China is said to be working on more cost calculation to bring rare earth products into the future US-China trade war.
|The soil contains rare earths at a port in Lianyung, China. Photo: Reuters|
The Financial Times quoted sources as saying that Chinese officials are believed to be consulting senior figures in the rare earth industry about how the US and the EU will be affected if Beijing restricts rare earth exports. these markets.
The source said that China is considering the possibility of affecting US defense contractors by reducing the supply of important goods to the industry.
Beijing has also figured out how long it will take the US to increase production or source substitutes for these important elements.
Rare earth elements play an important role in making everything from smartphones to fighters. China controls most of the world’s rare earth mining, making it difficult for American industries to immediately secure short-term supplies if limited measures are taken.
Notably, these are also essential substances in the production line of US F-35 fighters.
“The Chinese government wants to know if the US may have difficulty building F-35 fighters if China imposes an export ban,” said a Chinese government adviser.
The consultations are reportedly coming after Beijing released a draft rule aimed at further strengthening regulation for the rare earth industry last month. According to China’s Ministry of Industry and Information Technology, the document covers the management of domestic rare earth production quotas, investment management and supervision.
Another Chinese law, enacted in December 2020, is intended to limit the supply of controlled commodities, including rare earths. Restrictions may target countries that abuse export controls and harm China’s interests. They could also target the US, which has increased pressure on Chinese tech companies in recent months.
Rare earth metals – a group of 17 elements important to many industries from consumer electronics to military hardware – have long been at the center of the US-China trade war.
The Chinese media have repeatedly warned that Beijing is ready to ban supplies, but the plan has yet to be implemented – a move considered one of Beijing’s “nuclear options” in the process. The trade war is smoldering with Washington
The choice of rare earth “leverage” is arguably more and more practical in the context that the administration of the new US President, Joe Biden, has not brought any positive prospects in US-China relations.
The US used to be the world’s number one producer of this mineral, but is now heavily dependent on Chinese exports. As the trade war exposed this weakness, Washington tried to increase investments in key areas while looking to increase its own output.
In 2019, the White House ordered the Pentagon to promote production of rare earth magnets used to make civil and military engines. Former President Donald Trump signed an executive order declaring a national emergency in the mining industry and asked the Interior Department to explore the 70-year Defense Production Act to speed up mining development.
China’s dominance of the rare earth has raised alarm bells in the US administration, especially the defense ministry. The agency needs rare earth to make products such as fighters, missile defense systems and satellites.
Did the US catch up with the Chinese attack?
MP Materials owns a mine in Mountain Pass – the only mine in the US that still exploits rare earths. It provides about 10% of the world’s rare earths.
|Will the Biden administration “follow in the footsteps” of Mr Trump’s efforts to boost rare earth production?|
The rare earth market is expected to grow rapidly in the next decade, as the world becomes increasingly dependent on high-tech products. When the US and China were still stuck in the trade war, some officials and experts said that the US should have an alternative source of this essential mineral. The first step is to increase the extraction, and then to the development of the processing.
The bottom line is that Mountain Pass is not currently able to separate rare earths into other product types for the supply chain. All products are then exported to China for processing.
Experts say this is a real challenge in efforts to diversify the supply chain. Roderick Eggert, professor of economics at the Colorado Mining School, said: “Mining and concentrating are actually easy steps. The difficulty lies in the separation process.”
James Litinsky, the co-chairman of MP Materials, which owns the mine in Mountain Pass (California), said Mountain Pass will have its own segregation facility, allowing them to make rare earth oxides to be sold directly to companies around the world. bridge. The former owner of this mining site spent 1.7 billion USD to upgrade facilities and increase environmental friendliness. But then, they were abandoned because the company went bankrupt. The huge separation plant here is also not being used at the moment.
Litinsky hopes to one day realize the entire supply chain, from mining to the production of magnets, engines and other rare earth products for direct use in consumer products. Currently, nearly every final step is done in China or Japan.
Litinsky argues that the trade war between Washington and Beijing is the driving force for the company to accomplish this goal.