China's stranglehold on rare metals

China is now the world's dominant supplier of an obscure group of minerals vital to US industry. Called 'rare earth' metals, they could join oil as an emerging-market economic weapon as China chokes supply to suit its own ends. Eoin Gleeson examines the sector, and picks one stock to gamble on.

China's proposals for a new world currency to replace the dollar have drawn a lot of attention in recent weeks. But the Americans should be more concerned about another development that's largely been ignored. It seems that after 15 years of fighting tooth and claw, China is now the world's dominant supplier of an obscure group of minerals called rare earth metals.

Why should that worry America? Because these metals are vital to US industry. You'll find them in almost every consumer technology staple from iPods to BlackBerrys and flat-screen televisions. You'll also find them in wind turbines, solar panels and the super-magnets that kickstart car engines. With 90% of the world's rare earth metals now under China's control, it could soon be impossible to produce a wind turbine or electric vehicle without Beijing's blessing. "The world has to wake up and start thinking of this group of elements as the 'technology metals', without which there will be no technology," says metals analyst Jack Lifton.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.