House's Markey Asks Locke, Chu, Gates to Probe China's Rare Earth Policies

U.S. Representative Edward Markey asked the Obama administration to report on China’s curbs on the export of rare-earth elements and ramifications for the military and U.S. clean-energy producers.

Markey, the chairman of the House Select Committee on Energy Independence and Global Warming, said in a letter today to four Cabinet members that he is concerned by reports China is imposing additional restrictions on rare-earth materials.

“I am troubled by this recent turn of events,” said Markey, a Massachusetts Democrat. Dependence on China for rare earths and that country’s “willingness to use this reliance for leverage in wider international affairs poses a potential threat to American economic and national security interests,” he said.

The letter was sent to Energy Secretary Steven Chu, Defense Secretary Robert Gates, Commerce Secretary Gary Locke and U.S. Trade Representative Ron Kirk. The Defense Department is preparing a report on the military risks from limits on rare- earth exports.

Quotas imposed by China, which produces more than 90 percent of the world’s rare earths, have been faulted by U.S. lawmakers and officials in Japan and Germany. China in July reduced by 72 percent its second-half export quota for the minerals, 17 chemically similar metal elements, such as lanthanum and neodymium, used in making powerful magnets and radar equipment. It is now further restricting exports, according to industry participants.

Photographer: Joshua Roberts/Bloomberg

Representative Edward Markey, a Democrat from Massechusetts. Close

Representative Edward Markey, a Democrat from Massechusetts.

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Photographer: Joshua Roberts/Bloomberg

Representative Edward Markey, a Democrat from Massechusetts.

China started to rein in mining of rare earths in May 2009, setting production quotas to help bolster prices. The caps and subsequent export restrictions accomplished that goal.

Prices Soar

Prices for cerium oxide, used for polishing semiconductors needed to make electronic devices operate, soared sevenfold in the past six months and other elements have more than doubled, according to Metal-Pages Ltd. in London, which tracks prices.

Markey asked Chu which of the 17 elements are being restricted by China and “to what extent is the U.S. clean- energy sector reliant” on those imports. He also asked Gates what impact those curbs on trade would have on defense application.

President Barack Obama’s spokesman said yesterday the National Security Council staff is looking into reports that China is blocking shipments. “They’ve seen the reports,” press secretary Robert Gibbs told reporters traveling with Obama on a West Coast campaign trip. “They’re looking into them but don’t have anything they could confirm about those reports.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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