The targeting system on Stinger missiles requires rare earth minerals, which China now effectively controls the world supply of. (Chung Sung-Jun/Getty Images)

In the last decade, China has cornered the market on rare earth minerals, a range of 17 metallic elements necessary for heat-seeking missiles, submarine sonar, night-vision goggles and a host of other defense technologies. The Pentagon, alarmed that Beijing controls 97 percent of the world's supply, has begun combing the globe for rare earth minerals to add to its stockpile.

The good news? The U.S. has plenty of untapped rare earth reserves. The bad news? There's still no plan to mine them -- and the Pentagon isn't even sure which minerals it needs.

Understanding why requires understanding how China established its rare earth monopoly. The U.S. once produced most of the world's rare earth materials. But China aggressively acquired mines around the world and ran others out of business by flooding the market and lowering prices.

Profit margins are already thin -- some rare earths sell for as little as $4 a kilogram -- and the start-up cost for a mine and refinery approaches $1 billion. With China able to lower prices at will, American mining companies have been nervous about jumping into the market ever since Molycorp shuttered its once-prolific Mountain Pass mine in California in 2002.

Molycorp wants to reopen Mountain Pass and provide a counterweight to China. The mine needs $500 million in upgrades, but spokesman Jim Sims says the mine could be producing 20,000 to 40,000 tons of rare earths within two years, enough to meet current American demand. The Government Accountability Office had estimated in an April report that the domestic rare earths industry would need 7 to 15 years to get on its feet.

"The GAO report was accurate in a number of regards, but in that case it didn't have the latest information," Sims said.

Molycorp is looking to go public, probably later this summer, Sims said. Goldman Sachs recently sold its share of the company, perhaps in advance of backing the IPO later this year.

China has itself expressed interest in Mountain Pass. Unocal owned the mine in 2005, when the China National Offshore Oil Corporation famously tried -- and failed -- to purchase the American oil firm. After Chevron purchased Unocal, Chinese companies continued pursuing Mountain Pass and twice tried to buy the mine.

But can Molycorp take on China? Not even close, argued Jim Kennedy, president of Wings Enterprises, a rival mining company based in Missouri.

"If you wanna go out and launch a public company and make a bunch of money floating the stock, that's one thing," he said in a thinly veiled reference to the company's IPO plans. The idea, he continued, that Molycorp alone can challenge China is "ludicrous."

"It's like saying, 'we have a really good little league team, and we think we can beat the Mets next year,'" Kennedy added.

Molycorp, the GAO report noted, only has a small supply of heavy rare earths, the more valuable minerals essential for defense technologies. (Molycorp, meanwhile, insists that they have heavy rare earth deposits). And the $300 million refinery Molycorp wants to build won't be able to process rare earths from Wings Enterprises' Pea Ridge mine and mines elsewhere in Canada, Brazil and Australia.

Kennedy is pushing an alternative plan. He wants the U.S. to fund a consortium to coordinate mining interests in the U.S. and abroad and encourage the construction of a refinery that could handle minerals from around the world. Kennedy also wants the Pentagon to promise it will buy rare earths at a minimum price, so that if China begins dumping minerals, American mines can stay afloat. The alternative -- leaving the free market to sort out the rare earth dilemma -- won't work, he said.

"The public marketplace is not a long-term investor," Kennedy fumed. "The public marketplace has no nationalistic or patriotic governance. It doesn't care. It will chase the money. It's not like they're all buying war bonds. They don't care."

Congress is taking notice, but right now lawmakers are lining up mostly behind their state interests. Molycorp is headquartered in Denver, and Mountain Pass mine is in California, and the company counts Rep. Mike Coffman, R-Colo., and Rep. Jerry Lewis, R-Calif. among its allies.

Coffman introduced the Rare Earths Supply-Chain Technology and Resources Transformation Act, which would facilitate loan guarantees for domestic mining companies, establish a federal rare earths working group and create a national stockpile in addition to the Pentagon's supply. Lewis steered a $3 million earmark Molycorp's way last year.

Kennedy and Missouri-based Wings Enterprises have the backing of Sen. Christopher "Kit" Bond, R-Mo., and Reps. Jo Ann Emerson, R-Mo., and Russ Carnahan, D-Mo. Bond wrote the Brazilian ambassador on April 30 to arrange a meeting between Kennedy and the Brazilian Ministry of Trade and Natural Resources. Bond has also reached out to the Defense Department and Energy Department to promote Wings Enterprises' plan.

Perhaps the biggest stumbling block to creating a comprehensive rare earth plan is that the Defense Department doesn't actually know which elements it needs. The department is currently taking stock of its requirements, according to Belva Martin, the GAO's acting director for the Acquisition and Sourcing Management team, who oversaw the report. That report won't be done until the fall, she added, in part because how long it takes to find out from subcontractors what materials they use.

For Derek Scissors, who tracks Chinese foreign investment at the Heritage Foundation, the Pentagon's late arrival is perhaps the biggest worry of all.

"It staggers me," he said, "that this wasn't done long ago."