China's pricing of these metals is so low that it has become unprofitable for mining companies in U.S. and other Western countries to mine and process them.

The U.S. is almost completely dependent on China for these metals. One metal, neodymium, is used in hard-disk drive magnets, and nearly 100% of its production today is in China.

"China appears to view rare earths as one of the incentives they can offer a technology firm scouting for a new plant location," said U.S. Rep. Brad Miller (D-N.C.) of the U.S. House Committee on Science and Technology, in a statement on Tuesday.

"How do we compete in attracting and retaining manufacturing firms that need access to in light of China's current near monopoly, and their willingness to use their monopoly power to our disadvantage?"

Jack Lifton, a Detroit-based independent consultant on rare earth metals, said that the Chinese have managed to keep the price of neodymium very low. "It's not about making a profit," he said, in an interview.