Address in 2013](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-572) when he declared, “As long as countries like China keep going all in on clean energy, so must we.”[136](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-548)
>
> Having accepted that the United States was lagging behind in the green-growth race in which China was investing heavily, the Obama administration turned its attention to deploying these technologies. In point of fact, however, as much as rare earths have figured into policy discussions and the geostrategic conversation, securing unobstructed access to these materials was largely left to the industries themselves, in the same manner that both the EU and Japan had largely done as well.
>
> In the end, two government initiatives stood out as the most solid and targeted responses to the rare-earth crisis. The first was the trilateral cooperation between the United States, the EU, and Japan, and the second was the filing of the case against China at the WTO. Both garnered much attention and publicity, but a closer examination will reveal their limited scope and effectiveness.
>
> []
>
> Trilateral Cooperation
>
> When Japan, the EU, and the United States joined forces to find mutually beneficial solutions to the rare-earth crisis, they were attempting to address [](p.155) a number of wider problems. Clean-energy options required a large quantity of rare earths and other less common materials. These materials were supplied by a potential rival and as markets continued to grow, supplies could become even tighter and costs more prohibitive. These facts, then, raised the following questions: How could the EU, Japan, and the United States find new or enhanced recycling technologies to increase the available supplies of rare earths? Is substitution possible, and are there alternate device designs that might perform as efficiently at a comparable cost? How can changes in design and technological innovation impact the amount of rare earths necessary to give the optimal result of an application?
>
> The first workshop was organized by the European Commission, the US Department of Energy, and the Japanese Ministry of Economy Trade and Industry, as well as the New Energy and Industrial Technology Development Organization. It was held in Washington, on October 4 and 5, 2011. The main issues addressed were the policy and strategic implications of shortages, and these were followed by two parallel technical workshops. One workshop explored techniques of extraction, separation, and processing in a sustainable manner, and the other focused on efficient uses and substitutes. These themes carried into the second, third, and fourth conferences, held in Tokyo in 2012, Brussels in 2013, and at the Ames Laboratory in the United States in September 2014, respectively.
>
> The dialogue that the trilateral workshops initiated facilitated the exchange of best practices and common approaches to potential shortages of critical metals. In the beginning, they drew considerable media and government attention, but since the end of the rare-earth crisis, they seem to have faded to the background.
>
> []
>
> China and the WTO
>
> China became a member of the WTO in December 11, 2001. This was thought of as an historic event. China’s population size, its rapidly expanding economy and its one-party system in which the state maintained a significant role vis-à-vis resource allocation – all made it a formidable rising [](p.156) international power.. The fear of other WTO members was whether or not China’s economy would blend in with theirs, which were primarily market oriented. As noted by economist Robert Lawrence,[137](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-549) when China joined the organization, there were worries that it “would not participate constructively in the WTO. It would throw its weight around, try quickly to obtain disproportionate influence and use its influence to fundamentally change the WTO system. China was also seen as a potentially powerful addition to the ranks of developing countries, and many in the developed world worried that it would seek to limit the obligations required of developing countries.” The logic that prevailed, however, was that it would be far better to have China engaged in the operations of the world system through its participation in international organizations than to have it remain isolated at the edges of that system, where it could threaten and challenge international order and stability as the other actors understood those to be.
>
> For China, too, the process of accession held significance.[138](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-550) Accession had never been straightforward because there were many voices in China that opposed such an opening of the economy. Membership was a complex commitment, and China’s internal debate reflected considerable hesitation. There were those who argued that China (ever since it began opening its economy to the world) had been relying rather heavily on foreign investment, and that it was now time for it to develop the national domestic economy. The contagion of the 1997 Asian financial crisis seemed to strengthen these anxieties. Nonetheless, China “needed the rules-based WTO system to secure rights to market access for exports and rights against protectionist measures of its trading partners, as it was moving to the very center of the globalization process. And the WTO needed China as a full and committed member to be a truly global and effective system.”[139](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-551)
>
> Ultimately, after internal bargaining at the highest Chinese levels, it was decided that it would be best to proceed by opening a number of economic sectors to competition and to carry out economic reform, especially in the public and banking sectors. The time had come for China to reciprocate if Chinese exports were to more substantially compete in the markets of [](p.157) many of its trading partners. The high-tech revolution of the 1990s was another contributing factor to China’s decision because it could not afford to miss participating in these technological developments. Finally, China’s entry into the WTO would allow it to partake in the workings of the organization and help shape its future without having to depend on revisions for most-favored-nation status.
>
> For all these reasons, both sides, understandably, had their own apprehensions at the time of accession. China’s inclusion could have caused disruption and an unprecedented trade surge. But mostly there was fear that China would enter the WTO and then proceed to disrupt its workings by ignoring its rules. How could the others be sure of China’s commitment? The United States and the EU had the greatest concerns, but they took the risk and undertook the monitoring of China’s behavior and compliance through task forces and by using two important institutional mechanisms: the Trade Policy Review Mechanism and the Dispute Settlement Body. They had also requested that prior to membership, China should first accede to a protocol under which the PRC would commit itself to wider non-WTO obligations.[140](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-552)
>
> As Mike Moore, the WTO director general, observed at the conclusion of the meeting of the Working Party on China’s Accession, which took place in Doha, “International economic cooperation has brought about this defining moment in the history of the multilateral trading system . . . With China’s membership, the WTO will take a major step towards becoming a truly world organization. The near-universal acceptance of its rules-based system will serve a pivotal role in underpinning global economic cooperation.”
>
> Since China’s accession to the WTO, many have written about the subsequent experience of those years and on China’s performance as a member. The general consensus seems to be that China’s participation has been positive for overall trade. During the first few years, the PRC moved conservatively inside the WTO system, perhaps to better understand it and get its bearings, but it gradually became more active in the workings of the organization and of the Dispute Settlement Body system as well. The Dispute Settlement Mechanism of the WTO is rules oriented. The [](p.158) settlement of disputes is done through a set of enforced rules previously agreed on by both parties. Given that the disputes are brought by states against other states, this system provides a number of benefits that induce acceptance and a willingness to settle.[141](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-553) China’s initial reluctance to participate in the Dispute Settlement Body mechanism may have reflected a suspicion of normative constraints and even an aversion to multilateral adjudication.[142](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-554) Nonetheless, China has complied with tariff-reduction commitments in a timely fashion.[143](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-555)
>
> Since those early years, moreover, China has increasingly made use of the mechanism for settling disputes, many of them between the PRC and the United States. This in the minds of some indicates that these initial disputes could be foreshadowing possible trade wars. Specifically, from 2007 and 2012, the United States brought thirteen WTO cases against China, and China brought seven against the United States.[144](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-556) In the end, there will always be some critics who offer a consistent critique of China’s “maximizing its interests through minimal involvement abroad.”[145](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-557) This critique comes mostly from those who view China as a larger threat because of its growing economic, political, and military strength.
>
> On March 13, 2012, the United States, the EU, and Japan chose to act in unison by simultaneously filing complaints with the WTO demanding consultations with China over its restrictions on the export of rare earths, tungsten, and molybdenum.[146](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-558) The three powers alleged that China’s actions were not in line with WTO provisions. The actions they listed were:
>
>> The imposition of export duties; The imposition of export quotas, and other quantitative restrictions; The imposition of other restrictions such as the right to export based on licenses, prior export experience, minimum capital requirement, and {other conditions that appear to treat foreign invested entities differently from domestic entities}; The maintenance of minimum export prices, through the examination and approval of contracts and offered prices, and through the administration and collection of the export duties, {in a manner that is not uniform, impartial, reasonable or transparent}; [](p.159) The imposition and administration of restrictions through unpublished measures.[147](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-559)
>
> European Union trade commissioner Karel De Gucht said that China’s restrictions on rare earths “hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and ‘green’ business applications.”[148](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-560) In its response, China insisted that it was cutting rare-earth mining because of environmental concerns. “Regarding rare earth management, we have a very clear idea and direction, which is environmental protection and the long-term sustainable use of resources.”[149](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-561)
>
> The complaint against China was subject to divergent interpretations. Professor Yufan Hao of the University of Macau, in 2012, for example, during an interview for the National Bureau of Asian Research said,
>
>> The basis for the three complainants’ case is the WTO’s support for free trade, and that the three parties think that China’s export restrictions on rare earths are against WTO rules. However, many people in China feel that this case is quite ironic. These countries never complained to the WTO about China previously dumping underpriced rare earth product, as they did with China’s export of low-priced steel and textiles. They urged China to sell them rare earths at a very low price, and denounced rare earth export restrictions from a liberal economic viewpoint. And at the same time, these three groups are also very reluctant to sell China high-tech products, not to mention arms, which are produced using rare earths.[150](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-562)
>
> Others raised questions about China’s defense strategy. Jane Nakano, a fellow in the Energy and National Security Program at the Center for Strategic and International Studies, had the following concerns:
>
>> China’s dominance of the global rare earth supply has come at a great cost, with serious environmental issues. But many consumer countries feel that China will have to provide a much more satisfactory [](p.160) answer as to why the export quota has been declining while the production quota has been increasing. Also, it’s one thing to have the overall level of export quotas unchanged, but it would be quite another to allow exports—in a sufficient amount—of the types of rare earth materials that consumers want.[151](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-563)
>
> The EU, the United States, and Japan took their complaint to the WTO in accordance with their wider policies of seeking to find solutions with China through an institutionalized, cooperative, rules-based framework to which all parties have subscribed. It was also their way of not merely settling a trade dispute but also using a tool of economic statecraft to challenge the Chinese position.
>
> This became particularly clear when President Obama himself stepped into the Rose Garden to announce to the world that the three allies had taken action. Obama, with much fanfare, was responding to China, not just to a material shortage of rare earths. His announcement was tailored to both an international and a domestic audience. As the US president faced criticism on an economy still in recession, Obama’s words were greeted partially as a predictable political maneuver to emphasize the government’s concern with job creation in the United States. In the Rose Garden and under the guise of the rare earths dispute, the president could defend American interests, promote renewables as a response to climate change, and put China on notice, all in one fell swoop. On an international level, he indicated that the United States would continue to defend fair-trade practices, protect its dominant position both in the high-tech and in the green-tech industries, and champion a system of international rules and norms. Accordingly, President Obama underlined that American manufacturers needed unobstructed access to rare earths in order to produce high-tech products such as advanced batteries and that by curtailing exports, China was not allowing them to do so. This, he stated, went against WTO regulations. “Being able to manufacture advanced batteries and hybrid cars in America is too important for us to stand by and do nothing. We’ve got to take control of our energy future, and we can’t let that energy industry take root in some other country because they were [](p.161) allowed to break the rules . . . We are going to make sure that this isn’t a country that’s just known for what we consume.”[152](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-564)
>
> The president, the most vocal of all three actors in the dispute, strove to ensure that the clean-energy agenda that his administration had been pushing would have the materials necessary for production. Reliable and affordable access to rare earths was essential to achieving this aim. The steep rise in prices following the 2010 crisis and the fear that exports could be further restricted in the future raised concerns in green-technology companies in the United States because rare earths were essential elements in their industry.
>
> It had not been the first time China had interfered with the supply of critical materials. On the contrary, it had restricted raw-material exports before. In 2009 the United States, the EU, and Mexico launched a WTO case challenging China’s right to restrict bauxite, coke, magnesium, manganese, and zinc exports, again forcing prices to rise.[153](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-565) On January 30, 2012, a WTO panel ruled that China was in fact in violation of WTO regulations.[154](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-566) The panel asserted that the restrictions led to price inflation outside China and gave domestic Chinese firms unfair advantage. The ruling encouraged the United States, Japan, and the EU to submit a similar case about rare earths on March 13, 2012.
>
> Immediately following the ruling on bauxite, coke, magnesium, manganese, and zinc, Vivian Pang, an analyst with the Asian Metal consultancy in Beijing, said, “It is still too early to say what the impact will be [on rare earths], but I can’t see it having a big impact on prices—the main issue will still be supply and demand.”[155](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-567) According to industry analysts at the time, the widely held belief was that China would most likely not increase its production capacity because its priority was to control the environmental repercussions due to lax oversight in mining and separation and in order to maintain high prices of their strategic elements. The use of the environmental defense at the WTO was, in fact, grounds for limiting exports, so China needed to demonstrate the health and environmental implications of REE mining, and to show how the reduction of production had in fact helped to cut pollution and improve public health. China had also to convince the WTO that it applies its policies equally to foreign and domestic companies.
>
> [](p.162) According to Dr. Si Jinsong,[156](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-568) at the time the second secretary of the Economics Affairs Office at the Embassy of China in Washington DC, who spoke at the TREM 12 Conference on March 14, 2012, China would continue to supply the global market with rare earths. It would also develop its policies and effectively manage its resources in line with WTO regulations. The PRC, according to Dr. Jinsong, would strengthen its international cooperation with the United States, in particular, especially in areas of substitution and the improved utilization of these resources. He insisted that China had been urging other countries to develop their own rare-earth resources—since they do exist elsewhere—instead of only turning to China for supplies.
>
> Dr. Jinsong spoke at length about the need to consolidate the industry within China, which once had 1,000 REE mining, smelting, and separating enterprises, but at the time had only 120. He attributed this reduction to the need to monitor the environmental toll of extraction and processing in many parts of the country, as well as the Chinese decision to crack down on the illegal mining and smuggling[157](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-569) of rare earths.
>
> Dr. Jinsong produced extensive data highlighting that thirty-four countries had discovered rare earths, adding that China’s rare earths accounted for 36.4 percent of the global total. He stressed that China’s per capita reserve of rare earths was lower than the reserves of other countries, emphasizing that mining had led to China’s reserves quickly dwindling, falling by 40 percent in the past fifty years. China, he continued, had been exporting beyond its reserve share, and it now had to be careful because if the reserve was exhausted, it would be damaging not only to China but also to the world economy. In short, China’s position was that the world had received ample warning that it needed to look elsewhere for rare earths, because if China remained the only reliable supplier, then it would be safe to surmise that such a trajectory would lead to conditions of scarcity because of limited market availability.
>
> To underscore these concerns, the Chinese Information Office of the State Council released a white paper on rare earths in 2012. It was drafted to “provide the international community a better understanding of this issue.”[158](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-570) According to its findings, excessive mining taking place over the [](p.163) past fifty years had led to such rates of decline that in rich rare-earth areas like Baotou,
>
>> only one-third of the original volume of rare earth resources is available in the main mining areas, and the reserve-extraction ratio of ion-absorption rare earth mines in China’s southern provinces has declined from 50 two decades ago to the present 15. Most of the southern ion-absorption rare earth deposits are located in remote mountainous areas. There are so many mines scattering over a large area that it is difficult and costly to monitor their operation. As a result, illegal mining has severely depleted local resources, and mines rich in reserves and easy to exploit are favored over the others, resulting in a low recovery rate of the rare earth resources. Less that 50 percent of such resources are recovered in ion-absorption rare earth mines in southern China, and only ten percent of the Baotou reserves are dressed and utilized.[159](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-571)
>
> Nevertheless, the Chinese arguments did not suffice, and the PRC did not win the case at the WTO. The ruling came out against China on March 26, 2014. China, moreover, lost its appeal, on August 7, 2014, and subsequently announced its compliance, which took place in May 2015. While the dispute lasted, there had been much speculation about what China would be willing to do vis-à-vis rare earths. Would it abide by its WTO obligations or not? The outcome of the dispute and China’s compliance indicates that the PRC—just like other members—had gained the expertise on how to adhere to the rules and regulations of the organization while simultaneously using the rules to promote and secure its own interests.
>
> A recent study published in Resources Policy,[160](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-572) in 2015, examining whether or not China’s rare earths export policies had worked over the period in question showed that, in fact, “the market power and price sensitivity of China’s rare-earth products increased dramatically, indicating that China’s export policies have exerted significant effects. The quantitative estimate of the market power of China’s rare-earth products on the US and Japanese markets shows that it has risen significantly.” However, [](p.164) the authors also suggest that in the future, and in terms of sustainable improvement in pricing power, China’s focus could shift from “controlling exports to controlling production.”[161](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-573)
>
> Furthermore, by the time China was required to comply with the WTO ruling, it had nothing to lose. Prices had dropped, and there was an oversupply in the market because of ongoing smuggling and the stockpiling at the height of the crisis. While the case was being discussed, China had taken advantage of the critical years it needed to consolidate the industry domestically in order to reposition itself for the future. As the famous Chinese strategist Sun Tzu said, “Ultimate excellence lies in not winning every battle but in defeating the enemy without ever fighting.”[162](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-note-574)
>
> Notes:
>
> ([1.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-413)) Jun Li and Xin Wang, “Energy and Climate Policy in China’s Twelfth Five-Year Plan: A Paradigm Shift,” Energy Policy, no. 42 (2012): 519–28;J. H. L. Voncken, The Rare Earth Elements: An Introduction (Delft, NL: Springer, 2015), 110; [Seaman, “Rare Earths and Clean Energy.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-333)
>
> ([2.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-414)) Warren N. Warhol, “Molycorp’s Mountain Pass Operations,” in Geology and Mineral Wealth of the California Desert, ed. D. L. Fife and A.R. Brown (Santa Ana, CA: South Coast Geological Society, 1980), 359–66.
>
> ([3.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-415)) “Molycorp’s History,” Molycorp.com, accessed June 29, 2012, http://www.molycorp.com/about-us/our-history. After Molycorp went bankrupt, the link takes the reader to: http://neomaterials.com/company/our-history/.
>
> ([4.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-416)) James B. Hedrick, Minerals Yearbook Metals and Minerals 1985, vol. 1 (Washington, DC: US Bureau of Mines), accessed June 10, 2016 http://digital.library.wisc.edu/1711.dl/EcoNatRes.MinYB1985v1.
>
> ([5.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-417)) James B. Hedrick, “Rare-Earth Metals,” USGS, accessed September 19, 2016, http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/740798.pdf.
>
> ([6.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-418)) C. Wu, Z. Yuan, and G. Bai, “Rare Earth Deposits in China,” in Rare Earth Minerals: Chemistry, Origin and Ore Deposits, ed. A. P. Jones, F. Wall, and C. T. Williams, The Mineralogical Society Series 7 (London: Chapman and Hall, 1996), 281–310.
>
> ([7.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-419)) [Hurst, “China’s Rare Earth Elements Industry.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-181)
>
> ([8.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-420)) Pui-Kwan Tse, “China’s Rare-Earth Industry” (Open-File Report 2011–1042, USGS, November 12, 2011), http://pubs.usgs.gov/of/2011/1042/.
>
> ([9.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-421)) Yasuo Kanazawa and Masaharu Kamitani, “Rare Earth Minerals and Resources in the World,” Proceedings of Rare Earths’04 in Nara, Japan Proceedings of Rare Earths’04 408–412 (February 9, 2006): 1339–43.
>
> ([10.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-422)) J. B. Hendrick, “2005 Minerals Yearbook: Rare Earths,” US Geological Survey, http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/rareemyb05.pdf.
>
> ([11.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-423)) Chengyu Wu, “Bayan Obo Controversy: Carbonatites versus Iron Oxide-Cu-Au-(REE-U),” Resource Geology 58, no. 4 (2008): 348–54.
>
> ([12.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-424)) Pui-Kwan Tse, “China’s Rare-Earth Industry.”
>
> ([13.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-425)) [Hurst, “China’s Rare Earth Elements Industry.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-181)
>
> ([14.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-426)) Beijing San Huan New Materials High-Tech Inc. and China National Non-Ferrous Metals Import and Export Corporation used the Sextant Group Inc, to acquire Magnequench. SeeJoanne Abel Goldman, “The U.S. Rare Earth Industry: Its Growth and Decline,” Journal of Policy History 26, no. 2 (2014): 139–66, doi:10.1017/S0898030614000013;Charles W. Freeman, “Remember the Magnequench: An Object Lesson in Globalization,” Washington Quarterly 32, no. 1 (2009): 61–76, doi:10.1080/01636600802545308.
>
> ([15.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-427)) Cecilia Jamasmie, “Chinese Rare Earth Alliance Sues Hitachi Metals over Patents,” Mining.com, August 15, 2014, accessed September 1, 2016, http://www.mining.com/chinese-rare-earth-alliance-sues-hitachi-metals-over-patents-40057/.
>
> ([16.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-428)) “Made in China 2025,” State Council of the People’s Republic of China, English.gov.cn, September 19, 2016, accessed September 19, 2016, http://english.gov.cn/2016special/madeinchina2025/.
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> ([17.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-429)) Don Lee and Elizabeth Douglass, “Chinese Drop Takeover Bid for Unocal,” Los Angeles Times, August 3, 2005, accessed March 12, 2012, http://articles.latimes.com/2005/aug/03/business/fi-chinaoil3.
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> ([18.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-430)) Steve Lohr, “Unocal Bid Denounced at Hearing,” New York Times, July 14, 2005, accessed January 5, 2012, http://www.nytimes.com/2005/07/14/business/worldbusiness/14unocal.html.
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> ([19.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-431)) “China Fails in Another Bid for Resources Firm,” The Age, September 24, 2009, accessed April 12, 2012, http://www.theage.com.au/business/china-fails-in-another-bid-for-resources-firm-20090924-g4l7.html.
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> ([20.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-432)) “China Fails in Another Bid for Resources Firm.”
>
> ([21.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-433)) Bloomberg News obtained the minutes through an Australia Freedom of Information Act request and published them.
>
> ([22.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-434)) Rebecca Keenan, “Australia Blocked Rare Earth Deal on Supply Concerns,” Bloomberg.com, February 15, 2011, accessed April 20, 2012, http://www.bloomberg.com/news/articles/2011-02-14/australia-blocked-china-rare-earth-takeover-on-concern-of-threat-to-supply.
>
> ([23.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-435)) Elisabeth Behrmann, “China’s Interest in Arafura Resources’ Gains Approval,” The Australian, May 29, 2009, accessed October 1, 2012, http://www.theaustralian.com.au/business/chinas-interest-in-arafura-resources-gains-approval/story-e6frg8zx-1225717726769.
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> ([24.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-436)) [Seaman, “Rare Earths and Clean Energy.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-333)
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> ([25.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-437)) Jijo Jacob, “China Tightens Grip on Rare Earths Supply,” International Business Times, September 27, 2011, accessed May 21, 2012, http://www.ibtimes.com/china-tightens-grip-rare-earths-supply-318698.
>
> ([26.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-438)) “Highlights of Proposals for China’s 13th Five-Year Plan,” Xinhuanet, English.news.cn, November 4, 2015, accessed January 3, 2016, [http://news.xinhuanet.](http://news.xinhuanet.com/english/photo/2015-11/04/c_134783513.htm)[]com/english/photo/2015-11/04/c_134783513.htm; Wendy Hong, Denise Cheung, and David Sit, “China’s 13th Five-Year Plan (2016–2020):Redefining China’s Development Paradigm under the New Normal,” Fung Business Intelligence Centre, November 2015, accessed January 4, 2016, https://www.fbicgroup.com/sites/default/files/China%E2%80%99s%2013th%20Five-Year%20Plan%20(2016-2020)%20Redefining%20China%E2%80%99s%20development%20paradigm%20under%20the%20New%20Normal.pdf.
>
> ([27.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-439)) “Renewables 2017, Global Status Report,” Renewable Energy Policy Network for the 21st century (REN21), 2017, accessed June 25, 2017, http://www.ren21.net/wp-content/uploads/2017/06/17-8399_GSR_2017_Full_Report_0621_Opt.pdf.
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> ([28.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-440)) “China Announces Green Targets,” United Press International, accessed May 21, 2012, http://www.upi.com/Business_News/Energy-Industry/2011/03/07/China-announces-green-targets/33531299517620/.
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> ([29.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-441)) “Renewables 2017, Global Status Report.”
>
> ([30.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-442)) Li Junfeng, Cai Fengbo, et al., “2014 China Wind Power Review and Outlook,” Chinese Renewable Energy Industries Association (CREIA), Chinese Wind Energy Association (CWEA), Global Wind Energy Council (GWEC) accessed May 5, 2015, [http://www.gwec.net/wp-content/uploads/2012/06/2014DDD告2英文-20150317.pdf](http://www.gwec.net/wp-content/uploads/2012/06/2014DDD%E5%91%8A2%E8%8B%B1%E6%96%87-20150317.pdf).
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> ([31.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-443)) “Renewables 2017, Global Status Report”; Pierre Tardieu and Iván Iván Pineda, “Wind in Power: 2016 European Statistics,” February 2017, https://windeurope.org/wp-content/uploads/files/about-wind/statistics/WindEurope-Annual-Statistics-2016.pdf.
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> ([32.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-444)) Jost Wubbeke, “Rare Earth Elements in China: Policies and Narratives of Reinventing an Industry,” Resources Policy 28 (2013): 384–94.
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> ([33.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-445)) “Canadian Firms Step Up Search for Rare-Earth Metals,” New York Times, September 9, 2009, accessed May 21, 2012, http://www.nytimes.com/2009/09/10/business/global/10mineral.html.
>
> ([34.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-446)) “China Cuts Rare Earth Export Quota, May Cause Dispute,” Bloomberg.com, July 9, 2010, accessed May 15, 2012, http://www.bloomberg.com/news/articles/2010-07-09/china-reduces-rare-earth-export-quota-by-72-in-second-half-lynas-says.
>
> ([35.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-447)) USGS, “Rare Earths,” January 2012, accessed May 21, 2012, http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/mcs-2012-raree.pdf.
>
> ([36.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-448)) [USGS, “Rare Earths.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-511)
>
> ([37.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-449)) Gareth Hatch, “The First Round of Chinese Rare-Earth Export-Quota Allocations for 2012,” Technology Metals Research, December 28, 2011, accessed October 1, 2013, http://www.techmetalsresearch.com/2011/12/the-first-round-of-chinese-rare-earth-export-quota-allocations-for-2012/.
>
> ([38.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-450)) Hatch, “First Round.”
>
> ([39.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-451)) According to a recent article published in the China Daily, the Chinese government is “encouraging” companies across nine critical sectors in the Chinese economy to merge. Rare earths is one of those sectors.Wei Tian, “Ministry Proposes More Mergers in Key Industries,” China Daily, January 23, 2013, accessed February 17, 2013, http://www.chinadaily.com.cn/m/wudang/2013-01/23/content_16160776.htm.
>
> ([40.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-452)) According to the China Daily, “In the rare earth industry, Baotou Steel can produce over 7,000 tons of oxide converted hydrometallurgy rare earth product, and 80 varieties and 200 specifications of rare earth products. Baotou Steel can produce 26 varieties and 28 specifications of metallurgical coke and coking by-products.” See,“Baotou Iron and Steel Group (Baotou Steel),” China Daily, accessed February 17, 2013, http://www.chinadaily.com.cn/business/2006-11/15/content_734141.htm.
>
> ([41.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-453)) Zhang Qi, “Bigger Say Set on Rare Earths Market,” China Daily, August 10, 2010, accessed March 2, 2012, http://www.chinadaily.com.cn/china/2010-08/10/content_11125352.htm.
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> ([79.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-491)) Keith Bradsher, “Rare Earths Stand Is Asked of G-20,” New York Times, November 5, 2010, accessed May 10, 2012, http://www.nytimes.com/2010/11/05/business/global/05rarechina.html.
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> ([83.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-495)) “SETIS, Strategic Energy Technologies Information System.”
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> ([98.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-510)) “Monitoring Trends in Rare Metals,” Japan Oil, Gas and Metals National Corporation (JOGMEC), accessed May 2, 2012, http://www.jogmec.go.jp/english/activities/stockpiling_metal/monitoring.html.
>
> ([99.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-511)) Monika Chansoria, “Rare Earth Diplomacy: India and Japan Makes Strategic Partnership to Explore Stakes in Deep-Sea Mining,” Mail Online India, November 12, 2015, accessed January 5, 2016, http://www.dailymail.co.uk/indiahome/indianews/article-3316143/Rare-earth-diplomacy-India-Japan-makes-strategic-partnership-explore-stakes-deep-sea-mining.html.
>
> ([100.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-512)) Sonali Paul, “Japanese Shore Up Cash-Strapped Rare Earths Miner Lynas,” Reuters, March 13, 2015, accessed September 2, 2015, http://www.reuters.com/article/lynas-corp-debtrenegotiation-idUSL4N0WF2T820150313; [Humphries, “Rare Earth Elements.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-546)
>
> ([101.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-513)) “Sojitz and JOGMEC enter into Definitive Agreements with Lynas Including Availability Agreement to Secure Supply of Rare Earths Products to Japanese Market,” JOCMEG, March 30, 2011, accessed March 2, 2014, http://www.jogmec.go.jp/english/news/release/release0069.html.
>
> ([102.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-514)) “Trade Statistics,’ Trade Statistics of Japan Ministry of Finance, accessed October 8, 2016, http://www.customs.go.jp/toukei/srch/indexe.htm.
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> ([103.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-515)) Robert Looney, “Recent Developments on the Rare Earth Front,” World Economics 12, no. 1 (2011): 47–78.
>
> ([104.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-516)) [Looney, “Recent Developments on the Rare Earth Front.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-552)
>
> ([105.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-517)) Jay Solomon, “Clinton Presses Courts Beijing,” Wall Street Journal, October 29, 2010, accessed December 20, 2011, http://online.wsj.com/article/SB10001424052702303362404575579574019938714.html.
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> ([106.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-518)) “H. Rept. 111-644—RARE EARTHS AND CRITICAL MATERIALS REVITALIZATION ACT OF 2010,” webpage, accessed April 5, 2012, [https://www.congress.gov/congressional-report/111th-congress/house-report/644/1](https://www.congress.gov/congressional-report/111th-congress/house-report/644).
>
> ([107.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-519)) “Understanding Rare Earth Metals,” GE Lighting, accessed October 10, 2012, http://www.gelighting.com/na/business_lighting/education_resources/rare-earth-elements/downloads/GE_RareEarthFAQ_7.20.11.pdf.
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> ([108.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-520)) “Rare Earth Materials in the Supply Chain,” United States Government Accountability Office, GAO, April 1, 2010, accessed September 2, 2012, http://www.gao.gov/assets/100/96654.pdf.
>
> ([109.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-521)) In an ironic twist, the video game industry has picked up the threat of the rare earth crisis and has incorporated it in its plot by having the US and China fighting over rare earths. According to an article that ran in Time, “Call of Duty: Black Ops II, defined the year 2025 by a rampaging cult, a zombie apocalypse—and a war between the U.S. and China for control of the world’s supply of rare earths.” SeeAustin Ramzy, “Precious Holding,” Time, February 18, 2013, accessed February 18, 2013, http://www.time.com/time/magazine/article/0,9171,2135689,00.html.
>
> ([110.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-522)) The steps in the mining process as described in the Government Accountability Office briefing to Congress about rare-earth materials in 2010 are as follows:
>
> Steps in the Mining Process
>
> -
>
> ([•](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-522)) mining rare earth ore from the mineral deposit;
>
> -
>
> ([•](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-522)) separating the rare earth ore into individual rare earth oxides;
>
> -
>
> ([•](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-522)) refining the rare earth oxides into metals with different purity levels;
>
> -
>
> ([•](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-522)) forming the metals into rare earth alloys; and
>
> -
>
> ([•](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-522)) manufacturing the alloys into components, such as permanent magnets, used in defense and commercial applications.
>
> “Rare Earth Materials in the Defense Supply Chain,” Government Accountability Office, April 1, 2010, accessed May 21, 2012, http://www.gao.gov/assets/100/96654.pdf.
>
> ([111.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-523)) “Press Release from Senator Murkowski,” Technology & Rare Earth Metals Conference, March 23, 2012, accessed July 1, 2017, http://www.tremcenter.org/index.php?option=com_content&view=article&id=528:press-release-%20from-senator-murkowski&catid=105:latest-news&Itemid=476.
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> ([112.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-524)) [US Department of Energy, “Critical Materials Strategy.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-355)
>
> ([113.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-525)) “Rare Earths Supply-Chain Technology and Resources Transformation Act of 2010 (2010—H.R. 4866),” GovTrack.us, accessed May 20, 2012, https://www.govtrack.us/congress/bills/111/hr4866.
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> ([114.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-526)) “Rare Earths Supply Technology and Resources Transformation Act of 2010 (2010—S. 3521),” GovTrack.us, accessed September 29, 2016, https://www.govtrack.us/congress/bills/111/s3521.
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> ([115.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-527)) Rare Earths and Critical Materials Revitalization Act of 2010 (2010—H.R. 6160).
>
> ([116.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-528)) [US Department of Energy, “Critical Materials Strategy”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-355);“Energy Critical Elements Renewal Act of 2011 (2011—H.R. 952),” GovTrack.us, accessed May 20, 2012, https://www.govtrack.us/congress/bills/112/hr952.
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> ([117.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-529)) H.R.4883—National Rare-Earth Cooperative Act of 2014, accessed December 2, 2015, https://www.congress.gov/bill/113th-congress/house-bill/4883.
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> ([118.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-530)) H.R. 761 (113th): National Strategic and Critical Minerals Production Act of 2013, https://www.govtrack.us/congress/bills/113/hr761/text.
>
> ([119.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-531)) National Strategic and Critical Minerals Production Act of 2015 (H.R. 1937), accessed September 20, 2016, https://www.govtrack.us/congress/bills/114/hr1937.
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> ([120.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-532)) Statement of Administration Policy, H.R.1937—National Strategic and Critical Minerals Production Act of 2015, Executive Office of the President, Office of Management and Budget, October 20, 2015, https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saphr1937r_20151020.pdf.
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> ([121.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-533)) [US Department of Energy, “Critical Materials Strategy.”](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#oso-9780190670931-miscMatter-8-bibItem-355)
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> “Ames Laboratory to Lead New Research Effort to Address Shortages in Rare Earth and Other Critical Materials,” US Department of Energy, January 9, 2013, accessed January 27, 2013, http://energy.gov/articles/ames-laboratory-lead-new-research-effort-address-shortages-rare-earth-and-other-critical.
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> ([123.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-535)) “Ames Laboratory to Lead New Research Effort to Address Shortages in Rare Earth and Other Critical Materials.”
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> ([124.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-536)) “Annual Report-August 2016,” Critical Materials Institute-US Department of Energy, August 2016, accessed October 1, 2016, https://cmi.ameslab.gov/sites/default/files/cmi-annual-report-2016.pdf.
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> ([125.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-537)) “Reconfiguration of the National Defense Stockpile (NDS),” Report to Congress, April 2009, accessed April 1, 2012, http://www.acq.osd.mil/mibp/docs/nds_reconfiguration_report_to_congress.pdf.
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> ([126.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-538)) “Reconfiguration of the National Defense Stockpile (NDS).”
>
> ([127.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-539)) Shields and Šolar, “Responses to Alternative Forms of Mineral Scarcity,” in Dinar, Beyond Resource Wars, 254.
>
> ([128.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-540)) “Report of Meeting: Department of Defense Strategic Materials Protection Board,” U.S. Department of Defense, December 12, 2008, accessed May 10, 2012, http://www.acq.osd.mil/mibp/docs/report_from_2nd_mtg_of_smpb_12-2008.pdf.
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> ([129.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-541)) Valerie Bailey Grasso, “Rare Earth Elements in National Defense: Background, Oversight Issues, and Options for Congress,” Congressional Research Service, September 5, 2012, accessed January 21, 2013, http://www.fas.org/sgp/crs/natsec/R41744.pdf.
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> ([130.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-542)) “Press Release,” Strategic Materials Advisory Council, March 21, 2013, accessed April 10, 2013,;“2030 Climate & Energy Framework—European Commission,” accessed September 30, 2016, http://ec.europa.eu/clima/policies/strategies/2030/index_en.htm.ttp://www.strategicmaterials.org/2013/03/21/strategic-materials-advisory-council-cautions-dod-against-stockpiling-chinese-rare-earths/.
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> ([131.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-543)) “Mineral Commodity Summaries,” USGS, January 2016, accessed May 20, 2016, https://minerals.usgs.gov/minerals/pubs/mcs/2016/mcs2016.pdf. As the book is going to press, it appears that the Defense Logistics Agency has begun to respond to the risk of potential shortages of rare earths. According to the 2017 USGS report The Defense Logistics Agency acquired 8.8 tons of yttrium oxide and planned to add an unspecified quantity of dysprosium metal with a ceiling acquisition of 0.5 tons.“Mineral Commodity Summaries,” US Geological Survey, January 2017, accessed June 20, 2017, https://minerals.usgs.gov/minerals/pubs/mcs/2017/mcs2017.pdf.
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> ([132.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-544)) “Rare Earth Materials: Developing a Comprehensive Approach Could Help DOD Better Manage National Security Risks in the Supply Chain” (report to Congressional Committees, United States Government Accountability Office, February 2016), accessed March 1, 2016, http://www.gao.gov/assets/680/675165.pdf.
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> ([133.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-545)) “Rare Earth Materials: Developing a Comprehensive Approach Could Help DOD Better Manage National Security Risks in the Supply Chain.”
>
> ([134.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-546)) “Executive Order—National Defense Resources Preparedness,” Whitehouse.gov, March 16, 2012, https://www.whitehouse.gov/the-press-office/2012/03/16/executive-order-national-defense-resources-preparedness.
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> ([135.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-547)) “US Imposes Anti-Subsidy Taxes on China’s Solar Panels,” NDTV, March 3, 2012, accessed May 10, 2012, http://english.ntdtv.com/ntdtv_en/news_china/2012-03-21/us-imposes-anti-subsidy-taxes-on-china-s-solar-panels.html#video_section; President Barack Obama, Executive Order, National Defense Resources Preparedness, 2012, http://www.whitehouse.gov/the-press-office/2012/03/16/executive-order-national-defense-resources-preparedness;Diane Cardwell, “China’s Feud with West on Solar Leads to Tax,” New York Times, July 18, 2013, accessed March 20, 2014, http://www.nytimes.com/2013/07/19/business/energy-environment/chinas-feud-with-west-on-solar-leads-to-tax.html?_r=0.
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> ([136.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-548)) PresidentObama, “The State of the Union Address,” White House.gov, February 12, 2013, accessed February 18, 2013, http://www.whitehouse.gov/photos-and-video/video/2013/02/12/2013-state-union-address-0#transcript.
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> ([138.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-550)) Jean-Marc F. Blanchard, “The Dynamics of China’s Accession to the WTO: Counting Sense, Coalitions and Constructs,” Asian Journal of Social Science 41, no. 3–4 (2013): 263–86, doi:10.1163/15685314-12341303.
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> ([139.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-551)) Xiaohui Wu, “No Longer Outside, Not Yet Equal: Rethinking China’s Membership in the World Trade Organization,” Chinese Journal of International Law 10 (2011): 1–49.
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> ([140.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-552)) World Trade Organization, “WTO Successfully Concludes Negotiations on China’s Entry” (press release 243, WTO, Geneva, Switzerland, September 17, 2001) accessed December 2, 2014, https://www.wto.org/english/news_e/pres01_e/pr243_e.htm.
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> ([142.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-554)) Xiaojun Li, “Understanding China’s Behavioral Change in the WTO-Dispute Settlement System: Power, Capacity, and Normative Constraints in Trade Abjudication,” Asian Survey 52, no. 6 (2012): 1111–137.
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> ([143.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-555)) Kong Qingjiang, “China in the WTO and Beyond: China’s Approach to International Institutions,” Tulane Law Review 88 (2014): 959.
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> ([144.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-556)) Matthew Kennedy, “China’s Role in WTO Dispute Settlement,” World Trade Review 11, no. 4 (2012): 555–89.
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> ([145.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-557)) Evan S. Medeiros and M. Taylor Fravel, “China’s New Diplomacy,” Foreign Affairs (November/Decembeer, 2003), 22–35;Samuel S. Kim, “International Organizations in Chinese Foreign Policy,” ANNALS of the American Academy of Political and Social Science 519, no. 1 (January 1, 1992): 140–57;Samuel S. Kim, “China’s International Organizational Behaviour,” in Chinese Foreign Policy: Theory and Practice, ed. Thomas W. Robinson and David Shambaugh (Oxford: Clarendon Press, 1994), 401, 419. Kim argues that China extracts maximum benefits from nuclear disarmament treaties, but has not disarmed itself and thus assumes minimal obligations. See alsoPitman B. Potter, “China and the International Legal System: Challenges of Participation,” China Quarterly 191 (September 2007): 699, 701. Pitman argues that China selectively incorporates international norms most conducive to its economic growth and the preferences of its elites.
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> ([146.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-558)) Doug Palmer and Sebastian Moffett, “U.S., EU, Japan take on China at WTO over Rare Earths,” Reuters, March 13, 2012, May 11, 2012, http://www.reuters.com/article/2012/03/13/us-china-trade-eu-idUSBRE82C0JU20120313.
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> ([147.](https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190670931.001.0001/oso-9780190670931-chapter-5#ref_oso-9780190670931-miscMatter-8-note-559)) Gareth Hatch, “The WTO Rare Earths Trade Dispute: An Initial Analysis,” Technology Metals Research (TMR), March 28, 2012, accessed May 11, 2012, http://www.techmetalsresearch.com/2012/03/the-wto-rare-earths-trade-dispute-an-initial-analysis/.
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