China Will Dominate Rare Earth Supply for Decades

EE Times ^ | March 9, 2021 | Alan Patterson

[gattaca]

TAIPEI — While prices of rare earth elements soar, China is likely to dominate for decades production of these 17 minerals that are indispensable to the manufacture of smartphones, electric vehicles, military weapon systems and other advanced equipment, according to Lewis Black, the CEO of mining company Almonty Industries.

Prices of rare earths are surging as news media report (here and here) that China may again use the materials as a weapon in the trade war with the US. Shortages of the raw materials would further impact electronics supply chains already constrained by a dearth of chips that started last year.

Recommended:

The Politics of Rare Earth Metals

Despite a US initiative by President Joe Biden to support so-called “green energy” mining, it’s unlikely that the nation will increase rare earth production significantly during the next four years, according to Black, in an interview with EE Times.

“You’re ten years away from even coming close to having a fully diversified supply chain. To open a mine is not like building a factory. To open a mine can take three to four years of planning, then permits for two years and another three years if everything goes smoothly, which it rarely does, then two years to build. You’ve already spent eight years before you’ve even started production.”

As the coronavirus pandemic has demonstrated, the tiniest factors can have a huge impact on globally stretched supply chains and national economies. China is not likely to weaponize rare earths, but instead may take a more nuanced approach to its exports, Black says.

“ ’Weapon’ is too strong a term because it implies pistols at dawn. We’ve diplomatically evolved somewhat in the last 200 years where the fear of the unknown is often more important than the fear of the known. When you have a mechanism where you could restrict the export of rare earths, that in turn is probably far more powerful than actually restricting them.”

China will go to great lengths to maintain overall control of the global rare-earths supply, retired U.S. Navy admiral James Stavridis said in a Bloomberg Opinion column. That strategy seems to be aimed at allowing just enough supply to keep the threshold for entry by competitors high, he said. It’s an idea similar to that used by Russia and the Organization of Petroleum Exporting Countries to maintain their cartel.

To be sure, Beijing’s use of rare earths as a political tool made headlines in 2010 amid a heated dispute with Tokyo. After Japan arrested the captain of a Chinese fishing boat that rammed a Japanese Coast Guard vessel in the waters near the contested Senkaku/Diaoyu Islands, China restricted rare earth exports to Japan for two months. China is again ramping up the dispute over the islands.

Flexing strength

More recently, China flexed its rare earth strength against the US. Amid the US-China trade war, Chinese President Xi Jinping visited a rare earth facility in Jiangxi province in May 2019, sending a warning to the US. A People’s Daily article hinted that China could cut exports to the US as a “counter weapon” in the trade war. Days later, Beijing raised tariffs on US rare earths from 10 to 25 percent.

The US defense industry has a huge appetite for the minerals. According to the Congressional Research Service, each US F-35 fighter jet needs about 427 kg (941 pounds) of rare earths, and each Virginia-class nuclear submarine, about 4.2 metric tons. As of 2019, China still produced roughly 85 percent of the world’s processed rare earth oxides and approximately 90 percent of rare earth metals, alloys and permanent magnets, according to the Center for Strategic and International Studies, a Washington DC think tank.

The US dependence on China may persuade the two nations to hit the pause button in their trade war. America’s biggest companies also depend on the minerals. One example is the Apple iPhone. Neodymium is used in the magnets for iPhone speakers. Europium produces the red colors in the screen, and cerium is used for polishing during the manufacturing process.

Almonty CEO Black expects cooler minds to prevail at this time when the fragility of supply chains has become so acute.

“Any almost overtly aggressive act to disrupt the supply chain further leaves countries with very few responses,” Black says. “You’re being boxed into a taking a much more aggressive approach. It doesn’t make any sense for anybody to go down this route, least of all the manufacturing engine of the planet, which is China. Killing your customer doesn’t make good business.”

The outlook

Miners will not quickly ramp up production. Producers of consumer goods like cars and smartphones will need to carry more inventory to reduce risk exposure. More blows to the supply chain, including factory shutdowns, are likely, according to Black.

A rare earth mine. (Source: MP Materials) “Volkswagen shut down a production line a few weeks ago, and they cited the shortage of semiconductors. The cost of that to the company is dramatic. You have to ask yourself, what would it really have cost to have kept an additional 10 weeks of semiconductor supply?

“More disruption is inevitable, and this isn’t going to be fixed. By this time next year, there has to be a proper approach, a diligent approach, not just by government, but also by industry.

“It took 30 years for China to get to this point, and they’re very good at what they do. The example I use is when you finish work, go home at night and make a meal from scratch or just go to a restaurant. China is like a restaurant. You want something, it’s available. Even though it’s not always healthy for you, it tastes good, and it’s easy.”

China is a “fantastic” mining operator, according to Black. But producers there may ignore contractual obligations in the interests of the state, he says.

“That’s just a consequence of that political system. I’m not saying I’m for or against the political system. I’m just saying that is part of your risk profile when you’re operating under the fact that you have a dependency on that particular source.”

Companies in the capitalist economy will need to stop giving priority to balance sheet management, according to Black.

“A balance sheet now is the driver. It is no longer the the feeling or the strategy of the CEO or the market. You cannot carry inventory. Your CFO will walk into your office and blow his brains out.”

Balance sheets and inventories are not important in China, Black says. China has grabbed market share because of the flexibility of carrying inventory.

While rare earths are quite common around the world, the mining and processing steps are expensive and harmful to the environment. For years, China has used its low-cost labor and lax environmental laws to dominate the global market and become the leading supplier, according to the Center for Strategic and International Studies.

At the same time, miners outside of China face a number of issues, according to Black.

“If we look back over the last decade, we’ve seen many factors now that have to be considered within a supply chain. Conflict minerals were really what started it all off. Are the raw materials being used to fund wars? You can’t use those. Then we started getting into all the products being produced with proper social awareness. Children are not working in the mines or working in the supply chain. Are these mines or the supply chain environmentally responsible? What you’re going to see over the next two to three years is a new is another level of risk. They’re going to start assigning risk profiles to the supply chain. Do you have sufficient diversification?”

Almonty, which mines tungsten, has no plan to enter production of rare earths. The same global supply issues will affect tungsten, according to Black. Tungsten is used in production of semiconductors, as well as aerospace, medical and defense goods. It goes into development of anodes and batteries that are used for wind farms and solar farms, as well as electric vehicles.

China supplies more than 80 percent of the world’s tungsten after decimating the competition during the 1980s and 1990s, Black says.

“China arrived with a vast amount of material, and the price was basically collapsed. Since that day, all of my customers have always been supportive of diversification. Tungsten is a scarce, declining resource because there’s very little of any of any size or any duration left on the planet. There’s certainly a lot more rare earths available than tungsten around the world.”

[gattaca]

As long as the U.S. is dependent on China for these minerals, they can threaten to cut off our supply of these minerals (blackmail) in trade wars. Admiral Stavridis and others are warning about this.

https://www.bloomberg.com/opinion/articles/2021-03-04/u-s-needs-a-strong-defense-against-china-s-rare-earth-weapon

[BlackbirdSST]

This will slow down our march to electric utopia.

[Susquehanna Patriot]

DJT was on top of this - had a strategy to address this situation to ensure a supply of critical minerals. US Geological Survey had some good summary reports on the different substances. He issued an EO in October 2020 (while Buyden was in his basement and the media was censoring info on Hunter’s laptop while 24/7 calling Trump a racist) that reliance on foreign adversaries for these critical minerals was a threat to US national security, foreign policy and economy. 80% imported from .....China.

[BuffaloJack]

The ONLY reason we have to buy rare earth minerals from China it that the treehuggers, climate alarmists, and other liberals, progressives, socialists and communists have whined legislation into place that prevents us from using our own.

[Liz]

While Bungle Buyden was hiding out----hunkered down in his basement (as Hunter’s salacious laptop made headlines), Pres Trump had a strategy to ensure a supply of critical minerals....issuing an E/O October 2020 that reliance on foreign adversaries for these critical minerals was a threat to US national security, foreign policy and economy. 80% imported from .....China.

====================================

Prof Di Dongsheng and friend.

At a Nov 28, 2020 panel in Shanghai, Prof Di Dongsheng, mused over the narcissism endemic to Western elites
(like the Biden Crime Family, Cong Swallwell, GA Secy of State Raffensberger who learned Mandarin to hit up Chinese donors)
and the ease to which they are brought under the spell of the Communist People’s Republic.

CCP operatives (w/ hidden agendas) conscripted “prominent Americans and institutions” who were even willing to work against the interests of their own country.

The professor related his own triumphs as a CCP operative in recruiting new and useful American “friends.”

The professor said, America’s prominent pols fell easily to China’s leveraging of insatiable Western appetites for power, influence, and money.

NOTE Prof Di Dongsheng is Vice Dean of the School of International Relations at Renmin University (the school for children of the CCP elite).

=====================================

REFERENCE Chinese Communist President Xi Jinping visited a rare earth facility in Jiangxi province May 2019, sending a warning to the US that China could cut exports to the US as a “counter weapon”......days later, Beijing raised tariffs on US rare earths from 10 to 25 percent.

The US defense industry has a huge appetite for the minerals. According to the Congressional Research Service, each US F-35 fighter jet needs about 427 kg (941 pounds) of rare earths, and each Virginia-class nuclear submarine, about 4.2 metric tons. As of 2019, China still produced roughly 85 percent of the world’s processed rare earth oxides and approximately 90 percent of rare earth metals, alloys and permanent magnets, according to the Center for Strategic and International Studies, a Washington DC think tank.

[Wonder Warthog]

The US and Japan should team up to bring the massive deposits Japan has recently discovered in their offshore waters into production. Between them, they have all the tech needed...AND the need.

[NewHampshireDuo]

Remember when the only time you heard about rare earth elements was in GlassWax commercials?

[mosesdapoet]

Electronic Engineering Article comes from an interesting source based in Taiwan

[21twelve]

https://www.mining.com/round-top-to-establish-us-rare-earths-supply-chain/

From this article it sounds like only one mine (coming out of moth balls) in Texas. But we have an exploration agreement with Greenland.

Years ago I worked on a project to close down a mine in Idaho. IIRC it was for rare earth minerals. I’m guessing there are other deposits in the USA. Of course, trying to actually get them out of the ground with Biden in charge will be impossible.

Seeing other mines around the world, the best thing for “Mother Earth” would be to mine in the USA where we actually do have environmental regulations. And you could relax them ten-fold and STILL be way ahead of China, Russian, Africa, etc. in protecting the earth.

[sauropod]

bkmk

[Fred Hayek]

The US has sizable deposits of rare earth minerals, but they can not be mined thanks to environmentalists.

[Pollard]

[Wonder Warthog]

Japanese discovery of massive rare earths deposit:

https://www.sciencealert.com/japan-discovered-a-rare-earth-mineral-deposit-that-can-supply-the-world-for-centuries#:~:text=Earlier%20this%20year%2C%20researchers%20found,tons%20of%20the%20valuable%20metals.

[USS Alaska]

The ONLY reason we have to buy rare earth minerals from China it that the treehuggers, climate alarmists, and other liberals, progressives, socialists and communists have whined legislation into place that prevents us from using our own.

And that is the exact same reason that we are going to begin to import oil and gas products.

We have more than enough resource, but not the will {when the demonRATs and the pubbie swamp dwellers, are in control}, to use our own stuff.

When America dies, then what?

[Susquehanna Patriot]

There is some truth to the environmental regulations as part of the reason that these materials are not mined elsewhere. Other in mining as you probably already know having been around mines is the quality of the ore. If as a hypothetical the US ore only contained 15% of X, where China ore contained 63%, guess which one costs less to produce X? The US ore might not be economical to produce at world prices.

But also, a lot of this stuff isn’t in China - China is a big player in extracting mineral wealth out of Africa and sending it straight to China. Cobalt from Congo is good grade, essential for lithium batteries which is the key to cell phones, laptops and electric vehicles. EVs suck up most of it. Did I mention Congo has a huge problem with Human Rights abuses and forced child labor? Next time you are hanging out at a coffee shoppe and some leftist drives in in their EV carrying their cell phone or laptop, think about how best to ask them why they support abusing people so they can drive around in an EV. The Chinese don’t care, their “Green New Deal” wants all electric vehicles in China ... why? b/c they don’t have oil and can’t control that supply chain.

In the meantime, the demonkkraps demonic hatred for Trump kept most people unable to hear what he was saying about China as a threat to US and beyond.

[21twelve]

I was at a copper/gold mine in Indonesia for awhile. The waste material had a higher percentage of gold than what mines in the USA were mining!

But it was such a remote site and it was too expensive to leach the gold out of the waste material. They had plans to do it, but I think those plans were set up to appease environmental issues. Spend 20 years studying things, etc.

[Susquehanna Patriot]

Very interesting.

You must have been after the copper. Do you remember the market price for gold back then? Do you think if it were today, the economics would make it worthwhile?

[21twelve]

That was 25 years ago (hard to believe!). They mined the copper which had lots of recoverable gold mixed in. The copper paid for all the expenses of the mine and the gold was pure profit!

I have no idea on the economics of getting the lesser amounts of gold. I would guess not. In the nearby areas adjacent to the existing mine there were other zones that they were exploring - and the data indicated they would be of similar size and quality to what they have already been mining since the 70’s.

[Susquehanna Patriot]

Time does fly there is no doubt about it.

Someday the economics might make the lower quality materials recoverable. Mining and materials are basic building block industry, dangerous, and text book economics. Lots of opportunity for young people if they want to learn, work hard.