America is Finally Waking Up to the Fact that China Controls Our Military’s Future

Most Americans have never heard about rare earth elements. But these elements are critical to your national defense, and China controls them.

Jan 12, 2014 at 1:13PM

Night Vision Rare Earths

Photo credit: Flickr/U.S. Army.

More than 95% of the world's rare earth elements are produced in China. That probably doesn't bother most Americans. Few of us have even heard of, nor can we pronounce, the 17 rare earth elements critical to our country's future.

Names like dysprosium, erbium, europium, gadolinium, neodymium, praseodymium, and yttrium are foreign to us. However, we might want to get to know these rare earths, as the seven I just cited are important components of our nation's defense. Rare earths are used in Raytheon's (NYSE:RTN) Tomahawk cruise missiles, as well as in making smart bombs, missile guidance systems, and even night-vision technology. That's in addition to being important components for cell phones, wind turbines, and a host of other tech systems.

Are we in denial?
The U.S. military has played down our reliance on China for rare earths. It has said that military use of rare earths are only a "small fraction" of U.S. demand. Furthermore, the Department of Defense believes that military needs can largely be met by domestic production.

Congress in 2011 tasked the Pentagon to study the use of rare earth elements in defense applications to ensure we had adequate long-term availability if non-U.S. supplies were halted. The Defense Department was also to secure a source of these materials by 2015. One congressman  went so far as to suggest that the U.S. should begin stockpiling rare earths to ensure we have a sufficient supply to meet our future needs.

There is hope
According to its latest report,  the Defense Department sees "positive changes in rare earth supply chains." The report forecasts lower consumption of rare earths worldwide, suggesting that we'll have more than enough supply to meet the demand of our nation's military. In addition, domestic production of six of the seven key rare earths is expected to increase this year.

China leads the way with 55 million tons of extractable reserves, and it produced 95,000 tons of rare earth elements in 2012, America has about 13 million tons of reserves, though production was just 7,000 tons in 2012. That should change as U.S.-based Molycorp (NYSE:MCP) reaches full production capacity at its long dormant mine in Mountain Pass, Calif., this year. The company sees full capacity reaching 19,000 tons a year. That project will go a long way to satisfying the U.S. military's demand.

One more worry?
Unfortunately, there is still one rare earth to worry about. Production of yttrium isn't expected to keep pace with U.S. military demand in the coming years, as it's a particularly scarce element. The "heavy" element is used in precision lasers and rocket stabilizers. At the current rate, the U.S. won't be able to meet its yttrium demand until about 2019. Overall, the good news in all of this is that America is waking up to the fact that we can't rely on China to supply our nation with these important elements. We are taking steps forward to secure our supply. In doing so, we'll ensure the security of our nation as well.

Rare earths probably won't make you rich, but this stock could 

There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Raytheon Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers