DIIG Current Issues No. 22: Rare Earth Elements

A Wrench in the Supply Chain?

On 23rd September 2010, exports of rare earth elements (REEs) from China to Japan apparently stopped  due to a dispute over maritime boundaries. This use of economic leverage to influence policy raised concerns about the impact of China’s strategic hold on these precious metals. REEs have long been considered the “enhancers” of global products and are used to manufacture defense and commercial high-technology items. Their availability today, however, could be jeopardized since China controls over 97 percent of their production and refinement. The U.S. Magnetic Materials Association (USMMA) cites this problem as a silent crisis to the industry’s on-time acquisition of critical supplies. This Current Issue will examine supply and production, defense-related issues, and policy options related to REEs.