Saturday, April 8, 2023, 01:21
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After Putin’s war from Ukraine opened Europe’s eyes to the dependence on Russia, of its fuel imports, a new global economic strategy has taken shape. So United States and the countries of the old continent want to deal a heavy blow to China and give up its rare earths, a real wealth, by changing import markets.
Even as Chinese rare earth players cement their positions in international markets, other countries are slowly making progress in rebuilding their rare earth supply chains. They have a single purpose: to loosen China’s grip on these precious metals, fittingly Quartz.
Concluding a slew of recent deals, Western nations and their allies are trying to rely less on China for purified rare earths, which go into everything from iPhones to EVs to semiconductors. This marks a huge realignment in commerce – one that goes by names like “friendshoring” and “nearshoring”.
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These changes happened so quickly that they alienated Beijing. “China has not adapted to the current new model of global competition for rare earths,” Dai Tao, a professor at the Chinese Academy of Geological Sciences, wrote in a recent paper.
YOUR and Europe makes rare earth deals without China. An example of this realignment is a two-year-old collaboration between American and European rare earth firms.
The project involves processing Utah monazite sands to produce rare earth carbonates, then shipping them to Estonia for processing. In another transatlantic project, rare earth ores mined in Canada they will undergo preliminary processing there, then travel to Norway for further refinement.
In the meantime, Japan increased its investment in Australian rare earth giant Lynas to secure heavy rare earth supply, further expanding the rare earth supply chain Japan-Australia.
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Japan’s long-standing and strategic relationship with Lynas, which it saved from collapse in 2016, has paid off: its reliance on rare earths from China has fallen from more than 90% of imports to 58% within a decade , according to the data HIM Comtrade.
China defends its dominance of rare earths on a large scale. However, China continues to enjoy significant advantages given the scale of its industry. Apart from mining its own raw materials, China dominates every step in the long industrial chain of producing high-purity rare earths.
One solution for the West is to improve and develop technologies that require less rare earths to better reduce any dependence on China. E.g, Tesla recently announced that its next-generation engines will use magnets without rare earths, although technical details are not being disclosed.
China’s rare earth industry also has vulnerabilities. Another possibility, however, is that China’s rare earth monopoly is becoming a victim of its own success. China’s Combination of Ban on Foreign Investment in Rare Earths, Bans and Restrictions on the Export of Rare Earth Technology; and tax rules that distort the market and increase import dependence on rare earth raw materials are “unsustainable and cannot succeed,” said Thomas Krümmer, author of The Rare Earth Observer newsletter.
