China controls as much as 80% of the world's rare earth mineral supply. Image: Facebook

The Trump administration has finally awakened to the frightening fact, that China controls 80% of America’s rare earth mineral supply — a disturbing reality that the Pentagon wants to end once and for all.

A day prior to being airlifted to Walter Reed hospital, US President Donald Trump signed an executive order declaring a national emergency in the mining industry — an action aimed at boosting domestic production, Reuters reported.

Rare earths are an obscure group of 17 minerals used to build a range of goods including weapons and consumer electronics. There is no known substitute for them.

While the United States used to be the leading producer of the minerals, China has used its heft in the industry to its advantage in the trade dispute between the two world leaders.

Last year, Trump told the US Defense Department to find better ways to procure samarium cobalt rare earth permanent magnets, which are often found in precision-guided missiles, smart bombs and military jets.

Two Republican senators have introduced separate mineral-related legislation in the past year or so that have not passed so far.

Despite their name, most rare earth elements are relatively abundant.

The process of mining rare earths and transforming them into usable materials is, however, expensive and damaging to the environment, China Power online reported.

For years, Beijing exploited its relatively low-cost labor force and lax environmental laws to gain a competitive edge in the global market and become the leading supplier of rare earths.

It now China controls 90% of global rare earth production.

According to China’s General Administration of Customs, China exported 45,552 metric tons of rare earths worth US$398.8 million in 2019.

The vast majority of these exports went to the world’s major economic and technological powerhouses.

About 36% (by volume) went to Japan, making it the top destination of Chinese rare earths. The US was a close second, taking in 33.4% of Chinese exports.

Alongside the Netherlands (9.6%), South Korea (5.4%), and Italy (3.5%), these five countries imported a combined 87.8% of China’s rare earth exports.

China’s dominance in the rare earth industry is the result of decades of targeted industrial policies aimed at leapfrogging other nations.

In recent years, Beijing has also looked to reform China’s rare earth industry to enhance efficiency, better protect the environment, and crack down on illegal mining.

Pini Althaus, CEO of USA Rare Earth called the executive order “an important step” in ensuring the U.S. is free from price manipulation and other aggressive economic maneuvers, particularly those perpetrated by China, Forbes reported.

“It also addresses supply chain vulnerabilities based on our ability to source the critical materials we need for defense and manufacturing,” says Althaus.

— with files from Reuters, China Power & Forbes

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