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Back in July, I wrote about rare earth minerals (REE) and their importance to the high-tech industry. From cell phones, laptops and almost any type of electronics you can imagine, REEs make them work. China controls the largest source of these materials in the world, and thus with control comes risk—risk to the demand base.

As we approach the November elections, I’m reminded of the ramifications of politics both domestically and abroad. In September, China stopped all shipments of REEs to Japan in retaliation for Japan’s detention of a Chinese fishing boat captain. And earlier today, rumors swirled that REE shipments were also being cut to the U.S. and the European Union because of environmental concerns. It certainly highlights the fragility of any supply chain and the risks involved regardless of how much planning is involved. Because of China’s near monopoly of REE (the country holds 95% of the world’s reserves), countries such as Japan and the U.S. potentially face decisions being made based on politics that can be detrimental to economies. In this case, the distribution of REEs becomes a trade weapon.

In my previous post, I equated the Middle East’s control of oil to China’s hold on REEs. The most direct solution remains developing alternative sources. But the major hurdle with alternative sources is time.

Closer to home, big changes will likely come across the national and local spectrums. Here in California, we have a number of initiatives focusing on labor unions and environmental controls among others. That’s not to mention the political offices up for grabs including the governor’s race and the state and federal congressional seats.

What does this illustrate? That supply chain and logistics managers have yet another worry to consider: politics. You may already be tiring of the political campaign ads and rhetoric, but politics matter. Politics is often about bargaining, but that’s little consolation especially for our industry when the deals and paths are often chosen for us.

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