Taiwan needs to step up efforts to protect its access to rare earths amid escalating geopolitical risks and global economic uncertainty, given that its export-oriented economy relies heavily on imports of the elements to produce electronics.
Taiwan is not the only country facing pressure to secure stable access to rare earths — metallic elements used in artificial intelligence servers, smartphones, electric vehicles and military applications such as fighter jets — after China imposed an export licensing measure last year that threatened to cut off supplies. China is using its dominance in rare earths as a bargaining chip in its trade negotiatons with the US and the EU. As of last year, it controlled 60 to 70 percent of global rare earth mining production and more than 90 percent of processing capacity. Trade disputes are evolving into a fight over the supply of strategic elements, mainly rare earths, as well as semiconductor equipment availability and technology advancements. Those who control the supply chains have power in trade negotiations.
To bolster a rare earths supply chain that excludes China, the US since last year has unveiled investments in mining and refining companies, including MP Materials Corp, Vulcan Metals and Lithium Americas Corp, Bloomberg reported. Furthermore, the US Department of Commerce signed a nonbinding agreement with USA Rare Earth Inc for US$1.6 billion in funding, the report said.
Meanwhile, Japan is advancing a plan to extract rare earths from deep seabeds as part of the country’s broader drive to cut reliance on Chinese supply. Tokyo on Monday said that rare earths have been found in sediment from ocean depths of 6,000m.
Japan imports about 70 percent of its rare earths from China. As it seeks to diversify is supply sources, Japan said that the UK has agreed to greater cooperation on critical mineral supplies.
To promote mining, processing and manufacturing of rare earths in India’s eastern and southern states, New Delhi has listed rare earths alongside semiconductors as a strategic sector.
Taiwan, which has limited access to domestic rare earths, imports 90 percent of its supplies, with 95 percent of that from China. Building a resilient supply chain should be a top priority for the government, as the nation’s economy relies heavily on exports of high-tech goods, semiconductors in particular.
The government has taken some small steps to secure supplies, but they are far from sufficient. When China imposed its curbs, the Ministry of Economic Affairs accelerated plans to be free of reliance from across the Taiwan Strait in just one year. The ministry’s goal is to supply 1,500 tonnes, or one-third of annual consumption, domestically by 2030 by recovering high-value magnetic materials. That would reduce reliance on mining. Key recovery techniques, including hydrometallurgy and direct recycling, are being developed by the Industrial Technology Research Institute, but it would take time to transfer the technologies to private companies, the ministry said.
Last month, Taiwan and the US at an Economic Prosperity Partnership Dialogue agreed to enhance collaboration on exploration, mining and processing of rare earths for firms in seven key sectors, including drones, the ministry said.
That is encouraging news, but no concrete plans were announced.
In more recent developments, the ministry announced subsidies of NT$405 million (US$12.83 million) to encourage local companies to develop key minerals used in electronic components, optical cameras, layer processing and high-end equipment, with an aim to reduce dependence on imports, but as the amount is minuscule relative to the operating budgets of firms in the field, the relevance of the program is questionable.
The government should boost subsidies for extracting the elements from recycled products. One of the most effective approaches would be to expand global cooperation programs and participate in global initiatives such as the Minerals Security Partnership, which was initiated by the US and includes Japan and Australia as members.
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