The life-size diorama at the Inner Mongolia Museum records the beginning of the story: Leading his ox-cart, a shepherd guides his family to a new life far from the grasslands of his people, a sacrifice for the glorious quest to make his nation a great power. Local newspapers were full of similar iconography as the new People’s Republic of China sought to secure its revolution with iron, steel and nuclear weapons. There were pictures of young ethnic-Han women who had arrived to map the resources of the region, and socialist-realist images of industrial workers driving back imperialism with their lathes and milling machines.
Last week, after China imposed new restrictions on the export of rare-earth elements—indispensable to make everything from electric-car motors, missile components and computer-chip fabrication machines—US President Donald Trump vowed to impose massive new counter-tariffs. He threatened to cancel an upcoming summit meeting with his counterpart, Xi Jinping.
The strange part of the story is this: The reason China ended up with a de facto monopoly on rare-earth is that the United States gifted it one. Even less known is the role India played in ensuring that the US was pushed to turn to China. As journalist Justin Rowlatt notes, the seventeen rare-earth minerals are not rare. Yet, misguided policies allowed them to become the cause of a geopolitical crisis.
Rare earths in the Cold War
From early in the 1950s, engineers in both the US and the Soviet Union realised that rare-earth elements offered a way to move beyond the technological cul-de-sac reached in aviation design at the end of World War II. Tungsten-iron alloys were unstable at the kinds of high temperatures jet aircraft and engines encountered, prone to corrosion, and heavy. Light alloys made with rare-earth metals offered a solution. Applications for rare-earths also emerged in radar, batteries, magnets, televisions and computer hard drives.
Like their counterparts in the West, Soviet engineers began to explore the new material. This led to cooperation to develop the Bayan Obo iron-thorium rare earth mine near the town of Baotou, in Inner Mongolia, beginning in 1951. From 1956, China became concerned that the Soviet Union was denying it nuclear-weapons related technologies, and set up its own programme under the eminent Peking University chemist Xu Guangxian.
The geographer Julie Klinger’s seminal work on rare earths shows the US made a similar outreach to India. Facing famine in the years after the Independence, India sought food aid from the United States. The government of President Harry Truman proposed turning a $190 million gift into a loan repayable with monazite, critical to America’s nuclear programme.
“India needs grain immediately; we have the grain,” influential Congressman John Vorys declared. “We need strategic materials from India over a period of years; India has those materials. We should make India a loan which can be repaid in strategic materials.”
Arguing that the conditionality would undermine Indian sovereignty, former Prime Minister Jawaharlal Nehru first responded by rejecting the proposal outright. Likely at the urging of nuclear-bomb-programme chief turned anti-nuclear activist Robert Oppenheimer, he then allowed some strategic materials to be exported, but not those which might be of use to the United States’ nuclear weapons programme. This meant thorium and monazite were off the table.
Then, an unexpected development freed the US from having to look for rare earths in far corners of the globe. In 1949, three prospectors sought uranium in the Clark Mountain Range in California, where miners had once risked their lives looking for gold, silver, copper, zinc, lead, and antimony. The uranium prospectors struck bastnaesite, which contains rare-earth elements used to make magnets in everything from speakers to mobile phones.
A gift to the People’s Republic
Ever since the late 19th century, prospectors had arrived from around the world, seeking their fortune in the mountains of California and Arizona. The risks were not small. In several cases, historian Lawrence Fong records, 10 Chinese prospectors were killed by native Americans, seen as “fine subjects for scalping, as their hair was shaved close to the crown of the head and then tied in a pigtail.” The Chinese miners also had to face intense racism. From 1882 on, Chinese labourers were formally barred from immigrating under new, race-based laws.
From 1951, the Mountain Pass mine began to become one of the world’s most important sources of rare-earth, soon supplying over 70 per cent of both American and global demand. The mine was acquired by petrochemical giant Unocal in 1977. There seemed to be no challenge to its dominance—but then, it suddenly choked and died.
Late in the 1960s, President Richard Nixon’s brother, Edward Nixon, a graduate of Duke University’s geological sciences programme, drove the creation of the powerful Environmental Protection Agency (EPA). As the leading consultant to American companies on environmental issues, he pointed out that all rare earth elements can cause organ damage if inhaled or ingested; Five—promethium, gadolinium, terbium, thulium, and holmium—were so toxic that they needed special handling.
Edward offered corporations a solution, which minimised the risk of lawsuits, and also dovetailed with his brother’s famous political rapprochement with China. Early in the 1980s, as Unocal’s rare-earth operations came under growing EPA scrutiny, he offered the company the means to ship ores to China for processing. Later, Edward’s companies arranged for the transfer of magnet production to China and organised the import of rare-earth oxides back into the United States.
For a time, this appeared to be a magical arrangement: American companies were freed of the dangers of engaging in life-threatening industrial processes, and could purchase cheap, rare-earth products from China. The Chinese, in turn, claimed in a 1979 paper acquired by the CIA that rare-earth processing consolidated the “socialist revolution.”
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The price of power
The people of Inner Mongolia paid a hideous price for this commercial success. The Baogang tailings dam, where effluents from rare-earth refining ran into, soon grew into a lake containing 200 million litres of radioactive slurry, Klinger records. Women workers in Baotou’s smelting plants were found by doctors to have significantly higher rates of complications in pregnancies, and their children of congenital birth defects. From 1990, disturbing evidence also began to emerge of high rates of respiratory cancers.
Local reporters began to write about the situation, even at the risk of official censure. “Around the dam,” Li Guangshou recorded, “sheep have suffered from long tooth disease, villagers are suffering from cancer, and this once fertile vegetable garden has become a place where seeds do not grow and the water cannot be drunk”
The residents of the region also began voicing their grievances. A local nomad told Klinger that Bayan Obo was revered by Mongolians and considered a sacred mountain. Thus, as mining expanded in the region, no one wanted to leave. Later, though, “the animals got sick, then the babies, and then everybody else.”
Local authorities were forced to confront the pollution fallout from 2010. Government census records removed farmers and pastoralists as a category, thus criminalising grazing and relieving authorities of responsibility. “The demolished remains of the once notorious cancer villages were scattered among rusting pipes and dilapidated warehouses,” journalist Amy Hawkins reported earlier this year. “One overgrown, abandoned dumpling restaurant was the only evidence of the communities that used to live there.”
The nomads, though, continued to live in the area, reluctant to become low-wage labour in the cities. “Those I interviewed stated that they preferred risking an early death beneath [their] own sky to working as a day labourer on the margins of a far-off big city,” Klinger writes.
From Australia’s Enabba to São Gabriel da Cachoeira in Brazil, companies are now tapping massive rare earth deposits, following in the path of Mountain Pass. For its part, India has moved cautiously on its own substantial deposits, wanting to be certain it doesn’t suffer the massive human costs paid by China. In a few years, the rare-earth shortages that have allowed China to blackmail the world should be a thing of the past.
We are seeing how misplaced government policies and corporate greed can collude to create a strategic crisis. Although it’s too late to avert the hardships the artificial rare-earth shortage will inflict on the global economy, learning the right lessons could avert even more serious problems to come.
Praveen Swami is contributing editor at ThePrint. His X handle is @praveenswami. Views are personal.
(Edited by Ratan Priya)