Joe Biden’s policies increase U.S. dependence on China
At a time when the global supply of semiconductor chips is falling behind global demand, President Joe Biden is pushing heavily for massive changes to the U.S. economy that require near-geometric increases in our reliance on technologies that require chips and the rare-earth metals that make them work. Chinese President Xi Jinping could not have devised an American energy strategy more favorable to his nation.
Dr. Karen Clark, who has written extensively on natural resource crimes, warns that the Biden agenda, which appears on the surface to reduce U.S. dependency on fossil fuels, will instead create a near-total dependency on rare-earth metals and compounds from China.
Not only is the Middle Kingdom the world’s leading polluting nation, China’s regional aggression, its horrendous record on human rights, and its massive theft of intellectual property could create impassable obstacles (or demand U.S submission) to normal business operations. China could literally hold the United States hostage to its complete array of global demands. [Maybe that has already begun to occur.]
The Chinese, Clark contends, have made it national policy to capture the entirety of the rare-earth metals market, from extraction of raw ore through processing and manufacture of products using rare-earth metals. This concentrated effort makes China the kingmaker for 21st century technology, a position the U.S. might have held but for its penchant to regulate itself out of the mining and processing and manufacturing businesses.
While Americans first discovered and used rare-earth metals, the lure of cheap (often slave) labor and the loathing of “dirty” mining opened the door for the Chinese, who have dominated the rare-earth metals industry since the mid-1990s. Nearly all rare-earth metals processing – including of the rare-earth metals mined in the lone active U.S. operation – is done inside China. Any competitor nation will require massive subsidies just to overcome China’s dominance of the market and its ability to adjust its prices to eliminate competition.
The much-maligned Donald Trump recognized the threat of Chinese rare-earths dominance and issued an executive order declaring as a national emergency the need to beef up domestic mining and processing of rare-earth metals. How can the U.S continue to develop military technology independent of Chinese constraints without building at the least strategic stockpiles of the raw materials for so much of both military and civilian technologies?
The U.S under President Biden has quickly veered away from concerns about its military might, as evidenced by the embarrassing withdrawal from Afghanistan that left behind billions in new military hardware, the massive Bagram Air Force Base, and access to potentially trillions’ worth of Afghan lithium-containing ores. President Biden has also moved to shut down recently approved copper and other metal mines, a strong indicator that rare-earth mining will not be restarted as long as his party is in power (regardless of lip service to the contrary).
On top of its stranglehold on rare-earth metals, China also owns over a trillion dollars’ worth of U.S Treasury securities, which are payable upon demand. Yet the biggest obstacle to any future American energy independence is President Biden’s all-out war against fossil fuels (which ignores China’s heavy dependence on coal to power its minerals processing operations and much of its economy).
The war on fossil fuels will also make plastics more expensive. Plastics made from petroleum are used in the manufacture of wind turbine blades, electric (and other) vehicles, and literally thousands of other products. Replacing gasoline and natural gas with electricity to power vehicles, heat homes, and operate power plants (and downplaying nuclear and hydro) will require massive construction of wind turbines and solar arrays. China is also the world’s leading supplier of solar panels.
As if all this were not bad enough, the Biden-inspired inflation is just one of the factors that has resulted in skyrocketing world prices for many rare-earth metals. Nikkei is reporting that prices for neodymium and praesodymium, used in everything from wind turbines to electric vehicle motors to stereo speakers, have risen 74% over 2020 prices, and that prices for many other key materials have jumped by at least 50%.
Lithium prices are up 150%, copper is up 37%, and tin is almost 82% mor expensive than it was a year ago. Terbium oxide, used in LEDs, flat panel displays, and high-temperature fuel cells (and more), is up over 60%. Even aluminum prices are up over 55% – which adds to the cost of nearly every product that uses the lightweight metal.
Oddly, while it would seem that China is the beneficiary of these price hikes, the fact is that increased materials costs have begun to squeeze the profit out of long-term contracts Chinese companies had negotiated with business partners. Continuing losses could drive some of these firms out of business, further squeezing the semiconductor and related markets. The end result could be a worldwide inflation spiral that would doom international commitments to building a fossil fuel free future economy. It might even doom the Chinese economy.
There are two other options on the table. One is mining asteroids [NASA is actively pursuing this avenue] or maybe the moon for rare-earths and other needed metals. The other is nearly as fraught with uncertainties – extracting these valuable metals from deep under the oceans. Already there is a nascent deep-sea mining industry (not surprising, given that deep-sea oil and gas operations have been spreading like wildfire) which claims that deep-sea mining is much more friendly to the environment than land-based mining.
Marine and climate scientists, however, are not that sure. They point to a lack of real-world data on the deep sea that address the potential consequences for oceanic biodiversity and carbon sequestration of unearthing undersea rocks and hauling ore up through miles of ocean water to massive ships that would carry the ore landward for processing.
Hundreds of scientists, several conservation groups, and even some rare-earth-reliant manufacturers have called for a moratorium on deep-sea mining. Major corporations like BMW, Volvo Group, Samsung, and Google have pledged to abstain from sourcing deep-sea minerals.
But China, given its track record, is unlikely to forego the profits it could extract from the deep ocean. As reported in the Daily Mail, 23 of the 25 cities emitting the largest quantities of urban greenhouse gases (which collectively belch a whopping 52% of global urban greenhouse gases) are Chinese cities.
The Chinese are operating under the principle that the one willing to get dirty is most likely to dominate the prissy weaklings who proclaim their moral virtue while holding out their hands for free stuff. Only after they gain total dominance will they focus on such niceties.
Americans used to be like today’s Chinese – willing to do whatever it takes to forge a manifest destiny and lead the world. Now we cower at a bunch of Seventh Century barbarians. Worse, we don’t even prepare our young people for the Chinese century by teaching them Chinese in elementary school. Perhaps the only hope left is for the Chinese to overstep and stumble.
Duggan Flanakin is the Director of Policy Research at the Committee For A Constructive Tomorrow. A former Senior Fellow with the Texas Public Policy Foundation, Mr. Flanakin authored definitive works on the creation of the Texas Commission on Environmental Quality and on environmental education in Texas. A brief history of his multifaceted career appears in his book, “Infinite Galaxies: Poems from the Dugout.”