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China Cements Dominance Over Rare Earths
China, the global leader in the processing of rare earths, has outlawed the international trade of technology utilized for the extraction and separation of these vital materials on Thursday. This adds to China's concerted measures to safeguard its control over strategic metals, of which it's currently the leading processor.
Counted among these rare earths are a collection of 17 metals integral to the production of magnets, transforming energy into motion. These magnets find extensive usage in electric cars, wind turbines, and electronic devices.
The Implication of the Ban
With Western countries striving to establish their own rare earth processing industries, China's ban is set to profoundly impact the ‘heavy rare earths’ sector. These are primarily used in electric vehicle motors, medical equipment, and military hardware. At present, China has a near-total monopoly over the refinement of these materials.
A warning for Western nations relying on China, remarks Nathan Picarsic, co-founder of Horizon Advisory, a geopolitical consulting firm.
Foreign Reaction and Response
In December, the Chinese commerce ministry invited public opinions on the new initiative to introduce this technology to the list of technology that is prohibited and restricted from exportation.
In a bid to preserve national security and public interest, China has been implementing strict rules this year regarding the export of several metals, thus escalating the tussle with the West over control of crucial minerals.
Western Countries’ Struggle in Rare Earths
The West, including Europe and the United States, are struggling to reduce their reliance on China for rare earths. China drives almost 90% of the worldwide refined output. Western rare earth companies like MP Materials have been finding it difficult to adapt the solvent extraction process due to technical intricacies and pollution concerns.
Following China's latest move, California-based MP's shares spiked over 10%. In similar news, Ucore Rare Metals reported that it had completed the commission of a facility to test its rare earth processing technology. This development has been partially funded by the U.S. Department of Defense.
Tightening Grip on Rare Earth Supply Chain
Regardless of the ban, it is still uncertain to what extent China's rare earth technology is actually exported. Even though Beijing has been discouraging its export for years, this prohibition merely just validates what most knew to be accurate, notes Constantine Karayannopoulos, the former CEO of Neo Performance Materials.
According to consultants at Benchmark Mineral Intelligence (BMI), China separates practically all (99.9%) of the world's heavy rare earths. Most of the processing capacity being built in the West is for ‘lighter' rare earths.
