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Rare Earth Elements and National Security
October 17, 2014
- Report
Overview
Eugene Gholz analyzes the economic and security consequences of China's central position in the global rare-earths market. He discusses the evolution of the rare-earths market, which is critical to many defense, energy, and other high-tech products, and potential vulnerabilities posed to global trade resulting from China's near-monopoly of the industry.
Gholz explains why the alleged 2010 Chinese embargo of the market, which highlighted the prominence of rare earths, did not exact a greater cost on countries with rare-earth dependent supply chains, such as Japan and the United States, citing supply growth opportunities and administrative difficulties, as well as real-time adjustments in the global market. Gholz also examines the evolution of Chinese influence since 2010, particularly in light of capital investment and technological advances that have made non-Chinese producers more competitive.
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Based on his analysis, Gholz provides lessons to policymakers facing future raw materials threats, arguing that dependence on imported rare-earth products brings less national security risk than many have feared.
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