US imports 80% of its rare-earth compounds and metals from China
The Pentagon in Washington, US, is seen from aboard Air Force One on March 29 2018. Picture: REUTERS/YURI GRIPAS
Recent reports that China might ban exports of rare-earth refining technologies set off another round of worries about its near-stranglehold over the minerals critical to modern technology. It’s a threat US president Joe Biden’s administration needs to take seriously.
China’s leverage over the US is real. Rare earths — a family of 17 elements with similar chemical properties — are integral to all manner of 21st-century products, from iPhones to electric vehicles to wind turbines. They are especially crucial to advanced weapons systems: a single F-35 fighter jet requires more than 400kg of the stuff; a Virginia-class submarine 10 times as much.
While rare earths aren’t especially rare — deposits are found all over the world, including in the US — state-led industrial policies have helped Chinese companies gobble up market share since the mid-1980s. China now accounts for two thirds of the world’s rare-earth mining, 85% of refining and 90% of production. By contrast, the US has one operating mine and no commercial-scale processing capacity; it imports 80% of its rare-earth compounds and metals from China.
The US can’t rely on the market alone to address this vulnerability. Opening new mining and processing operations is expensive and technically challenging, and China can always make the task harder by ramping up production and driving down prices to unprofitable levels. The Pentagon has recently stepped in, using the Defense Production Act to help fund new processing facilities in California and Texas, while stockpiling both raw minerals and feedstock for permanent magnets. The new projects will require continuing support. If successful, though, they should meet the US military’s needs.
The more difficult question is how to address the risk to US companies if China chokes off supply, as it did during a 2010 dispute with Japan. As the Biden administration proceeds with its 100-day review of vital US supply chains, it should ensure that tackling this threat is a priority.
As a start, the US would be wise to partner with European and Asian allies rather than trying to reshore the entire mine-to-magnet supply chain domestically. Given economic and environmental concerns, for instance, Australia and Canada may make more sense as sites for mining. Japan and South Korea already produce rare-earth compounds and alloys. Stitching together a geographically diverse supply chain spread among friendly nations would make the whole system more resilient to unexpected shocks.
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