So what are Rare Earth Minerals and what are they used for you may ask?
“Rare-earth Minerals (REMs) are used as components in high technology devices, including smart phones, digital cameras, computer hard disks, fluorescent and light-emitting-diode (LED) lights, flat screen televisions, computer monitors, and electronic displays.
What are the main rare earth minerals?
The most abundant rare earth elements are cerium, yttrium, lanthanum and neodymium. They have average crustal abundances that are similar to commonly used industrial metals such as chromium, nickel, zinc, molybdenum, tin, tungsten, and lead.
The rare earth minerals (REM) are a set of seventeen metallic elements. These include the fifteen lanthanides on the periodic table plus scandium and yttrium.
Rare earth elements are an essential part of many high-tech devices. The U.S. Geological Survey news release “Going Critical” explains:
“Rare-earth minerals (REM) are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions. Significant defence applications include electronic displays, guidance systems, lasers, and radar and sonar systems. Although the amount of REM used in a product may not be a significant part of that product by weight, value, or volume, the REM can be necessary for the device to function. For example, magnets made of REM often represent only a small fraction of the total weight, but without them, the spindle motors and voice coils of desktops and laptops would not be possible.
In 1993, 38 percent of world production of REMs was in China, 33 percent was in the United States, 12 percent was in Australia, and five percent each was in Malaysia and India. Several other countries, including Brazil, Canada, South Africa, Sri Lanka, and Thailand, made up the remainder. However, in 2008, China accounted for more than 90 percent of world production of REMs, and by 2011, China accounted for 97 percent of world production. Beginning in 1990 and beyond, supplies of REMs became an issue as the Government of China began to change the amount of the REMs that it allows to be produced and exported. The Chinese Government also began to limit the number of Chinese and Sino-foreign joint-venture companies that could export REMs from China.”
Why does China have a monopoly on rare earths?
China leveraged its lax environmental laws by way of an indirect ecological subsidy in the rare metal industry. However, the turning point came in 2010 when the world realised that China had a crippling monopoly where it could punish any country by controlling the supply of the rare earth metals
Why are rare earth metals so important?
Rare earth metals, a group of 17 chemical elements in the Earth’s crust, are crucial to keeping our society running smoothly–and to transitioning to a clean-tech-driven economy. They’re used in electric car motors, lithium ion batteries, computer hard drives, solar panels, and wind turbines.
The Chinese leader and others in China’s leadership enjoy reminding the world of how they value patience and take the long view. But Beijing’s recent behaviour suggests that the Chinese Communist Party (CCP) has lost track of these virtues that is has turned to bullying and pressure to achieve its immediate goals.
Recently Beijing has lashed out at the United States, Japan, and especially Australia, threatening to cut off their supply of rare earth minerals. Since China controls more than two-thirds of global production, and these elements are crucial to modern technologies, such a cut-off could significantly harm these economies.
The problem for China is that any such a cut-off would encourage users to find other sources, and these exist. China would then lose a major portion of what today are lucrative trading arrangements whilst earning the distrust of more than just these three nations.
It is strange that China would consider such policies, which in the past have not only failed to achieve Beijing’s objectives, but they have also impelled movement away from China trade, either sourcing in China or viewing it as an attractive market.
An example is Beijing’s 2010 effort to deny Japan rare earth products over the long-standing dispute about control of unpopulated islands in the East China Sea. Beijing blocked sales to Japanese users after a particularly hot exchange between ships from Japan’s navel self-defence force and Chinese fishing vessels. Japan did not relinquish its claims to the islands and now actively warns other trading nations of how unreliable a trading partner China is.
More recently, the CCP has tried similar bullying tactics with Australia, also to no avail. Angered by Australia’s desire to investigate the cause of the COVID-19 pandemic, Beijing imposed an array of quotas and huge tariffs on Australian goods coming into China, especially metals, energy, and agricultural products. Part of that effort included an 80 percent tariff on Australian barley.
But none of these efforts to punish the Australian economy got what Beijing wanted. The government in Canberra refused to back down in its efforts to find the origin of the disease, and Australian producers found other markets for their goods and relatively quickly, too.
With the loss of Ukrainian and Russian grain from world markets due to the war in Ukraine, Australian agriculture has less need than ever for China’s markets. The only lasting effect Beijing managed in the exchange was to earn a more general distrust of China as a trading partner.
Beijing is now trying such tactics again. In response to military cooperation between the United States, the United Kingdom, Australia, and Japan over the Russian invasion of Ukraine, the CCP has threatened to cut off supplies of rare earth elements.
There can be little doubt that if China were to go through with such plans, it would exacerbate already troublesome supply chain issues. But for the long run, such a cut-off would encourage these major buyers to shift away from China and take a lucrative source of trade with them.
And there are alternatives to Chinese rare earth sources. The fact is that rare earth elements are not very rare. They exist in many places on the globe as shown in the image above. The only reason China presently has a near-monopoly is that the refining of these elements is very hard on the environment, and richer economies prefer to offload such environmental destruction to China.
But if Beijing forces the issue as it has threatened, the need for these products will force these other nations to change their priorities. China will lose its present near-monopoly and earn the distrust of other nations relatively quickly in the grand scheme of things.
It is my belief that this is a gamble that comes with a seriously high level of risk and that China may do well to remember its cultural heritage and spend more time taking the longer view rather than trying to coerce other sovereign nations to acquiesce to China’s will and priorities.
In my opinion this strategy of attempting to hold other nations to ransom over the supply of Rare Earth Minerals has the potential to have a hugely detrimental effect on both China’s economy and on the global environment.