The Chinese procurement question Is it overblown?

Oct 01, 2010 | 08:21 AM |

Rare earths are a hot topic in Washington. Almost everyone agrees that the United States needs a dedicated supply of rare earths for high-tech national security and defense systems. But not everyone is in agreement on how to make it happen.

Whether the U.S. Defense Department should take a bottom-up approach of stockpiling raw materials by paying market rates in places like China, or look more downstream and invest in a domestic supply chain that can produce value-added products are two points of contention.

Jeff Green, president of J.A. Green & Co. LLC, Washington, and former counsel to the House Armed Services Committee, warned of impending shortages of rare earth materials, which are needed to support domestic manufacturing of "green" technologies as well as military applications. "There are clear projections that Chinese consumption is going to exceed their supply," said Green, who noted that China controls about 97 percent of global rare earths production.

China announced earlier this year it would cut rare earth export quotas by nearly 72 percent in the second half of the year. China's Ministry of Commerce said foreign shipments will be capped at 7,976 tonnes vs. 28,417 tons in the same period last year.....