The trade war has begun. In response to U.S. trade policy, China has decided to halt the export of rare earth elements. So, what are rare earth elements?

Rare-earth elements are relatively scarce minerals such as niobium and yttrium.   Rare-earth elements are used in products like magnets, batteries and fluorescent light bulbs. It turns out that rare earth elements aren’t all that rare. The U.S. has millions of tons of rare earth elements.

Rare-earth elements tend to occur together, which means extracting them is relatively simple. However, rare-earth elements have similar properties and it is difficult to isolate them from one another. An expensive process is required to make these element usable without harming the environment. For instance, uranium is often extracted with rare-earth elements. These waste must be dealt with. China is not much worried about pollution control, so they have been able to undercut the market price and drive most producers out of the business.

A trade war will create a shortage of rare-earth elements and cause these products to rise in price. Mines can be re-opened but it will take years. Will the trade war last that long? Will the EPA keep us out of the market so other countries like Australia can fill the void?  This will create a quandary for the  Obama Administration. They want green jobs to dominate our recovery and rare-earth element mining could be considered a “green job” since they are used in so many high tech applications, but the over sight required to protect the environment could slow down the re-start process so that the window of opportunity closes before we make any headway.

Read more about rare-earth elements

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