China has complete market dominance over rare earth materials. The actual production of rare earths in the world in 2021 was 168,000 tonnes, or 61 percent, from China. Such ascendancy is extremely concerning for countries like the USA, which is working to lessen its reliance on its main strategic adversary. The aforementioned number, which accounts for 85% of the world’s output of rare earth magnets, is simply the start of China’s production.
China dominates has 85 percent of worlds rare earth market, its ascendency is concerning countries like USA
There are reportedly 44 million tonnes of rare earth reserves in China. Vietnam, Brazil, and India are the next-largest countries, each having half as much as the USA, which has only approximately 1.8 million tonnes. Its annual output, at 15.5% of global 2021 production, is also less than one-fourth that of China.
China’s Mines surged on account of :
Government Subsidies
Lax Attention to environmental Protection
Low wages for workers
During the 1980s and 1990s period of globalisation, China experienced a surge in this industry. Government subsidies, a disregard for environmental regulation, and low worker pay all contributed to the growth of its mines. As a result, the market was overrun with its products, driving away numerous foreign rivals.
A Canadian corporation engaged in mineral discovery, Defense Metals Corp.’s President and Director, Doctor Luisa Moreno, told sources “I think it was probably around the ’80s when China really started to dominate. Essentially, they basically imported, let’s call it, the processing technology from the United States and other countries. And they started very seriously developing their own resources … They have a lot of processing capacity, and they have many, many deposits, and over the years they perfected how to process it and extract the rare earth in a really competitive fashion.”
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China pursued strategic vision for rare earths
Indeed, China was pursuing a strategic vision for rare earths while the West was lax in its commitment. What precisely are rare earth elements?
What are rare earth elements
This collection of 17 minerals includes 15 lanthanide elements, yttrium, and scandium. They are essential for the creation of magnets because of their magnetic and conductive qualities.
Neodymium, for instance, produces the strongest permanent magnet ever discovered. Flat-screen televisions and monitors, cellphones, microphones, computer hard drives, electric cars, MRI scanners, loudspeakers, solar panels, and wind turbines are just a few of the many applications they are employed in.
In actuality, a single wind turbine requires 600kg of rare earth elements, whereas each battery for an electric vehicle requires 1kg.
The first stage of processing begins with the mining of raw materials, which are then ground into a fine powder in a mill. At this stage, all the constituent parts are still mixed together. It is then concentrated through a messy process called froth flotation.
The concentration then goes through roasting, leaching, and chemical separation to remove certain minerals. A fine powder is the final product.
But the procedure doesn’t end there. Oxides are transformed into metals, alloys, and magnets in the third stage. Nowhere in the USA is able to achieve this since China and Japan hold 92% and 6%, respectively, of the world’s conversion capacity.
Rare Earth element critical for military and commercial sector
These rare earth elements are essential for the military as well as the commercial sector.
As a result, they are utilised in a variety of devices, such as fighter jets, submarines, night vision devices, weapons, radars, electronic displays, guidance systems, lasers, radars, sonars, and missiles.
Interestingly, the Pentagon temporarily halted the supply of F-35 stealth aircraft in September 2022 after learning that a cobalt and samarium alloy used in the turbomachine originated in China. Deliveries resumed once a waiver was granted because the combatant was not in danger as a result.
However, this served as a timely reminder that all contractors working for the US Department of Defense (DoD) are required to disclose any goods or work that come from China.
This Chinese-made alloy is used in every F-35 that has been delivered thus far, to nations like Australia, Japan, South Korea, the UK, and the USA. However, brand-new F-35 warplanes won’t use American alloys starting in the second quarter of 2023.
US concerned at being strategically vulnerable to China
Due to this dependence, the USA and other nations are understandably afraid that their nations are strategically weak and at Chairman Xi Jinping’s mercy.
The reality is that if a country wishes to cut off supply for any reason, in addition to prioritising themselves, it means that others are at risk, according to Halimah Najieb-Locke, the Pentagon’s Deputy Assistant Secretary for Industrial Base Resilience. In order to avoid any chokepoints, we want to give such areas priority from the standpoint of national security.
There are choke points that we are unable to regulate, she continued. Weak areas that prevent us from effectively defending ourselves will exist if we don’t give this a high priority.
Regarding the risk of leaning so heavily on China, Moreno concurred. It’s always dangerous. There is a significant reliance on the nation. Consider how your political risk is rising, particularly in light of the Taiwan and other related situations.
“There’s a significant risk there,” she said, “because you essentially rely on China for the components you use to manufacture your equipment, or even weapons and missiles.
China restricts trade in rare earths to Japan in 2010
Agency questioned Moreno about whether China has ever restricted trade in rare earths due to political concerns. She cited the infamous instance of China doing so in 2010, following Japan’s detention of a Chinese fishing vessel in the Senkaku Islands, a group of Japanese islands that China contentiously claims as its own.
Beijing allegedly halted rare earth exports at that time until the captain’s release. China’s top rare earths buyer was Japan.
China’s action causes massive reverberations
China’s activities had a significant impact on the pricing of minerals as well as the political landscape of nations that depended on Chinese rare earth production and processing.
Over the past ten years, this has led to increasing diversification; in 2016, Chinese production accounted for 83% of global totals, but this has subsequently dropped to 61%.
China can sanction American Military Companies for supporting Taiwan
According to Moreno, there are other situations in which China may penalise American defence companies for aiding Taiwan or carrying out actions against its wishes.
In response to the Trump administration’s pressure on telecom giant Huawei, China once more threatened to impose export restrictions on select goods that include rare earths.
These incidents demonstrate how ready the Chinese government is to restrict access to rare earths. Xi is not afraid to use the weaponization of trade to put other nations under pressure.
US introduces Inflation Reduction Act
Agency questioned Moreno about how seriously the world was treating this threat. “I believe that has become worse every year since 2010… Although there is curiosity, I believe that the supply chain and the necessary steps are not fully understood. For example, the US allocated hundreds of millions of dollars for the creation of essential commodities through the Inflation Reduction Act. And a sizable portion of that appears to be moving further downstream to create separation facilities, such as those for rare earths and similar items.
US Department of Interior lists 35 critical materials that are vital for national and economic security
The US Department of the Interior in 2018 compiled a list of 35 essential items for ensuring economic and national security. All seventeen of the rare earth elements are represented in this list.
Additionally, President Joe Biden authorised the use of the Defense Product Act to increase domestic battery material production and processing.
Governments, according to Moreno, should concentrate on locating more of these elements in their nations, expanding mined production, and then constructing processing infrastructure to facilitate conversion into magnets and other products. Because it’s so dangerous, “I believe there has been an uptick in activity,” and “more money is available for corporations to delve into it.”
Defense Metal Corp oversees a major deposit in the US
A significant deposit is managed by Defense Metals Corp in North America. It is located in Canada’s Wicheda, British Columbia. This idea, according to Moreno, a Canadian physics engineer, is in the pre-feasibility stage.
Only rare earth mine in the USA is Mountain Pass in California
Mountain Pass in California is the sole rare earths mine in the United States. After it was shut down due to a toxic waste accident in 2002, operations there were restored in 2012. However, because the USA lacks the capacity, the concentrate that is mined there is still transferred there for processing into alloys and magnets.
Mountain Pass Mine is owned by MP Materials, but the company wants to rebuild the entire US supply chain. Additionally, a manufacturing plant is being created in Fort Worth, Texas to transform refined materials into alloys and magnets. It has stated plans to establish separation and purification facilities.
By the time this facility is completed in 2025, MP Materials will be the world’s first vertically integrated producer of rare earth magnetic materials.
All of the Pentagon’s needs for rare earths should be met by Mountain Pass.
With a focus on neodymium and lanthanum, the US DoD has committed USD 200 million in rare earth mining over the last two years.
However, breaking free from such a heavy reliance on China is no simple task. A new mine may take years to open, and without government assistance, it is financially dangerous for private enterprises.
In Moreno’s explanation: “Therefore, increasing the West’s general independence from China is the answer. It’s not exactly simple. It’s not as if your entire supply chain still depends on China, therefore we’re going to mine more “
While there is desire for increased supply, processing, and production independence in the West, she noted, “It’s insufficient. It’s a very, very nice start, but I believe there should be more. However, there is a misconception, or perhaps there is simply a lack of interest, or historically, it is not something that Western countries do, for example, to support junior mining businesses more directly by saying, “Okay, here is USD 20 million.” Yes, hurry up. That is not taking place.”
She expressed hope that Biden will increase investment further down the line, adding “It must involve several, diverse nations working together. There isn’t just one country, one answer. Building that supply chain for rare earths and other essential commodities would involve multiple nations “
Angola, Australia and USA are all ramping up production of rare earth elements
The output levels in Angola, Australia, and the USA are all rising. In any case, Bayan Obo in Inner Mongolia, China, is the largest rare earths mine in the world and it has an estimated 40 million tonnes of reserves. It has been in operation since 1957 and is responsible for 70% of the production of “light” rare earth elements.
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