What if China were to cut off the US and Europe from access to rare minerals that are essential to electric vehicles, wind turbines and drones?
At a time of frequent geopolitical friction among the three powers, Washington and Brussels want to avoid this scenario by investing in the market for 17 minerals with unique properties that are largely extracted and refined in China.
“The expected exponential growth in demand for minerals that are linked to clean energy is putting more pressure on US and Europe to take a closer look at where the vulnerabilities are, and the concrete steps these governments can take,” said Jane Nakano, a senior fellow at the Washington-based Center for Strategic and International Studies.
In 2019, the US imported 80 percent of its rare earth minerals from China, the US Geological Survey said.
The EU gets 98 percent of its supply from China, the European Commission said last year.
Amid the transition to green energy, in which rare earth minerals are sure to play a role, China’s market dominance is enough to sound an alarm in Western capitals.
Rare earth minerals with names like neodymium, praseodymium and dysprosium are crucial to the manufacture of magnets used in wind turbines and electric vehicles. They are also present in consumer goods such as smartphones, computer screens and telescopic lenses.
Others have more traditional uses, like cerium for glass polishing and lanthanum for vehicle catalysts or optical lenses.
Last week, the US Senate passed a law aimed at improving US competitiveness that includes provisions to improve critical minerals supply chains, following a similar executive order issued by US President Joe Biden in February.
Washington aims to boost production and processing of rare earths and lithium, another key mineral component, while “working with allies and partners to increase sustainable global supply and reduce reliance on geopolitical competitors,” US National Economic Council Deputy Director Sameera Fazili said on Tuesday.
The best hope for boosting US production can be found at the Mountain Pass mine in California.
Once one of the major players in the sector, the mine suffered as China rose and ate up its market share, aided by Beijing’s heavy government subsidies.
MP Materials Corp relaunched the mine in 2017 and aims to make it a symbol of the US’ industrial rebirth, saying the concentration of rare earths at its site is one of the world’s largest and highest-grade rare earth deposits, with soil concentrations of 7 percent versus 0.1 to 4 percent elsewhere.
The company’s aim is to separate rare earth minerals from each other through a chemical process, and by 2025 manufacture the magnets that industry uses — as market-leading Chinese firms currently do.
The project was supported by the US government, while a Chinese firm is a minority shareholder.
Elsewhere, Australian company Lynas Rare Earths Ltd has won several contracts in the US, including an ore refinery in Texas for the military that was supported by the US Department of Defense.
In Europe, Bernd Schafer, chief executive officer and managing director of rare earth mineral consortium Eit Raw Materials, said this month that an “action plan” would soon be presented to the European Commission on how to boost production.
However, Europe faces a more complicated path to achieving this goal, said David Merriman, a specialist in batteries and electric vehicles for London-based consultancy Roskill Information Services Ltd.
“Europe is expected to rely on importing raw materials or semi-processed materials and become more a processing base or recycling base,” he said.
China is expected to remain dominant for some time to come, but Schafer said that if recycling is scaled up, “20 to 30 percent of Europe’s rare earth magnet needs by 2030 could be sourced domestically in the EU from literally zero today.”
The desire to accelerate rare earth production comes amid a shortage of semiconductors, which are essential for the computing and automotive industries, and are mostly manufactured in Asia.
The scarcity “has caused global manufacturers to think about their supply chain in a new way, and think about vulnerabilities,” an MP Materials spokesman said, adding that several European automotive and wind power firms are already in contact with the company.
China’s chip industry is growing faster than anywhere else in the world, after US sanctions on local champions — from Huawei Technologies Co (華為) to Hikvision Digital Technology Co (海康威視) — spurred appetite for homegrown components. Nineteen of the world’s 20 fastest-growing chip industry firms over the past four quarters, on average, hail from the world’s No. 2 economy, data compiled by Bloomberg showed. That compared with just eight firms at the same point last year. Revenue at China-based suppliers of design software, processors and gear vital to chipmaking is increasing at several times the pace of global leaders Taiwan Semiconductor Manufacturing Co
Had Audrey Hepburn and Gregory Peck hopped on an electric scooter rather than a Vespa in the classic film Roman Holiday, their spin around the Eternal City might have ended in tears. The number of crashes and near-misses involving the two-wheelers has prompted Rome authorities to impose some order on a booming rental market that began two years ago. The havoc came to a head earlier this month when two US tourists attempted a night-time drive down the Spanish Steps, causing more than 25,000 euros (US$26,392) worth of damage to the 18th-century monument. Caught on security footage, the couple in their late 20s
POSITIVE SIGNS: GlobalWafers has continued to sign long-term supply agreements, most of which exceed 2028, and aside from one factory, it is running at full capacity GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer maker, yesterday said that Samsung Electronics Co and most of its customers have not scaled back on orders, or delayed shipments, even though consumer spending has shifted away from smartphones and notebook computers due to mounting inflation pressures. Rising inflation has altered consumers’ spending habits, dampening sales of consumer electronics, the Hsinchu-based company said. However, customers all honored their supply agreements by adjusting their product mix and shifting to applications that are still reporting robust growth, it said. Aside from one 6-inch factory, GlobalWafers’ 15 factories around the world are running at 100 percent
Nearly a quarter of European companies in China are considering shifting their investments out of the country as COVID-19 outbreaks and lockdowns dim the outlook for the world’s second-largest economy, a survey showed. About 23 percent of the businesses that responded to the survey are thinking of moving their current or planned investments away from China, a report released yesterday by the EU Chamber of Commerce in China said. The survey was conducted at the end of April, when Shanghai was still in shut down and restrictions in places like Jilin Province disrupted business activity. The number of European firms reassessing