There is a magic to rare earths, the set of 17 elements that appears halfway down the periodic table. Discovered at the birth of the industrial age in the late 1700s, rare earths were first used to make flints for lighting fires and mantles for gas lanterns.

During the past few decades their uses have multiplied. Phone touchscreens and camera lenses, wind turbines, LED lights, electric cars, jet turbine blades and magnetic imaging all depend on rare earth elements.

The air force’s F35 fighter aircraft each contain about 400kg of rare earth products, which helps explain why US Commerce Secretary Wilbur Ross is in Australia this week.

The US sees us as the best alternative source of rare earths to China, which accounts for about 80 per cent of world supply.

The Trump administration has declared that it will no longer accept the dependency of its military on Chinese-sourced rare earth products and has flagged a willingness to use US taxpayers’ money to subsidise alternative suppliers.

The Australian government has assembled an interdepartmental taskforce to identify how it can help. Ross’s discussions with Australian ministers and officials will be followed by a summit in Washington next month.

Chinese authorities have floated the possibility they may use their market power as a weapon in the developing trade and technology conflict with the US. Following the US ban on technology exports to Chinese telecommunications group Huawei, China’s National Development and Reform Commission warned that if the US were going to ban the export to China of technology that used Chinese rare earth products, then the US could not expect China to continue supplying them.

China has squeezed supplies of rare earths to Western markets before. In 2010, supplies to Japan were disrupted amid a heated dispute over the sovereignty of uninhabited islands while cuts to general export quotas that year, as China sought to reserve supplies for its own industry, resulted in astronomic price increases.

The success of Australian listed miner Lynas in bringing its Mount Weld rare earths deposit in Western Australia into production was a result of that crisis. Japan’s authorities resolved not to be so dependent on China and funded the development of the Lynas mine and its processing plant in Malaysia, which has long-term supply deals with Japanese customers.

Australia’s national security is no more jeopardised by Chinese investments in rare earth production than it is by its investment in the iron ore industry. Chinese investors already have substantial stakes in promising Australian developments and the Foreign Investment Review Board should remain open to its participation.

Many other rare earth pros­pects were identified in Australia and elsewhere during the 2010 crisis — indeed, they are not particularly rare; about as common as nickel or tin. However, extracting the rare earth elements from their host rock is chemically complex and expensive, requiring large quantities of energy, water and acid, often leaving radioactive waste. There are about a half-dozen listed companies with Australian rare earth deposits while several more Australian miners have promising prospects in other parts of the world. All are trying to secure the funding for their developments and tie down prospective customers in firm contracts.

All spin the same stories of an outlook of booming demand as electric cars take off and wind power supplies a rising share of global energy. Several are making progress, although sales deals tend to be more statements of intent rather than contracts. None appears close to gaining funding for the full development, which would be in the $500m to $1bn range. The most advanced among the hopefuls is Northern Minerals, which has a pilot plant and recently secured a sales deal with German metals company Thyssenkrupp for its entire output.

So is there a case for government intervention? There are reasons developments have been slow to get off the ground. There is no open market pricing for rare earth elements; they are negotiated in private, so there is no the futures market to give comfort to investors. To the extent one can tell what price they are being traded at, they have been very cheap for a decade with markets depressed by illegal Chinese product smuggled out of the country.

The complexity of extracting them is a disincentive to investors who may also fret about how the big Chinese state-owned mining groups may respond to an upstart competitor. Moreover, many customers appear happy enough with their Chinese supply. So there may not be much progress in our industry if it is left to private banking or equity markets.

The Trump administration is not concerned about the outlook for electric cars or wind farms: its focus is on military needs. The US subsidies for new defence supplies so far are modest, with amounts above $US50m for individual projects needing specific authorisation from US congress. It is not the project finance that Australian developments are looking for.

Consistent with Australia’s alliance and US national security concerns, the Australian government could consider providing its own financial support for the rare earths industry. It has previously used its “national interest account” at Export Finance Australia to provide up to $3.8bn in funding for its military equipment export program. But it would need to go into any such support with its eyes open to the possibility of losing taxpayers’ money. It is the prospect of loss that deters private investors.

It may be that the most promising source of commercial finance for developing Australia’s rare earth deposits comes from China, which is forecast to become an importer in coming years as growth in demand outstrips supplies from its mines.

Australia’s national security is no more jeopardised by Chinese investments in rare earth production than it is by its investment in the iron ore industry. Chinese investors already have substantial stakes in promising Australian developments and the Foreign Investment Review Board should remain open to its participation.