Digging Ourselves Out

I was reading a book about cyber warfare last week and I came across an interesting statement concerning non-battlefield warfare.  The book sites a Chinese official statement indicating that non-traditional warfare, such as economic disruption and control of rare earth metals (REMs), will be as important as battlefield warfare in any major war.  The book, and the Chinese statement, was published several years ago.  Is it surprising to find out that today the Chinese control a vast majority of the world’s rare earth element mining?

Why is the control of REMs so important?  Basically, the REMs are used for much of our advanced military weapons, such as nuclear weapons, cruise missiles, advanced electronics, and more. Non-military usage includes many consumer electronic devices and much of the green technologies.  By controlling the market, China has already reduced the supply of REMs available to the rest of the world and this has increased the overall cost for other countries by imposing taxes on the REMs.  A more sinister use of their control of the REMs market would be to shut off supply in the time of battlefield war.  Opposing countries would start having difficulty resupplying equipment and munitions lost and used during the conflict.

The name rare earth metal is something of a misnomer.  REMs are not really that rare.  The U.S. and Canada have a large supply of such elements, in the ground, if needed.  The problem is that it could take over a decade to startup a new mine and generate a significant output level.  Even reopening or expanding an existing mine will take years to produce significant quantities.

Regulation and restriction on mining in the U.S. makes it a long and expensive process for any company to do mining.  Even with China artificially increasing the cost of REMs, they are still cheap enough where U.S. mining still will not be profitable enough to invest in new REMs mining here. 

What can the U.S. do to address the current problem and protect ourselves against a future cutoff of supply?  Under the goal of national security, the U.S. needs to subsidize domestic mining of REMs so that companies can adhere to U.S. regulations while still being able to be profitable.  Mining regulations are needed to protect our environment for the long term.  China will eventually have to address their growing national pollution problem due to their lack of environmental protection. 

Now is the time to put money into mining.  According to a 2009 study of the effect of mining on the economy in 2007, almost 1.5 million direct and in-direct jobs are due to U.S. mining operations.  For every one mining job, there are 2.9 other jobs created that are needed to support the mining job.  In addition, mining jobs average annual wage is about 33% higher than the overall national average for all industrial categories.

I honestly do not believe that China is thinking about a battlefield war with the U.S. anytime soon.  I do believe that China has already shown that they are in an economic war with the west.  If China feels that it is in their long term interest to cripple the U.S. economy, by any means, they would do it in a heartbeat.  It might not be in China’s interest today, but what about ten years from now.  Since it could take us that long to be truly prepared, we need to start now.  In the end, it is a win-win for us.  By taking REMs off China’s list of possible threats, the U.S. stimulates the economy effectively with high value mining jobs while protecting national interests against already identified threats.