Monday, August 2, 2010
Legitimate Concerns on Rare Earth Minerals and Beyond
Paul Denlinger is spot on in calling the ability of Molycorp Minerals to get up and running in order to end America's utter dependence on China for rare earth minerals as a (one might say THE) test case for whether the US is serious about preventing a continuation of China's current near monopoly on these resources (link here). One might go further and state that this is a test case for the American government's resolve in turning around the severe structural weakness of the American economy more generally (i.e. too much consumption, not enough investment and thus not enough production) amidst an international economy where other major players predicate their economic strategies on American excessive consumption (hello China, Germany and Japan) as former World Bank economist and FT columnist, Martin Wolf, has repeatedly emphasized over the past year or so. Beyond the question of US determination to fix these problems is the specific issue of how quickly the dependence on China for rare earth minerals can be terminated. Denlinger's states that opening a few mines would end dependence, and this may be true, but opening a few of these mines might take a long time. The Government Accounting Office suggests it might take up to 15 years to end rare earth mineral dependence on China (link here).