U.S. control of 'rare earth' minerals slipping

When China slashed export quotas of fundamental minerals in 2010, it awakened America to a danger that has been building for more than a decade, experts say.

Those minerals, called "rare earths," shape a modern nation's defense and economy.

Your iPhone and hybrid car won't work without them, nor will your laptop computer. The Pentagon needs them for its precision-guided "smart" bombs.

China has locked up the supply stripping the United States of its dominance.

U.S. lawmakers in both parties blame China's "mercantilist" policies state interference in international trade. Yet, the United States and other nations also were caught napping, according to members of Congress, lobbyists and industry experts.

Consider:

China produces 97 percent of the rare earths used in high-tech items such as fiber optics, flat-panel monitors and televisions, and electricity-generating wind turbines.

Through export policies and tariffs, China forces foreign companies to manufacture there in order to remain competitive. And where manufacturing goes, research and development often follow.

China dominates more than rare earths. It leads the United States (or even the rest of the world combined) in key elements such as germanium, indium, antimony, zinc, manganese, tungsten, magnesium, cadmium, pig iron, graphite and fluorspar.

Those materials, used to make alloys, feed China's surging steel industry. A decade ago, China and the United States produced roughly equal amounts of steel; in 2010, the United States produced about 90 million metric tons to China's 630 million.

China is acquiring even more foreign resources. While most of the world fell into recession in 2008, China went on a spending spree: It bought all or part of 184 foreign mining assets for $37.2 billion, according to the U.S. accounting firm Ernst & Young.

Recently, Shanghai Securities News reported that China may create a strategic stockpile of rare earths, tungsten, antimony, molybdenum, tin, indium, germanium, gallium, tantalum and zirconium.

In contrast, the United States began selling its reserves in the 1990s.

China has positioned itself to surpass the United States in purchasing-power parity a closely watched measure of an economy's real size next year, according to the Conference Board, a nonprofit international business association.