Brett Guthrie Asks Experts How China Uses 'Market Manipulation' To Stunt US Rare Earth Industry

Forbes Breaking News

During a House Energy and Commerce Committee hearing prior to the congressional recess, Rep. Brett Guthrie (R-KY) spoke about China's use of market manipulation to make the United States more reliant on China for critical minerals.

Transcript

00:00General Lady Yields, the chair now recognizes the chairman of the full committee, Mr. Guthrie,

00:06for five minutes for his question.

00:07Thank you, Mr. Chair.

00:08Thank you for having this.

00:09Sorry, I've been in the rules committee over in the Capitol building most of the night.

00:12So I missed your testimony, so I apologize.

00:16And first, I want to just bring up, I know I think everybody probably heard that our

00:20dear colleague, Jerry Connolly, passed away.

00:23And I mentioned to him in our full committee, he was one of my dear friends here, he and

00:26his wife, Smitty.

00:28And I told a story about where he brought her the wrong Valentine gift last time.

00:31This one, he was studying to be a priest.

00:34He was in the seminary, was right before vows, and she had been a nun, his wife.

00:39And they met at a nonprofit thing later.

00:41They both, she had left the, anyway, I was telling a, we were on a NATO committee, telling

00:45a friend of ours in Europe, I said, well, Jerry was about to be a priest and he married a nun.

00:49And he came to me, he goes, you make it sound like I was trolling the convent.

00:53You better tell it, you better tell that like it really is.

00:55I didn't think about that, the story of it.

00:57But anyway, so gosh, what, what a man, what a wonderful person.

01:02So I'm sorry, we're going to all lose, we've lost him.

01:06Getting back to the end, thank you, Mr. Chairman, for doing this.

01:09Critical minerals, as we know, we saw during the tariff issues when China was going to start

01:15restricting that and the leverage they had.

01:17And so, Ms. Hunter, how critical are, how, how are critical minerals, and particularly

01:23rare earth elements, for the reliability for energy and also to being competitive with

01:28China for AI, which is part energy as well?

01:31You want to talk about that?

01:33Thank you for the question, Chairman.

01:35Rare earths are a really good example here of the importance across energy infrastructure,

01:40ensuring American energy dominance, and then also supporting new growing technologies

01:44like the AI revolution.

01:47They get a lot of attention, rare earth elements, for their application in permanent magnets,

01:51specifically used to propel wind turbines, also to use in electric motors for EVs, but

01:57to their utilization across society is really outsized.

02:01When we're putting in place these new AI data centers, they have to remain cool.

02:05It is the rare earth magnets that actually keep the fans going in these data centers, so

02:10critically important there as well.

02:11Another good example, besides rare earths is copper and aluminum, for their conductivity,

02:16they're used not only in transmission infrastructure, but also in these data centers to make sure they

02:21can have that high level of computation.

02:24Okay, thanks.

02:24And so, Ms. Sweeney and, or Ms. Hunter, and also Ms. Sweeney, the issue right now is China.

02:31Well, we need them anyway, but the issue right now is China.

02:34And so, could you talk about, I'm certain Ms. Sweeney and Ms. Hunter could talk about it, too.

02:38I think my question for you, what are the economic implications of not having our own supply, Ms. Hunter?

02:44And then, Ms. Sweeney, if you'll talk first and talk about both of it is, my understanding is that China has

02:50tried to kind of drum up opposition in the United States for us to develop our own critical minerals

02:55and rare earth elements, not only mining, but processing as well.

03:01I mean, how does China try to use more manipulation, any type of thing to prevent us or discourage us

03:09from developing this industry, which makes us more dependent on them?

03:12Can you give us some examples of that?

03:13Yes.

03:14A great example, I think, is the Gervois cobalt mine in Idaho.

03:22They were just about to open.

03:25They were fully permitted.

03:28And China dropped the price of cobalt, manipulated the market,

03:35dumped excess cobalt onto the market,

03:39and Gervois had to choose between operating a loss or closing,

03:46and they closed that facility.

03:50But that's a prime target for trade action, is it?

03:54It should be.

03:56So, Ms. Hunter, what are the national security implications

04:01if China keeps doing this and we don't have our own supply?

04:03There are very clear national and economic security implications

04:07if we don't find alternative supplies to China.

04:10Again, rare earths is a great example.

04:13With the most recent export controls that we've seen,

04:16that have been somewhat de-escalated.

04:19We heard, you know, it's covered all over the news

04:23about how manufacturers who keep, you know, around 45 to 60 days of inventories

04:27are lacking alternative sources of supply,

04:29particularly for heavy rare earths that we have to get processing online for.

04:33Last year, the USGS documented a lawsuit.

04:35Thanks, I'm just about out of time.

04:37But we have the biggest proponent of rare earth minerals chairing this committee

04:40right now on critical minerals, Mr. Palmer.

04:42And we're going to all turn him loose and ourselves loose.

04:46What?

04:47Turning ourselves loose and having a game plan to different things?

04:49I know he has a game plan.

04:50I'm trying to learn from him.

04:52So what do you, anybody, I do start with you guys,

04:54suggest what does Congress need to be doing?

04:57What's the biggest impediment that Congress can help you solve

04:59to get rare earth and critical mineral processing in our nation?

05:03State side, start Ms. Hunter.

05:05And go down.

05:06Permitting reform and helping with the cost of disadvantages for U.S. processors.

05:11Ms. Hunter, Ms. Weaney?

05:12I'm sorry.

05:12Ditto.

05:13Mr. Hergert, you want to?

05:14Capital being put at risk.

05:16There's a 30% premium in the United States

05:17spent on unnecessary permitting costs.

05:21The IRA, all it did was offset half of that.

05:24So if we sped up mining projects, we would see close to a trillion dollars

05:28of foreign direct investment pour into the United States,

05:31and you wouldn't need Keynesian-style federal money.

05:33Now, I'm not going to tell my members that are going to slap me that they don't like the free money,

05:37but at the end of the day, we need to change the way we think about it.

05:41That's what Mr. Palmer says, a trillion dollars of it.

05:44So you're saying he's right.

05:46We have a narrow window where China is at the end of its useful life on what it built 20 years ago.

05:52It can no longer meet the purity standards that are required for AI, semiconductors, cathodes, and the rest.

05:58So we have about a two-, three-year window where we need to get out of our own way,

06:01and we might be able to catch up a little bit to China.

06:03I'm not going to get to the other two of you, but I will say that the time to act is now,

06:07and so it's time for us to put some action into this.

06:09Thank you very much.

06:10Appreciate it.

06:11Thanks, gentlemen.

06:12The chair now reckoned.

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