The world needs rare earth Magnets to construct everything from cell phones to electric vehicles. China controls the flow of these essential raw materials.
This isn’t a passing geopolitical trend. It’s an issue with the structure of markets that poses a threat to Western countries and their economies.
Since its inception, China has dominated the global market for rare earth minerals. China holds the largest stock of rare earth Magnets and is the top producer and exporter.
These Magnets are used in the production of solar panels, electric vehicles satellites, weapons and other vital technologies. They are an essential component of the manufacturing process, and are therefore extremely vulnerable to disruptions in supply chains.
However, the Chinese hold the market in the world for these Magnets won’t last for long. The supply of these elements has been decreasing for a long time.
This has prompted concern from the western governments that their dependence on Chinese rare earths threatens the US and EU’s competitiveness. The US and other countries are seeking to decrease their dependence on China for REE production and processing, and storage.
Several governments across the US, Australia, and Canada are working on new sources of these minerals. There is also an increasing interest in Africa to investigate mining opportunities in rare earths.
The United States’ dependence on Chinese rare earths is a thorny political issue which is currently being discussed in Washington, D.C. In fact the president Trump has directed his cabinet to research the situation and seek ways to reduce the country’s dependence on Chinese REEs, Bloomberg reported in February.
Bloomberg News reports that the European Union, Japan, as well as other countries, are seeking to sign trade agreements that would remove China from their supply chain for these minerals. They are worried that the US, which imports about a third the rare Earth elements in the world, may rely on Chinese REEs for wind turbines, batteries and other energy-efficient devices.
The market’s growth is also being accelerated by the increasing demand for magnets that utilize rare earth elements for construction. They are also used in automobiles, consumer electronics, as well as turbines.
The expansion of the global market for rare earth elements is being driven by the increasing amount of tech-savvy people and their increased reliance on electronic devices. The market growth is expected to be assisted by the development of green energy products.
The United States has long feared that its military could be threatened by China’s stranglehold on Rare earth Minerals, the principal raw materials used to make jet engines, as well as other essential components of military equipment. When the Chinese government first began limiting exports in 2010, the main concern was that it would result in shortages of vital rare earth metals, which are essential to power technology such as computers and batteries.
Washington has taken steps to counter the threat by attempting to diversify supply chains for rare earths and collaborating with other countries across the globe to boost their processing capacity. This has worked in countries such as Japan, which has cut its reliance on China for the majority of its rare earths needs.
It’s unlikely that the U.S., or any other country will be able completely to break away from China’s dominance in the market. That will take years and a substantial investment of time and money.
Washington and its allies can cooperate to improve their supply chain in the right way and create an efficient system that isn’t prone to economic coercion and policy disruptions.
But building a more diversified supply chain won’t happen overnight according to Jane Nakano, a senior researcher at the CSIS. It will require a decade or more to break away from China’s control over the supply of vital minerals.
The United States should partner with its allies in the Quad, Canada and Mexico as well as those in South America, Africa, and Europe to diversify the processing of rare earths. This will ensure a more reliable and resilient supply of these essential elements for the global economy.
CSIS recently discovered that China’s rare Earth production is based on a plan of influence on geopolitics. The Chinese government views the rare earths as a trumpcard to be used in retaliation for foreign policies.
This strategy is in effect. Xi Jinping visited a rare earth processing facility in Jiangxi province in the past year, reiterating the country’s stance that critical Magnets are geopolitical assets. But this strategy also raises concerns for Western policymakers, as it may pose a risk that China’s strategic leverage could be used to sabotage Western economies, Nakano said.
Despite the recent rise of new competitors, China remains the dominant player in the world of rare earth mining and production. China is the sole owner of 60% of the rare earth mines in the world and 85% of the refined products made.
China’s monopoly on rare earth Magnets has become a source of concern for the US, Japan and other Western countries. These critical resources are crucial to a variety of modern technologies, such as smartphones and electric vehicle batteries. As renewable energy infrastructure gets better and green technologies advance and the market for these materials is increasing.
There are many ways the United States can diversify its supply of rare earth elements including tax breaks and cost-assistive strategies to boost production in the country. However, analysts say that it may take a while before the U.S. and its allies are free of dependence on China’s supply of rare earth minerals.
One approach is to create a shift in market dynamics, which will make it easier for non-Chinese suppliers to compete. Changing market conditions could result in more favourable prices and a greater capacity to negotiate long-term contracts with suppliers, enabling new companies to join the market.
Another way in which the United States can help diversify its supply of Magnets is through exports. While the United States currently has a substantial inventory of rare earth elements the market is expected to increase dramatically in the coming years, with demand being driven by the shift to wind, solar and other renewable energy systems.
The global rare earth market can be extremely competitive, and many players are looking to create an industry that is not dependent on China. Some of the newcomers are focusing on the African continent, where there are significant mineral deposits.
These efforts were endorsed by the US government, Congress, and are currently being examined by Congress to decrease its dependence on Chinese rare Earths. While different administrations may have different priorities for national defense or the climate crisis, there is a bipartisan consensus for reducing the country’s dependence on foreign rare earth sources.
The US and its allies face a huge issue in overcoming the difficulties in processing and mining rare earths. Because all the Magnets are mixed it is difficult for processors to determine their distinct properties. The thorium component of these materials can pose a health risk to those who use them. Additionally, there are often environmental issues that limit the potential for Western companies to get involved in the sector.
Initiatives to diversify
The world’s supply of Rare Earth Magnets (REEs) has been dominated by China for a long time, however recent developments in the decarbonization of technologies have made it more important for nations to diversify their REEs supply. This is especially applicable to elements like lithium, cobalt, nickel and copper, which are utilized to power EVs and turbines.
The demand for these Magnets is likely to rise as the world moves towards achieving climate change goals through decarbonization techniques. REEs are now more crucial than ever before to the global economy.
REEs are also essential for the production of semiconductors or batteries. These technologies are essential for modern societies to thrive, and if REEs become unavailable, these sectors would be affected severely.
In the wake of this, many countries are making efforts to diversify their REEs sources and production facilities. For instance, in the United States, a number of companies are investing millions to construct new rare earth refineries.
Japan is an excellent example of diversification. It was the first country to recognize the importance in cutting dependence on China for REEs. Its diversification strategy included joint ventures, new economic partnership agreements, as well as mining exploration.
South Korea is another country that has a long-standing tradition in diversification. The country has a strong economy and is an emerging leader in the field of technology development and was eager to diversify its rare earths resources. It has formed partnerships with universities in order to create a cleaner and more polluting way of turning rare Magnets into metallics.
A number of other countries have taken steps to reduce their dependence on China for REEs, including the United States and Argentina. However, diversification away China has been slow.
This could be a result of the growing suspicion of Western countries towards Chinese policies, particularly those that involve the use of foreign Magnets Fmagnetsand other natural resources. This is why they are becoming more concerned about how China’s policies could affect their own REEs production.