TAIPEI, Taiwan – Rare earth minerals vital to the production of electronics, cars and weapons are being harvested as U.S. President-elect Donald Trump prepares for a second trade war with China after he takes office on January 20. This is one of the expected resources. In the middle of a fight.
China controls about 70 percent of the production and 90 percent of the processing of rare earths, which as their name suggests are abundant across the Earth’s surface, according to estimates from the U.S. Geological Survey and the International Energy Agency.
The 17 elements, including scandium, promethium, and yttrium, are used to make everything from smartphones, semiconductors, and EV batteries to F-35 fighter jets, drones, wind turbines, radar systems, and nuclear reactors.
As geopolitical tensions increase, the vulnerability of rare earth supply chains is a growing concern for governments around the world.
Last month, China banned exports of gallium, germanium and antimony to the United States, after President Joe Biden’s administration announced restrictions on sales of advanced chips and machinery to China.
The move was widely seen as symbolic, as the United States has other sources of gallium and germanium.
However, this does not stop the Chinese government from declaring rare earths state property in October and banning the export of technology used to extract and separate the materials late last year. This means that the use of rare earths has escalated.
He also recalled the Chinese government’s decision to temporarily ban exports of such minerals to Japan in 2010 amid a maritime border dispute between the two countries.
As President Trump promises to impose a series of new trade restrictions on China, ranging from 10% tariffs on Chinese goods for Beijing’s failure to rein in fentanyl exports to 60% tariffs for unfair trade practices. , the Chinese government may further restrict its response to rare earths. Kind.
Even if the Chinese government does not retaliate with export bans, President Trump’s tariffs could make minerals significantly more expensive.
“As we look ahead 12 to 18 months, the global geopolitical landscape is full of wild cards that can have an immediate and significant impact on the outlook for supply chains and the economies they serve. ” said Ryan Castilleux, a rare earths expert at a Canadian-based research and advisory firm. Adamas Information Agency told Al Jazeera.
Castilleux said the Washington government is particularly concerned about rare earths such as neodymium, praseodymium, dysprosium and terbium, which are used to make powerful neodymium magnets, also known as NdFeB magnets.
Finished products such as rare earths and rare earth magnets, which are several times more powerful than standard magnets, are a “vulnerability for U.S. manufacturers and the defense industry” because the U.S. and its allies have not developed alternative sources outside of China. It is considered that Kastilou said projects to produce the mineral are underway in three U.S. states and elsewhere, including Estonia.
Washington has made establishing a “sustainable supply chain from mine to magnet” a top priority.
Daniel Miller, the acting assistant secretary of defense for industrial infrastructure resilience, said in March that efforts to build a pipeline capable of supporting all of the United States’ defense requirements by 2027 are “on track.”
Expanding the supply chain beyond China is a difficult endeavor, even though many countries, from Angola and Australia to Brazil, Canada and South Africa, have rich reserves of rare earths.
Neha Mukherjee, a senior critical minerals analyst, said China has a strong lead in the industry thanks to economies of scale, government subsidies and large stockpiles that have allowed it to undercut competitors with “unreasonably low prices.” He said that he was able to maintain his superiority. At Benchmark Mineral Intelligence.
Rare earths are byproducts of mining other minerals, such as iron ore, and are not produced in predictable quantities. As a result, the quantities and prices of various rare earths can vary widely among the 17 minerals.
Mukherjee said China is focused on stabilizing rare earth prices to support the domestic EV industry, even at the expense of the mining sector.
China’s near-monopoly and competitive prices have historically made operating rare earth mines and processing facilities an unattractive proposition for many investors.
“They’re discouraging everyone from becoming competitors. It’s not economically viable to develop a mine when you can buy semi-processed materials at competitive prices.” Mike Walden, senior director at specialist consulting firm TechCet, told Al Jazeera.
It also has a long timeline, with exploration to construction taking 10 to 20 years, Walden added.
A turning point in U.S. efforts to secure rare earth supplies was the reopening in 2018 by MP Materials of the Mountain Pass mine in California’s Mojave Desert, first discovered in the 1870s. .
The company later opened a magnet factory in Texas.
Other rare earth facilities outside China include a mine in Yellowknife, Canada, a magnet recycler in Texas, USA, and a rare earth magnet factory in South Carolina, USA, with more projects in development across North America. is.
Since 2022, the U.S. Department of Defense and Department of Energy have awarded more than $440 million in subsidies to rare earth companies, including additional tax credits from the Inflation Control Act.
Walden said such projects could help the U.S. weather the storm if China stops exporting rare earths, but the country may still have a hard time achieving full self-reliance. Ta.
“The important thing here is that we have operational facilities in North America. Is it enough to necessarily support all the demand in North America? The answer is no. Is it enough to support the strategic demand in North America? ?The answer to that seems to be yes,” he said, referring to Washington’s priority areas such as defense and energy.
Analysts say that even though mines are opening or reopening outside China, rare earth minerals are still often sent to China for processing.
China controls 99 percent of heavy rare earth processing. Heavy rare earths are a group of rare earths that, while not abundant, are essential for the production of electric vehicles, wind turbines, and fiber optic cables.
North America is not alone in trying to catch up. In January, Brazil’s first rare earth mine in Serra Verde began commercial production after 15 years of development.
In Europe, France, Estonia, and Germany have rare earth processing facilities, but Sweden, Finland, Norway, and Spain have yet to open mines despite having vast rare earth deposits.
Australia also has large-scale mining and processing facilities operating, and the government is pumping hundreds of millions of dollars into further development.
Benchmark Mineral Intelligence’s Mukherjee said these efforts are still not enough to reduce dependence on China.
“A circular economy is desperately needed. Recycling facilities are desperately needed. The development of processed midstream and upstream facilities is desperately needed in the U.S., and a lot of funding is going in that direction. It should be redirected,” she said.
Part of the hesitation, especially in Europe, is due to the environmental costs associated with mining and processing rare earths, including the separation and removal of radioactive materials uranium and thorium.
Mining and processing produces large amounts of waste rock that can release residual concentrations of rare earths, radionuclides, heavy metals, and acids into the surrounding air, soil, and groundwater, according to a 2021 Canadian study.
Australia’s Lynas Rare Earths, the largest rare earth processing company outside of China, faced massive protests in 2019 over toxic waste generated from a rare earth processing facility in Malaysia.
Analysts say some of these concerns could be overcome with new technology and automation to meet higher environmental standards required by many governments, but that would take time and money. .
Ironically, the industry could gain further momentum if the Chinese government blocks exports, Adamus Intelligence’s Mr. Castilleux said.
“The last time China restricted rare earth exports, it led to years of demand destruction as many end users sought to reduce their consumption of rare earths or switch to alternatives in the coming years,” he said. said.
“Restrictions on magnet exports, even in the short term, are likely to significantly increase government investment in alternative supply chains, both domestically and internationally.”
There are days left until Trump re-enters the White House, but there is great uncertainty about how he will approach the rare earth industry.
During his first term as president, he issued an executive order declaring rare earths a national emergency, arguing that the United States was dependent on “foreign adversaries” to obtain rare earths.
President Trump is widely expected to roll back environmental regulations that create barriers to opening and operating mines, but he has also expressed opposition to major funding initiatives such as the Anti-Inflation Act and the bipartisan infrastructure bill.
Some analysts believe that President Trump could invoke the International Emergency Economic Powers Act to impose tariffs on mineral imports such as rare earths, or that such imports pose a threat to national security, as he has done. They have expressed concern that the Secretary of Commerce may be directed to launch a Section 232 investigation into the impact. Despite its vital importance to the economy, the use of aluminum was banned in 2018.
In the meantime, the industry is preparing for the difficult road ahead and stockpiling resources accordingly, Walden said.
“We’re all set. Instead of everyone calming down, we’re actually expecting more escalation: retaliation, retaliation, next step, retaliation, next step,” he said. Said.
