Heard on the Street: The U.S. dependence on China’s rare-earth industry is worrying—just not as much as it looks
Rare earths such as lanthanum aren’t particularly rare—but mining and processing them is heavily polluting, one reason mining originally moved to China. Photo: david gray/Reuters By Nathaniel Taplin Updated June 6, 2019 7:54 a.m. ET The supply of an essential high-tech input, which one side completely dominates, is being dragged into the U.S.-China trade fight. Both sides see the imbalance as a critical source of leverage.
Beijing would like U.S. negotiators to believe this could be a life-or-death issue for U.S. military or technology firms. That is hardly the case, but a ban could cause disruption. On top of that, a lot of U.S. demand isn’t strategic in nature, but stems from mundane applications such as gasoline refining, where they are used as catalysts. Catalysts were 60% of U.S. demand last year. Refiners can either pay up or forgo using catalysts, without too much drama. The Department of Defense, meanwhile, might find it harder to substitute or cut out rare-earth usage, but it accounts for about 1% of U.S. demand, according to a 2016 government report.