Ernest Scheider and Pratima Desai
(Reuters) – China has sought to manipulate global prices of critical minerals for decades, using its control as an economic weapon to expand its manufacturing sector and geopolitical influence, a U.S. House committee said on Wednesday.
The allegations, contained in a 50-page report by the bipartisan US House Select Committee on China and reviewed by Reuters, add to a series of reports from Washington criticizing Beijing’s influence in critical mineral markets.
President Donald Trump and his predecessor, Joe Biden, have sought in recent years to undermine China’s dominance of the key minerals sector.
COMMITTEE RECOMMENDATIONS ON MINERAL PRICE CONTROL
The committee’s legislative report seeks to codify the president’s orders into law with a number of recommendations, including price controls and expanded government oversight of price reporting agencies.
The Chinese embassy in Washington did not immediately respond to a request for comment. China has previously accused the US of distorting and exaggerating Beijing’s rare earth export controls and fomenting panic over the issue.
“China has a loaded weapon aimed at our economy, and we must act quickly,” said Congressman John Moolenaar, Republican of Michigan and chairman of the committee.
Moolenaar, a chemist who formerly worked at Dow Chemical, added that Beijing’s practices “have cost Americans jobs, put American miners out of business and put national security at risk.”
The report, prepared by committee staff, was also endorsed by Democrat Congressman Raja Krishnamoorthi of Illinois.
It says China’s role as the world’s largest processor of many important minerals makes it nearly impossible for the United States and its allies to determine the true price of certain metals, including rare earths.
The London Metal Exchange, which trades many minerals, is vulnerable to Beijing’s influence because it is owned by Hong Kong Exchanges and Clearing, the report also said.
“The LME advertises itself as displaying prices that ‘properly reflect global supply and demand.’ However, with (the Chinese government) looking over HKEC’s shoulder, it is difficult to determine whether the prices it publishes accurately reflect global supply and demand.
The LME said it is subject to the laws and regulations of the United Kingdom where it is located.
“All major LME prices are determined based on the transparent trading activity of international participants,” the spokesperson said.
REPORTING THAT CHINA IS FIXING RARE EARTH PRICES
The House committee report, based on published reports and data, also said China has specifically targeted the lithium and rare-earth industries by raising and lowering prices to bolster its economy.
“Each time lithium prices rose, the PRC government took steps to bring lithium prices back down,” the report said.
The Trump administration cited problems with pricing in September when it sought to acquire shares of Lithium Americas.
The report makes 13 policy recommendations, some of which Trump has already acted on. It also aims to encourage a broader dialogue about China’s presence in mineral markets, rather than address all issues.
“A single policy will not fully address the serious challenge facing the United States in critical minerals, and we must pursue multiple policy directions simultaneously,” it said.
One of those recommendations, the creation of a “critical minerals czar,” was proposed by Trump earlier this year. The report also suggests building a U.S. mineral stockpile that the administration has said is open.
(Reporting by Ernest Scheider in Houston and Pratima Desai in London; Editing by Veronica Brown and Edmund Klamann)