- By Blake Hounshell
Blake Hounshell is managing editor at Foreign Policy, having formerly been Web editor. Hounshell oversees ForeignPolicy.com and has commissioned and edited numerous cover stories for the print magazine, including National Magazine Award finalist "Why Do They Hate Us?" by Mona Eltahawy. He also edits The Cable, FP's first foray into daily original reporting, and was editor of Colum Lynch's Turtle Bay, which in 2011 won a National Magazine award for best reporting in a digital format.
Blake joined Foreign Policy in 2006 after living in Cairo, where he studied Arabic, missed his Steelers finally win one for the thumb, and worked for the Ibn Khaldun Center for Development Studies. Blake was a 2011 finalist for the Livingston Awards prize for young journalists for his reporting on the Arab uprisings, and his Twitter feed was named one of Time magazine's "140 Best Twitter Feeds of 2011." Under his leadership, in 2008, Passport, FP's flagship blog, won Media Industry Newsletter's "Best of the Web" award in the blog category. Along with Elizabeth Dickinson, he edited Southern Tiger: Chile's Fight for a Democratic and Prosperous Future, the memoirs of former Chilean president Ricardo Lagos, published by Palgrave Macmillan in 2012.
A graduate of Yale University, Blake speaks mangled Arabic and French, is an avid runner, and lives in Washington with his wife, musician Sandy Choi, and their toddler, David. Follow him on Twitter @blakehounshell.
At one point in Diamonds Are Forever, the 1971 James Bond thriller, Agent 007 asks the villain, who has covertly amassed a stockpile of valuable gems: "What do you intend to do with those diamonds?"
"An excellent question," the evil criminal mastermind, Ernst Stavro Blofeld, replies with a diabolical grin. "And one which will be hanging on the lips of the world quite soon." Bond gets his answer quickly enough: a satellite-rigged laser powerful enough to hold the world hostage.
Hu Jintao is no Blofeld, but if Chinese leaders are trying to provide a readymade plot for the next Bond film, they may have succeeded with today’s news that China has quietly begun blocking Japan’s supply of rare earth elements, used in everything from Priuses and iPads to wind turbines, oil refineries, and smart bombs.
Such a move, which Chinese officials have denied, would represent a sharp, sudden escalation in the ongoing diplomatic dispute between China and Japan over an island chain in the East China Sea. Real or imagined, the threat is credible, and it’s been a long time coming.
In 1992, Deng Xiaoping, the late Chinese leader, reportedly declared, "There is oil in the Middle East; there is rare earth in China." His comment spawned a crash program to develop and exploit China’s vast reserves of the metals, estimated at 57 percent of the world total. It wasn’t easy: Though most of the 17 elements known as rare earth minerals (numbers 57 through 71, as well as a couple others, on the periodic table) are not actually all that rare, they are difficult and costly to extract. Seven years after Deng’s remarks, his successor Jiang Zemin ordered the Chinese state to go a step further. "Improve the development and applications of rare earth," he instructed, "and change the resource advantage into economic superiority."
If anything, Deng was too generous to the Middle East, which today pumps less than half the world’s oil and still relies heavily on Western expertise. Today, China has become dominant in rare earths in ways the Saudi royal family could only dream, driving others out of the business, and now controls as much as 97 percent of the global market. According to a recent paper by Cindy Hurst, an analyst for the U.S. Army’s Foreign Military Studies Office, that figure may even understate China’s supremacy: Beijing has also poured untold millions into basic and applied research on rare earth elements, and runs two state laboratories employing hundreds of scientists devoted exclusively to the subject. The world’s only two journals dedicated to rare earth metals are in Chinese.
This isn’t the first time rare earths have been big news. Last year, Britain’s Daily Telegraph reported that Beijing was considering altogether banning its exports of the stuff — a story that provoked alarm among high-tech manufacturers and Pentagon planners. Any such ban has yet to be imposed, but China has actually been tightening its chokehold over the strategic commodities for several years now, preferring to use the minerals in its own factories in the hopes of moving up the supply value chain. Chinese premier Wen Jiabao hinted at the thinking in a forum Wednesday with American business leaders. "An iPod is sold at $299, and China in the manufacturing link will only get $6 for it," he complained. As of 2008, China was consuming more than half of the rare earth elements it produced, while smugglers also absconded with a significant chunk.
Initiatives are now underway to revitalize the industry outside China — a business once dominated by the United States. In April, Molycorp Minerals, a U.S. firm based in Colorado, announced a $500 million plan to refurbish Mountain Pass, a California mine that, before closing in 2002 due to low-cost Chinese competition and environmental concerns, had once been the world’s leading producer of rare earth metals (ironically, China nearly acquired Mountain Pass in 2005 as part of its failed bid for Unocal, the U.S. energy company that then owned the mine).
South African, Canadian, and Australian companies are all racing to develop their own mines, though as the New York Times‘ Keith Bradsher notes, these plans are fraught with risk and questionable economic rewards. "One potential threat," Hurst warns, "is that, while China’s reduction in export quotas is currently causing prices to go up, if China were to turn that around and bring prices back down, this could potentially put these and other companies out of business even before they become fully operational."
There is also talk of setting up a U.S. stockpile for rare earth elements, as South Korea and Japan have already done, but any such plans for an American "strategic metals reserve" remain embryonic. It may be time to get cracking: According to the latest projections by Dudley Kingsnorth, an industry consultant, China could be consuming nearly its entire annual production of rare earth elements by as early as 2014.
Some rare earth elements matter more than others. Among the most important is dysprosium, a silky, silvery metal used to make hybrid motors, lasers, nuclear reactors, and computer hard drives. Ninety-nine percent of it is produced in China through a laborious, expensive process (appropriately enough, the element’s name is derived from a Greek word meaning "difficult to get at"). Mountain Pass doesn’t contain significant amounts of dysprosium, which is critical for the so-called permanent magnets used in many critical components of American defense systems, such as precision-guided munitions — and Chinese officials have warned that their supplies are running low.
All this has many in the U.S. government and the defense industry worried. An April 2010 report by the U.S. General Accountability Office estimated that it will take as many as 15 years before the United States can rebuild its domestic rare earths industry — assuming a number of legal, technical, and financial hurdles can be overcome. The Pentagon is studying the military’s vulnerability, and is expected to come out with its initial findings later this month — but the GAO has already found "a wide variety of defense systems and components," including the M1 A2 Abrams tank, "that are dependent on rare earth materials for functionality and are provided by lower-tier subcontractors in the supply chain." The Department of Energy is working on its own plan, and the House Armed Services Committee has scheduled a hearing on the issue.
In the meantime, Hu Jintao may not have a space laser pointed at our heads, but if you see him fighting the urge to pet a white cat or curl his pinkie finger to his lips, you’ll know why.