Why China's control of rare earths matters | FT

Financial Times
21 Sept 202003:13

Summary

TLDRRare earths, crucial for high-tech manufacturing including electric vehicles and smartphones, are predominantly supplied by China, raising concerns as US-China relations worsen. Western nations, fearing a supply cutoff, are urgently seeking alternatives. Lynas, an Australian company, is the only major non-Chinese supplier but can only process light rare earths. The US and Australia are collaborating to establish a domestic heavy rare earth processing industry, crucial for maintaining high-tech manufacturing and defense capabilities, amidst China's market dominance and strategic ambitions.

Takeaways

  • 🌐 China dominates the supply chain of rare earths, which are crucial for high-tech products.
  • 🛠️ Rare earths, including lanthanum and terbium, are difficult to mine and process due to their geochemical dispersion.
  • 🔥 These elements have high melting and boiling points and are essential in reactions with other elements for various applications.
  • 📱 Modern devices like electric vehicles and mobile phones are irreplaceably reliant on rare earths for their electronic, optical, and magnetic components.
  • 🔒 The defense industry also heavily depends on rare earths, making their supply a matter of national security.
  • 📉 Historically, the Mountain Pass mine in California was a leading source, but China now produces about 80% of the world's rare earths.
  • ⚠️ Deteriorating US-China relations raise concerns about potential supply disruptions from China.
  • 🛑 China's potential to cut off supply is highlighted by its recent threat to sanction Lockheed Martin, a major US arms manufacturer.
  • 🔄 In response, the US, Australia, and the EU are working to establish an alternative supply chain for rare earths.
  • 📈 Lynas, an Australian company, is the only major non-Chinese supplier but is limited to processing light rare earths.
  • 🏭 The Pentagon is funding the design of heavy rare earth processing facilities in the US to reduce reliance on China.
  • 🔍 Western governments are seeking new rare earth deposits to enhance supply security.
  • 🚧 Establishing a non-Chinese supply chain faces technical and environmental challenges, as well as market pressures from China's dominance.
  • 📈 China's strategy aims for a vertically integrated supply chain in high-tech manufacturing, influencing the west to seek self-sufficiency in rare earths and related technologies.

Q & A

  • Why are rare earths crucial for high-tech products?

    -Rare earths are essential for high-tech products because they are indispensable for many electronic, optical, and magnetic applications in modern devices such as electric vehicles, mobile phones, and even fighter jets.

  • What is the current situation of rare earth supply chain dominance?

    -China currently dominates the rare earth supply chain, producing about 80% of the world's rare earths, which has raised concerns among western countries due to deteriorating relations.

  • What are the geochemical qualities of rare earths that make them difficult to mine and process?

    -Rare earths tend to be widely dispersed in the earth's crust, making them relatively difficult to mine and process profitably, hence the name 'rare earths'.

  • Why are rare earths considered irreplaceable for certain applications?

    -They become really useful when they react with other elements, making them irreplaceable for modern devices due to their unique properties such as high melting and boiling points.

  • What was the historical significance of the Mountain Pass mine in California?

    -Half a century ago, the Mountain Pass mine in California was the world's leading source of rare earths before Beijing pushed to become the global leader in the sector.

  • What actions have the US, Australia, and the EU taken in response to supply chain concerns?

    -The US, Australia, and the EU have stepped up efforts to create an alternative supply chain, including providing funding to companies like Lynas and MP Materials to design heavy rare earths processing facilities.

  • What is the current limitation of Lynas, the major non-Chinese supplier of rare earths?

    -Lynas can only handle light rare earths at its Malaysian processing facility, leaving western companies reliant on Chinese suppliers for heavy rare earths.

  • What is the 'Made in China 2025' strategy, and how does it relate to rare earths?

    -'Made in China 2025' is Beijing's strategy to create a vertically integrated supply chain that dominates mining magnates in high-tech manufacturing, including the production of high-performance magnets required for the digital age.

  • What are the challenges in establishing a non-Chinese supply chain for rare earths?

    -The process of separating rare earths poses technical and environmental challenges, and China's market dominance allows it to control prices and put pressure on competitors.

  • Why is it important for the west to produce its own supply of rare earths and high-performance magnets?

    -Producing their own supply is crucial for the west to avoid dependency on China and to prevent the migration of millions of high-tech jobs to China, ensuring technological sovereignty and economic growth.

  • What measures has the Pentagon taken to secure the supply of heavy rare earths?

    -The Pentagon has provided funding to Lynas and MP Materials to design heavy rare earths processing facilities that could be based in the US, aiming to reduce reliance on Chinese supplies.

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Étiquettes Connexes
Rare EarthsChina DominanceHigh-TechSupply ChainGeopoliticsManufacturingUS-China RelationsLynas CorpMP MaterialsBeijing StrategyTech Jobs
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