BEIJING,
China has a tight grip on the rare earths industry, from mining and natural resources to processing and new ideas. This is the result of decades of hard work, and it now gives Beijing important weapons in its trade war with the US.
In the next few years, these 17 key elements will be very important to the world economy. This is because experts say it could take years for Western governments to make plans to secure other supply lines.
Rare earths are very important for protection because they are used in fighter jets, missile guidance systems, and radar technology. They are also used in many everyday items, such as cars, smartphones, and medical equipment.
AFP visited the southeast mining area of Ganzhou this month. It is known for its “heavy” rare earths, such as yttrium and terbium, and was very busy.
In China, the media rarely gets to see the secretive industry. However, AFP reporters saw dozens of trucks moving in and out of a rare earth mine and several busy processing facilities, even though they were being watched almost constantly by unknown guards.
In Ganzhou, huge new offices are being built for China Rare Earth Group, which is one of the two biggest state-owned companies in the country in this field after years of Beijing-led consolidation.
Economist Heron Lim at ESSEC Business School told AFP that problems this year have “paved the way for more countries to look into expanding rare earth metal production and processing.”
He said, “This investment could pay off in the long run.”
- Trade war –
When China put strict limits on exports to the sector at the beginning of October, it sent shockwaves through the global industrial sectors.
It was a big deal in Washington, DC, because Washington and Beijing have been in a trade war again since President Trump started his second term.
At a very important meeting in South Korea at the end of last month, Trump and Xi Jinping agreed to stop the fierce trade war between the world’s two biggest economies for a year.
The deal, which ensures the supply of rare earths and other important minerals, at least briefly, cancelled out the worst US actions and was seen by many as a win for Beijing.
“Rare earths are likely to stay at the centre of future economic talks between China and the US, even though some agreements have been made so far,” Heron Lim told AFP.
He said, “China has shown that it is ready to use more trade tools to keep the US at the negotiating table.”
“The chaos has made things hard for companies that depend on different rare earth metals because they don’t know how long they will have access to them.”
Right now, Washington and its partners are working hard to come up with new mining and processing chains. However, experts say the process will take years.
- Loss of supremacy –
During the Cold War, the US was the first country to learn how to extract and handle rare earths. The Mountain Pass mine in California supplied most of the world’s needs.
But as relations between the US and Russia got better and the industry’s heavy damage to the environment became more well known, the US slowly moved some of its work overseas in the 1980s and 1990s.
Most figures say that China now controls about two-thirds of the world’s rare earth mining.
Geological surveys say that it already has the biggest natural reserves of the elements of any country in the world.
And it pretty much has a lock on separation and refining; this year, research showed that it did about nine tenths of all processing around the world.
Beijing also has a strong grip on patents and strict controls on the sale of processing technology, which help keep know-how inside the country.
When asked about the risks to important industries, commodities analyst at BMI Amelia Haines said at a seminar this month, “The United States and the European Union are heavily dependent on imports of rare earth elements.”
“This long-term risk is likely to speed up and broaden the move towards rare earth security,” she said.
- Looking for other options -
In the past few years, the US government has spent a lot of money to boost local production as part of its plan to have a “mine-to-magnet” supply chain by 2027.
Washington has also been working with its partners to find other ways to get resources and make things besides China.
Last month, Trump signed a rare earths deal with Australia’s Prime Minister Anthony Albanese that promised $8.5 billion in important mineral projects. Australia’s huge land is home to a lot of rare earth resources.
Last month, the US president also made deals with Japan, Malaysia, and Thailand to work together in the important minerals sector.
Washington has known about its rare earths problem for years, even though there has been a lot going on and news about it this year.
In 2010, a maritime territorial dispute with Tokyo caused Beijing to stop sending the minerals to Japan. This was the first big event that showed how China’s control over the sector affected world politics.
The event led the government of President Barack Obama to call for stronger US domestic resilience in the strategic field.
But after 15 years, China is still the biggest player in rare earths.
