A critical component of today’s high tech and energy consumptive society is controlled by one of America’s largest creditors, China. High guass rare earth magnets are used in disc drives, generators, motors and US weapons guidance systems and energy.
Rare-earth elements were obscure until the past year, when China, their primary producer, tightened export quotas on the materials. Rare-earth elements are used in a multitude of technologies, including magnets for wind turbines, hybrid-car batteries, fluorescent lightbulbs, and hard drives.
China is not the only country with significant reserves of these valuable materials; in fact, the U.S. was their primary producer until the 1990s, when the Chinese began undercutting the Americans on cost. Now companies in the U.S. and Australia are ramping up production at two rich sites for rare earths, but the process will take years. Getting from rocks to the pure metals and alloys required for manufacturing requires several steps that U.S. companies no longer have the infrastructure or the intellectual property to perform.
Recently, China has been using the monopoly it acquired with the assistance of first the Clinton administration followed by the Bush administration explained by author, David Cay Johnston.
The loss of rare earths magnetic technology in America cited in the article came about because the Chinese military, using American fronts, bought up Magnequench (which GM owned), GA Powders and others. This technology was developed with help from taxpayer dollars.
As explained in chapter 4 of my 2008 bestseller on stealth subsidies to the super-rich, FREE LUNCH:
“…a pair of Chinese companies — San Huan New Material High-Tech Inc. and China National Non-Ferrous Metals. Both firms were partly owned by the Chinese government. The heads of these two Chinese companies are the husbands of the first and second daughters of Deng Xiaoping, who at the time was the paramount leader of China.”
Permission for the Chinese to buy neodymium magnet companies was granted by the Clinton administration, but was contingent on the technology remaining in the United States. The Bush administration then allowed the removal of all the equipment and intellectual property to China.
Sen. Bayh of Indiana, the GAO and me, then NYTimes investigative reporter, were unable to get any response from the Bush administration to questions about this change in policy, which had important economic and military implications.
It is rather incongruous that the very administration arguing they were ‘keeping America safe’ exported a technology so critical to national security.
The critical issue here, is the use of taxpayer money to develop a technology which a private company then sold to a foreign country and the mishandling of domestic, publicly held resources. Today, even though the US has ample domestic supplies of rare earths, we no longer have the processing capability to capitalize on them, courtesy of our government.
We are faced with critical resource decisions every day in this country and right here in Coos County. This isn’t a partisan issue. As illustrated above, both Democrats and Republicans can act irresponsibly when corporate interests supersede public interest. This is a matter of learning to distinguish between corporate welfare and the wise investment of public dollars.
Favoring business interests with the mistaken belief that quarterly profits benefit the collective good while ignoring the long term consequences, as with Magnequench, can and does have dire consequences for future generations. Vote for people with a long view that weigh all the consequences not just the next quarterly statement.
