FULL HEARING | Predatory Pricing: How China Manipulates Global Mineral Prices to Maintain Dominance

Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party

2025-11-19

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Summary

This meeting of the Select Committee convened to address the increasing control of critical minerals by the Chinese Communist Party (CCP) and its implications for U.S. energy infrastructure, manufacturing, and defense industrial base[ 00:06:19 ] . The discussion highlighted the urgent need for the United States and its allies to reduce dependence on China by developing domestic mining and production capabilities[ 00:06:28 ] . Witnesses provided insights into the challenges and potential solutions to bolster American supply chains and counter China's strategic dominance[ 00:09:58 ]

Themes

China's Dominance and Predatory Practices

The Chinese Communist Party has strategically gained control over critical mineral supply chains, leveraging this dominance to exert geopolitical influence[ 00:06:19 ] . Historically, Chinese leaders recognized the strategic value of rare earths, with Deng Xiaoping stating, "there is oil in the Middle East, there is rare earth in China"[ 00:07:20 ]

. China now controls a vast majority of the global rare earth refining, magnets, and lithium processing capacity[ 00:07:27 ] . This control was achieved through a playbook involving overproduction, selling below cost, and subsequently weaponizing monopolies[ 00:11:39 ] . Examples include manipulating prices of neodymium-praseodymium (NDPR) oxide and samarium to undercut American competitors, often selling these materials below their own production costs. China also strategically acquired American magnet companies, stripped their expertise, and moved production to China, and depressed global mineral prices to eliminate American mining firms[ 00:07:48 ] . Furthermore, there are concerns that China utilizes Uyghur forced labor in critical mineral mining, drawing parallels to "Blood Diamonds".

U.S. Vulnerabilities and National Security Implications

The United States faces significant national security and economic vulnerabilities due to its heavy reliance on China for critical minerals. This dependence threatens the functionality of energy infrastructure, manufacturing, and the defense industrial base, including crucial military platforms like the F-35, Tomahawk cruise missile, and Stinger missile[ 00:08:18 ]

. Without these minerals, American society and industries could face collapse, as they are essential for everything from blenders and smartphones to advanced weapons systems[ 00:08:36 ] . China's weaponization of these supply chains, such as imposing export restrictions, can disrupt U.S. industries, trigger factory shutdowns, and grant China the power to dictate economic terms[ 00:06:41 ] . This situation demands an urgent, all-hands-on-deck effort to maximize rare earth capabilities across the free world and end mineral dependencies on China[ 00:09:36 ] .

Strategies for U.S. Self-Sufficiency and Competitiveness

To counter China's dominance, a multi-faceted approach is proposed, including bolstering domestic production, fostering alternative technologies, and implementing supportive government policies[ 00:08:43 ]

. Companies like Lithium Americas and MP Materials are developing significant domestic capacity, such as the Thacker Pass lithium project in Nevada and the Mountain Pass rare earth mine in California, alongside magnet manufacturing facilities in Texas. Niron Magnetics is pioneering iron nitride magnets that require no rare earth elements, offering a secure, domestically abundant alternative for many applications.

Government support is deemed crucial, including low-cost loans (e.g., $2.23 billion from DOE to Lithium Americas), grants, and tax incentives (like 45X) to de-risk projects and attract private capital. Streamlining and shortening unpredictable permitting timelines, which currently take 7-10 years in the U.S., are essential to enable timely project construction and attract investment. Price floor agreements and other tools to neutralize predatory pricing are also vital to create a level playing field. Furthermore, fostering international cooperation with allies like Canada, Australia, Japan, and South Korea can help build diversified and resilient supply chains outside of China's influence. Incentivizing American companies to source U.S.-produced critical minerals and derivative products, and prioritizing supply chain security over short-term cost savings, are also recommended.

Challenges and Barriers

Despite the clear need, several barriers impede the U.S. in achieving mineral self-sufficiency. China's predatory pricing and market manipulation, including selling below production costs and actively suppressing prices, deter private investment by distorting market signals. The lengthy and unpredictable U.S. permitting processes, often extending for years and subject to litigation, discourage private capital and cause significant delays. High upfront capital costs for new mining and processing projects in the U.S. are another significant hurdle, making them more expensive than in countries like China due to differing regulatory environments and labor costs. There is also a challenge in competing with state-backed Chinese entities that benefit from subsidies and non-market economic structures. The debate also touches on balancing free-market principles with government intervention, particularly regarding equity stakes in private companies, which some view as a unique necessity in this strategic sector but not a general model[ 01:08:14 ]

Tone of the Meeting

The tone of the meeting was one of urgent concern and determined resolve, underscored by a strong bipartisan consensus[ 00:08:43 ]

. Speakers emphasized the critical nature of the issue for national security and economic independence, repeatedly highlighting China's aggressive and predatory tactics as an immediate threat[ 00:08:10 ] . While acknowledging the severe challenges, there was an overarching sense of optimism in American innovation and the potential for the U.S. to regain leadership, provided swift and comprehensive action is taken. The discussion conveyed a shared understanding that this is not a theoretical problem, but a pressing reality requiring a "Manhattan Project-like effort"[ 00:06:45 ] .