Why are the US and China competing for rare earth minerals?

Last week, US President Donald Trump signed an executive order declaring a national emergency in the mining industry, calling for a boost in the production of rare earth minerals, while reducing America’s dependence on them.

The US isn’t the only country that sees a potential faceoff over these rare minerals, or another trade war. China also knows their worth. 

In May 2019, China’s top economic planning agency made a statement suggesting that Beijing may stop exporting these materials, a commodity item believed by many trade experts to be China’s “secret trade war weapon” against the US. This threat comes amid Trump’s continued escalation of economic and tech conflicts with China.

Chinese state media has called America’s dependence on Chinese rare earths “an ace in Beijing’s hand.”

But what are they exactly, and what’s the big fuss about them?

Rare earth minerals are called the ‘vitamins of chemistry’. Even the smallest amounts can have a significant effect. For instance, a little bit of cerium and a touch of neodymium makes TV screens brighter, battery life longer, and magnets stronger. 

If China cut off access to any of these 17 elements, the entire tech industry would go back a few decades. At that point, it would be goodbye to your smooth liquid crystal touchscreen, and back to a phone with an actual keyboard.

What are 'rare earths'?

Rare earth materials are a group of 17 elements on the periodic table.

True to their name, they are quite rare. While they’re more common than precious metals like gold, their uniqueness comes because they’re usually stuck to other metals and compounds. A big part of mining rare earth minerals is being able to refine them in a cost effective way. In countries with strict environmental laws against pollution, this is incredibly difficult to do, making them a precious commodity.

Where can they be found?

Rare earth mineral deposits exist in China, California, Australia, Brazil, Burundi, India, Malaysia, Myanmar, Russia, Thailand and Vietnam, with global deposit reserves estimated at 120 million tonnes.

Up until the 1980s, the US used to be the world’s largest producer of rare earth minerals. Then China came on the scene.

With significant investments into its mining and mineral processing capabilities, China came to dominate more than 90 percent of the world’s rare earth mineral production. 

How are they used?

In nearly every field of technology you can imagine. 

Rare earths are used in rechargeable batteries for electric and hybrid cars, electric car motors advanced ceramics, computers, wind turbines, catalysts in cars and oil refineries, monitors, televisions, lighting, lasers, fibre optics, superconductors and glass polishing, to name a few. 

Some of its uses are altogether strategic, and used extensively in militaries.

Their presence is essential in jet engines, missile guidance and defence systems, satellites, and lasers. 

Lanthanum, for instance, is needed to manufacture night vision goggles.

Defence giants like Raytheon, Lockheed and BAE Systems use rare earth metals for guidance systems and sensors in their missiles.

Apple uses rare earth elements in their speakers, cameras and the ‘haptics’ that make your phone vibrate. These minerals cannot be recycled either, because they’re used in such small amounts. 

Scandium is used in televisions, and fluorescent lamps. Yttrium is used in drugs to treat rheumatoid arthritis and cancer.

They’re also used in spaceship parts, jet engines, and drones.The glass industry is also a heavy user of rare earths, making use of them in polishing, or to add colour or special optical properties.

What about magnets? While we don’t immediately think of magnets as being a strategic resource, they are essential to hard drives, speakers, headphones, and generators. These are all reliant on a number of rare earth minerals. 

With modern industry’s deep reliance on rare earth minerals, governments and companies around the world try to limit their use of them, or build up stockpiles. Neither are long-term solutions to the chokehold China enjoys on them.

One mineral to rule them all

When the rare earth industry was still primarily dominated by the US, China took active measures to ensure it came out on top.

It began mining the minerals in the 1950s, and only in the1980s did the country begin to focus on fully exploiting its resources.

In 1992, on a visit to the Rare Earths site in Inner Mongolia, China’s leader Deng Xiaoping said, “The Middle East has its oil, China has Rare Earths.”

After nearly two decades of heavy investments and a centralised push to dominate global markets, China finally had its ace in the hole.

In 2010, China curbed the delivery of rare earths to the US, Japan, Europe - they showed the world its control over vital resources. This came after a diplomatic incident, where a Chinese fishing trawler collided with a Japanese patrol boat. 

The limit on supply was intended to hit Japanese car makers like Toyota and battery makers like Panasonic’s ability to produce electric cars.

Meanwhile, the US’s only mine was shut down in 2015, and was sold to an American group funded by China’s Shenghe Resource Holding two years later. It has since resumed production, and it now ships minerals to China’s refineries. 

Is it really all that bad?

While China’s hold over rare earth minerals definitely posed a risk to global supply chains and modern industries, countries around the world have rallied to find alternatives and solutions. 

Not long after China limited its export capacity, other countries started to develop their own mining and refining capacities. This was possible because rare earth minerals aren’t actually ‘rare’. China was only able to increase its production massively and kill off competition by neglecting environmental concerns, which can cause deep damage to ecosystems. 

As a result, China’s market share has declined from 97 percent to nearly 70 percent today.

Technology companies have also reduced their reliance and rare earths. Hitachi patented a way to use less dysprosium in an important electric car magnet. Panasonic has also found a way to recycle neodymium from old electronics.

Even China’s execution of restrictions on exports weren’t fully effective. For rare earths like dysprosium and europium, a number of Chinese producers found their way around the ban, resolving shortages in years. 

But that doesn’t mean the world still doesn’t rely on China for this. While Trump’s administration has threatened to place tariffs on China’s rare earths, it has so far avoided doing so. 

Instead, the US military is entering the rare earth production market for the first time since it built the atomic bomb in World War II, trying to ensure mining and processing capabilities that won’t be affected by the global shortages that China could trigger.

For China however, coming to terms with the loss of its trump card may still be a while in the making.