Rare earths become trade dispute tools

Rare earths become trade dispute tools, illustration photo (shutterstock)

In Beijing earlier this month, China passed a law allowing the government to ban exports of strategic materials and advanced technology to specific international companies. As a result, the country could take measures against a nation or region that abuses export-control procedures and “poses a threat to China’s national security and interests, according to the law,” reported Xinhua News Agency.

The law, which becomes effective in December, is the latest move in the increasing tensions between China and the US, which has been strengthening sanctions on Huawei. Concerns have since been raised that rare earth elements (REE), for which China’s market share exceeds 60 per cent, may be on the restricted item list, with such a ban having wide implications on a global scale.

Rare earths are critical minerals used in a vast range of everyday goods, including magnets and electric vehicles, and the issue has become a vital consideration for the US as it looks to reduce reliance on China. Lynas Corporation in Australia, which is the world’s largest producer of REE outside of China, last week posted a 8.1 per cent rise in first-quarter neodymium and praseodymium output as production normalised following the easing of coronavirus restrictions in both Malaysia and Western Australia, according to Reuters.

However, the US has been more vulnerable in recent years as China has supplied about 80 per cent of US rare earth imports in the three years up to 2018. Consequently, the US government has been scouring the country and elsewhere for potential rare earth reserves.

“We’ve been almost 100 per cent dependent on foreign sources of REE for industrial applications,” Jim Reilly, director of the US Geological Survey, told Bloomberg earlier this year. “We are looking for those resources literally across the globe, and building up collaboration with our partners.”

Commercially viable

Creating efficient and speedy methods to extract REE has proven incredibly tricky over the years, with several stop-start initiatives and dragged-out, loss-making processes.

Rare earths are an important strategic and non-renewable resource, but without planning countries cannot move up the ranks in utilisation of their reserves. Currently only China, which heads the list in reserves, output, exports, and consumption, is the only nation that can supply every element, while it also boasts complete mining, smelting, and separation systems.

Li Wei, academic at the Chinese Academy of Engineering, said that the US, Japan, and the EU in particular are attempting to change this status quo with long-term strategies. “In particular, the US has stepped up its deployment of rare earth supplies outside China and strengthened research and development of new rare earth technologies,” Wei explained. “At the same time, China’s heavy rare earth resource supply mainly relies on imports from Myanmar, Vietnam, and other countries, leading to hidden risks in the supply of such resources.”

Meanwhile June Teufel Dreyer, a senior fellow of the Asia Program at the Foreign Policy Research Institute in Philadelphia, asserted that establishing a REE supply chain that does not include China is a complicated process. “REEs are mixed with many other minerals in different concentrations. Dissolved materials go through steps that may be repeated hundreds or even thousands of times and, in many cases, the process is complicated by the presence of radioactive elements,” Dreyer said.

Finding a commercially feasible method of extraction continues to be a problem, even for the technologically astute Japanese. There was brief euphoria there when a rich deposit of high-grade REEs, estimated to supply Japan’s needs for several centuries, was discovered in 2012. However, by 2020, slow processes, environmental concerns, and commercial factors are hindering progress – 3,500 tonnes need to be collected daily to make the business profitable, but at present, only 350 tonnes can be collected.

Dreyer noted that enhanced environmental concerns in China are also impacting production, with severe impacts in areas where production and refining take place. Dreyer explained, “Given that floods presumably resulting from climate change have become more frequent, the possibility of future flood damage and contamination become more likely as well.”

Reducing dependence

China’s export moves came hot on the heels of the Trump administration issuing declaring a national emergency in the mining industry, and calling for a boost in the production of rare earth minerals.

The president’s actions were a direct consequence of China’s dominance of the sector for the last few decades, according to Gavin Wendt, a senior resource analyst at Australian mining software group MineLife Pty. “Previously, the West has been happy to be supplied with cheap rare earths from China, with China bearing the environmental consequences,” Wendt pointed out to Bloomberg.

“The big problem for aspiring producers outside China has been the ability to source project funding,” he added. “If they want to develop alternate production, governments might have to step up and help subsidise projects, which is something they’ve failed to do in the past.”

With modern industry’s deep reliance on rare earth minerals, governments and companies around the world try to limit their use, or build up stockpiles, and many tech companies have also reduced their reliance on rare earths. Meanwhile, Apple announced a fortnight ago that its newest iPhone would be produced using recycled REEs as part of its pledge to become “100-per-cent carbon neutral”.