Tuesday , 18 June 2019

Trade Hardball: China Threatens To Cut Off Supply Of Rare Earth Elements To U.S.

China does not have the means to match the U.S. in the total number, or amount, of tariffs but China can strike back in other ways. One critical way would be to cut off its export of rare earth elements to the U.S..

China produces 80% of the world’s supply of 17 rare earth elements which are critical in the manufacturing of cell phones, hybrid cars, weapons, flat-screen TVs, magnets, mercury-vapor lights, and camera lenses…

There’s a good set of reasons nearly all rare earths are produced in China:

  • The whole process is “expensive, difficult, and dangerous,” says former rare earth trader and freelance journalist Tim Worstall [and, as such,]…”the West has been more or less happy to cede production of rare earths to China”. (From the 1960s to the ‘80s, the U.S. did actually supply the world with these elements; all extracted from a single mine in California named Mountain Pass but, in the ‘90s, China entered the market and drove down prices, making Mountain Pass unprofitable and leading to its closure in 2002.)
    • Rare earth production in China is often a byproduct of other mining operations. “The biggest plant there is actually an iron ore mine which extracts rare earths on the side,” says Worstall. This means that, unlike the Mountain Pass mine, producers aren’t reliant on a single product. “If you are trying to only produce rare earths, then you’re subject to the swings and roundabouts of the market”…
    • A grueling extraction process is required to obtain rare earths from the ore that contains them. The material has to be dissolved in solutions of acids, over and over again, then filtered, and dissolved once more…
    • For each new mining location, the concentration of the acids used has to be recalculated in order to target the specific impurities in the soil.
    • To top it off, the whole process produces any number of nasty chemical byproducts and is radioactive.

The notion that there will be a plant any time soon in the U.S. seems like fantasyland material…[so where does that leave the U.S. in their negotiations with China? Time will tell.]

Below is an infographic on the REE market compliments of VisualCapitalist.com:

rare-earth-elements-infographic

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Editor’s Note: The above excerpts* from the original article have been edited ([ ]) and abridged (…) for the sake of clarity and brevity. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)

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