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The race to break China’s control of supplies of hi-tech metals is leading to Madagascar — and beyond

For decades, Northern Madagascar has often offered only one path to wealth for those living off its land: the capricious crop that is vanilla. Now it seems that the far-flung African island is rich in an even more sought-after commodity, one that is a bellwether for the increasingly fraught rivalry between China and the West.

Research by British scientists has found that the geology which helps to make Northern Madagascar one of the few places ideal for growing temperamental vanilla also produces a clay which is rich in so-called “rare earths” – a group of 17 metals whose unique properties make them vital in the production of technologies ranging from wind turbines to fighter jets and mobile phones to x-ray machines.

Permanent magnets

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Currently, China controls some 70 per cent of global production of rare earths via its expansive mines and production facilities in the north and south of the country, dedicated to pumping out stocks of elements with such exotic names as dysprosium and promethium.

When it comes to producing the highly-specialised permanent magnets based on rare earths that are essential components in items from missile-guidance systems to the motors in electric cars, Beijing controls some 90 per cent of global output.

KINGS LYNN, ENGLAND - JUNE 06: One of the first four F-35B Lightning II fifth generation, multi role combat aircraft, arrive at RAF Marham on June 6, 2018 in Kings Lynn, England. The four F-35 stealth jets are the first of the reformed 617 Squadron (the Dambusters) to arrive in the UK from the United States. Gavin Williamson, Secretary of State for Defence, witnessed the arrival of the F-35Bs, which comes ahead of the decommissioning of RAF Marham's Tornado GR4 fleet by April 2019. (Photo by Christopher Furlong/Getty Images)
One of Britain’s first four F-35B Lightning II fifth generation, multi role combat aircraft, arrive at RAF Marham, near Kings Lynn. The fighter jet contains components reliant on rare earths (Photo: Christopher Furlong/Getty)

It is a lopsided equation of global supply and demand which has hardly arisen by accident. In 1992, then Chinese supremo Deng Xiaoping realised the geopolitical importance of the country’s rich veins of the hi-tech metals, observing: “The Middle East has oil, China has rare earths.” The willingness of Beijing to deploy this advantage in a muscular manner was shown in 2010 when China cut off rare earth exports to Japan.

A decade later, rare earths are even more important as a green technology revolution and the arrival of the “internet of things” bolster ever-growing demand against the backdrop of an acrimonious trade war between China and the United States. To underline the point, Congress this week introduced a bipartisan bill designed to reduce US dependence on Chinese rare earths after state-controlled media in Beijing last year floated the idea of once again restricting rare earth supplies as a lever in its superpower showdown with Washington.

Extinct volcano

The result is a global race to find other sources of the 17 elements which has now led to the remote reaches of the extinct Madagascan volcano of Ambohimirahavavy.

Researchers at St Andrews and Brighton universities this month announced the results of advanced testing which showed the composition of clays in what remains of the 24 million-year-old volcano core are identical to those in southern China which are the source of a significant proportion of the world’s rare earths.

MADAGASCAR - 2012/09/06: The sacred waterfall in the rainforest of Montagne d'Ambre National Park near Antsiranana (Diego Suarez), Madagascar. (Photo by Wolfgang Kaehler/LightRocket via Getty Images)
Rich in wildlife and natural resources, Madagascar is nonetheless one of the world’s poorest countries (Photo: Getty)

The findings potentially open the way for Madagascar, one of the world’s poorest countries, and other nations with unexploited rare earth reserves to meet future demand.

Dr Anouk Borst, from the School of Earth and Environmental Sciences at the University of St Andrews, who led the research, said the idea that the Chinese rare earth deposits are unique had been dismissed.

She said: “Our study confirms that the Chinese soils are identical to deposits found in Madagascar, and that they formed in similar ways. The race is now on to find other deposits elsewhere in the world.”

Pollution

The authors underline that there is a considerable difference between the potential value of the Madagascan deposit – separately estimated to be worth up to $10bn (£7.5bn) – and economic and political circumstances being right to establish a viable mine, not least with acceptable environmental standards for the complex process of separating the various heavy metals from clay – an operation which has led to considerable pollution linked to scores of unlicensed mines in China.

Miners are seen at the Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China July 16, 2011. Picture taken July 16, 2011.REUTERS/Stringer ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT.
Miners are seen at the licensed Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China (Photo: Reuters/Getty)

Whether rightly or wrongly (several industry analysts point out that China would simply be harming its own economy if it sought to cut off supplies of any rare earths to the West), America in particular is taking practical steps to secure its own pipeline of rare earths.

With hawkish legislators pointing out that projects such as the F-35 advanced fighter jet, in which Britain has a stake,  are reliant on components containing rare earths, Washington has in recent months signed a joint venture with Australia to explore joint exploitation of resources. Australian company Lynas Corp, which is currently the only large-scale rare earths producer outside China, has announced plans to build a processing plant in America. Meanwhile the US Army has signalled it may be ready to invest directly in a rare earths venture in the US to secure supplies.

‘It’s like having a machine gun but giving your enemy control of the bullets’

One industry source said: “The reality is that the Pentagon probably gets through a relatively small amount of rare earth-rich components every year. But there are lots of other strategic industries whose demand is growing and there is an amount of nervousness China has a real stranglehold.

“You may need only a few per cent of these [rare earth] elements to make your wind turbine or your missile system work but they are often irreplaceable. There are a good number who argue it’s like having a machine gun but giving your enemy control of the bullets.”

Nonetheless, such is the grip that China has on the rare earths market – it currently holds reserves of some 44 million tons, nearly half the global total – that experts argue its commercial advantage currently looks unshakeable. Indeed, Beijing last year became a net importer of raw rare earth concentrates as it concentrates on strengthening its lead in finished products such as permanent magnets fashioned dysprosium and neodymium.

One analyst said: “The trouble with any globalised commodity is that anyone can buy it. The economics of rare earths are complex but, in theory, even if you opened up a mine in Madagascar, what could you do to stop China buying up everything it produces?”

Those 17 rare earths… and what they are used for

  1. Cerium — Lens manufacturing, oil refining, catalytic converters
  2. Dysprosium — Magnets, nuclear reactor neutron absorption, lasers
  3. Erbium — Control mechanisms for nuclear power rods, optical fibres
  4. Europium — Television screens, lasers, optical electronics
  5. Gadolinium — Cancer treatment, MRI contrast chemical
  6. Holmium — Lasers, permanent magnets
  7. Lanthanum — Camera lenses, oil refining, car batteries for hybrid technology
  8. Lutetium — LED lights and processing chemicals
  9. Neodymium — Vital component of permanent magnets, also used in computer hard drives and mobile phones
  10. Praseodymium — Arc lights, jet engine blades
  11. Promethium — Luminous paint, nuclear batteries for guided missiles, pacemakers
  12. Samarium — Magnets, infrared-absorbing glass
  13. Scandium — Additive for alloys, aircraft parts
  14. Terbium — Naval sonar systems
  15. Thulium — Superconductors
  16. Ytterbium — Stainless steel manufacturing, portable X-rays, lasers
  17. Yttrium  Computer monitors and TV displays, lasers, microwave detection

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