While the onset of the coronavirus pandemic has triggered a gradual shift in global supply chains that will likely reduce the dominance of China in the manufacturing of consumer goods, the Asian country has another, perhaps even more important, ace up its sleeve: rare earth metals, an analysis by news portal Mandiner warns.
The name “rare earth” refers to the 17 elements that occur in significant amounts in the earth’s crust, but concentrated mineral deposits from which they can be extracted economically are quite rare. Their importance is enormous in the 21st century, as they are essential in the manufacture of computers, smartphones and other technical devices due to their special physical properties.
To name just one of them, which the average reader has probably never heard of before: Cerium is used in catalytic converters, LCD and plasma screens, oil refining, rechargeable batteries and smartphones. China controls 70 percent of the annual 9,104 tons of Cerium exported around the world, with over half going to Japan and another 20 percent to the United States.
Rare earth metals are also indispensable in the production of military equipment, and various emerging green technologies rely on rare earths as well. Thus, it is not surprising that demand for them could nearly double by 2030 — and China could once again be the biggest beneficiary. The Asian giant has long recognized that significant stocks of rare earth metals can bring serious benefits. As early as 1992, Teng Xiaoping, then leader of the Chinese Communist Party, declared that “the Middle East has oil and China has rare earths.”
Although China “only” has a little over a third of the world’s known reserves, it has the largest ratio of economically mineable ones, providing the country with an almost insurmountable advantage in recent years.
However, countries around the world have recognized in the last decade that it is not a very responsible decision to base their supply chains on China’s near-monopoly position. As recycling rare earths is extremely costly, in parallel with growing demand, other countries have gradually started mining for rare earth elements themselves, cutting China’s share to 62.9 percent in 2019 from 97.7 percent in 2010. However, this means little in light of the fact that nearly 80 percent of the refineries that can actually produce metals from these minerals are still located in China.
And China is not at all afraid of using Western countries’ dependence on rare earths to advance their own interests. Just think back to the rare earth crisis of 2010, when China cut exports significantly, spiking world prices and causing many Western technology companies to relocate to China to secure their supplies. In addition, China has blackmailed the United States several times since the outbreak of the trade war by shutting down rare earth supplies, with severe sanctions in the summer of 2020, for example, for U.S.-Taiwan arms sales.
Title image: Rare earth metals mine in China.
