Obama's Clean Energy: a Dangerous Dependence on China

The headline President Obama wants uppermost in the minds of American voters today is that the stimulus bill is translating into real jobs, after all. For this purpose, he travels to Holland, Michigan to celebrate the groundbreaking of a new battery manufacturing facility there made possible by an infusion of $89 million in funds from the Economic Recovery Act.

The plant is being built by Compact Power Inc., a subsidiary of the South Korean conglomerate LG Chem to produce lithium-ion cells for the Chevy Volt and other electric or hybrid-electric vehicles. (There is a certain irony to the President applauding LG for its leadership, since – as my colleague, Chris Holton, points out in a very important piece at the Center for Security Policy’s website, http://www.centerforsecuritypolicy.org/p18459.xml – that company is providing economic life-support to the Iranian regime. After all, Mr. Obama just signed into law U.S. unilateral sanctions that are intended to discourage precisely the sort of investment companies like LG make in Iran to the benefit our enemies.)

Now, I happen to be an enthusiastic supporter of freeing our automotive fleet from its present, nearly complete dependency on oil-based fuels. I am happy to have what will, hopefully, prove to be safe, durable, efficient and cost-effective batteries manufactured in this country. I look forward to the advent of the Volt and the sorts of vehicles that it may usher in that could allow most consumers to drive around on trivial amounts of gasoline.

The new facility and the 450 jobs it will ultimately offer to bolster Michigan’s depressed economy have an inherent problem: There will be no batteries coming off its production line once it gets going – unless there are supplies of lithium and other rare earth minerals (REMs) from which they can be made. And it’s not just our batteries that are at risk. Such minerals are also essential to a host of other high-tech applications, including in many modern weapon systems.

And last week, the source of 97% of the world’s rare earth minerals, the People’s Republic of China, announced that it was reducing its exports by a staggering 72%. The Chinese are said to be worried about meeting their burgeoning domestic needs. They certainly are interested in pushing up prices they are now in a position to command.

Forbes.com columnist Gordon Chang pointed to another possible purpose in this monopolistic play during his weekly interview on our show, Secure Freedom Radio, on Monday [link]: The Chinese are effectively telling manufacturers all over the world that, if they want access to rare earth minerals, they better move their manufacturing operations to China, thus avoiding export quotas and other restrictions. The question occurs: How long might the Compact Power plant be able to resist the PRC’s REM-powered tractor beam?

Another recent news item adds to the drama of this story. It turns out that, of all places, Afghanistan may turn out to be the Saudi Arabia of rare earth minerals. It will be, under the best of circumstances, years before that wealth can be tapped – apart from what the Chinese are beginning to do in exploiting Afghan copper deposits (get this: protected by U.S. forces).

Still, here is one more powerful reason for ensuring the Taliban are not restored to power: The last thing we need is for those who adhere to Shariah and are, therefore, determined to destroy us, to have a stranglehold on yet another critical ingredient for our economic and national security.

The one bit of good news is that the United States actually does have one mine for rare earth minerals in Mountain Pass, California. It has been hobbled for years by environmental restrictions and was nearly sold off to the Communist Chinese as part of the PRC’s 2005 bid to buy Unocal. But, who knows, if Molycorp, the privately held company that owns the Mountain Pass mine, it can get a piece of Mr. Obama’s stimulus package to restart its operations and pay the premium for environmental monitoring (by some estimates $2.4 million), maybe the President will actually be able to keep in the USA the manufacturing jobs he is touting today – and provide for our competitiveness and vital defense needs in the process.