HONG KONG - The United States is too reliant on China for minerals crucial to new clean energy technologies, making the American economy vulnerable to shortages of materials needed for a range of green products - from compact fluorescent light bulbs to electric cars to giant wind turbines.

So warns a detailed report to be released on Wednesday morning by the United States Energy Department. The report, which predicts that it could take 15 years to break American dependence on Chinese supplies, calls for the nation to increase research and expand diplomatic contacts to find alternative sources, and to develop ways to recycle the minerals or replace them with other materials.

At least 96 percent of the most crucial types of the so-called rare earth minerals are now produced in China, and Beijing has wielded various export controls to limit the minerals' supply to other countries while favoring its own manufacturers that use them.

"The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes," the report says, which also mentions some concerns about a few other minerals imported from elsewhere, such as cobalt from the Congo.

And here is a section on China's lead in green technology which requires rate earths metals.

China also increasingly dominates the manufacture of clean energy technologies that require such minerals, including the production of million-dollar wind turbines. Chinese export restrictions have added up to $40 a pound to world prices, which makes a big difference particularly for some of the less expensive rare earths, like lanthanum, that sell for several dollars a pound in China.

That is among the reasons, along with cheap labor and extensive Chinese government subsidies, that many clean energy manufacturers have found it cheaper to shift production to China.

Mr. Sandalow said that wind turbine manufacturers were capable of building very large turbines without rare earths. But using rare earths could reduce the per megawatt cost of wind energy and improve its competitiveness through savings on other materials, like steel and copper.

He cautioned that the United States had been putting far fewer resources than China into exploring ways to use the powerful magnetic and other properties of rare earths.

"There are thousands of rare earth researchers in China and dozens in the United States, and that underscores both the challenge and the opportunity," he said. "Their expertise in this area is significant."

David Fuller's view The 'commodity wars', in terms of gaining access to strategic and often scarce resources, which Fullermoney began to discuss approximately a decade ago, are being won by China in what can only be described as 'no contest' to date.

The West has been out thought, out manoeuvred, out spent and is beginning to find itself marginalised, not least in the important field of green technology.

How should investors address these issues?

Become your own expert on strategic resources. You probably already find the subject interesting as you are a Fullermoney subscriber. Keep up to date by reading as much as you can. Start with the links within the article above and also the related topics links - here is one of them: The Mines and Minds Are in China. The video is also informative.

Keep an open mind but question the logic of those who say the problem of strategic shortages and / or broadly rising prices will soon pass. People have been underestimating China's potential for 20 years. It may be comforting to think that the US and other western countries can catch up anytime soon or that commodity related problems will simply disappear, but how realistic is that!?

Invest in commodities mainly through shares. Bullion funds that actually hold gold, silver and platinum remain a sensible diversification but most commodity futures ETFs have been a predictable disaster because of the contango costs which they increase. Also, their propagation and even participation will almost certainly be curtailed as prices rise, as I have mentioned before.

Experienced traders may wish to participate directly in the futures markets. However I always caution newcomers that leveraged trading has a particularly steep learning curve and requires a considerable amount of attention. Investing in shares is less difficult.

Remain overweight in mining shares, including some of the very competitive investment trusts (closed-end funds) such as the BlackRock World Mining Trust which I have held for years. Caution: mining shares can be quite volatile at times and they have had a good run recently. The sector is less cyclical than it used to be but the miners are best purchased following pullbacks towards their rising medium-term trend mean, represented by the 200-day moving average.

My suggestion to investors is that they strategically build mining portfolios over the next few years, if they have not already done so. One can start conservatively with the mining funds which have very diversified portfolios. I would also have at least one or two of the mega-miners - BHP Billiton which I have also held for many years is the biggest. Thereafter, one can nibble at the medium to small-cap miners. The latter are much more speculative but some also become takeover candidates.

I personally will probably not cash in mining shares until or unless they become absurdly overextended and / or we have good reason to suspect that the next global recession is due.

Lastly, here is a US Department of Energy report titled: Critical Materials Strategy.