News ID: 253486
Published: 1018 GMT May 29, 2019

Are rare earth minerals China's trump card in its trade war with US?

Are rare earth minerals China's trump card in its trade war with US?

China has been signaling that it may restrict the export of rare earth minerals to the US as the trade conflict between the two countries escalates.

It is by far the largest producer of these raw materials, vital for many American industries including high-growth sectors such as electric car and wind turbine production, BBC reported.

Last year, the US Geological Survey designated these minerals critical to the economy and national defense.

"China is seriously considering restricting rare earth exports to the US," tweeted the editor of Chinese state-run Global Times this week.


What are rare earth minerals?


Rare earth minerals are a group of 17 elements used in production in a huge number of sectors, including renewable energy technology, oil refinery, electronics, and the glass industry.

Although called ‘rare’, they are actually found relatively abundantly in the Earth's crust, according to the US Geological Survey.

However, there are relatively few places in the world that mine or produce them.

Extraction is both difficult and potentially damaging to the environment.

Chinese mines account for around 70 percent of global output.

Myanmar, Australia, and the US plus a few other countries which mine only small amounts, account for the rest.


China's dominance of rare earth mining

In the refining of rare earth ores, China is even more dominant.

Last year, almost 90 percent of all the processing into usable oxides was done in China.

An Australian company operating in Malaysia produces almost all the rest.

Over the past five years, China's exports of rare earth oxides have almost doubled, according to official Chinese statistics.


How reliant on China is US?


Around 80 percent of the rare earths imported by the US comes from China, according to US government data.

Estonia, France and Japan also supply processed rare earths to the US, but the original ore comes from China.

The one rare earth mine operating in the US sends its ore to China for processing — and already faces a 25-percent import tariff imposed by China.

There is an option for the US to import from Malaysia, but not in the quantities required.

Also, the Malaysian government has threatened to discontinue production because of environmental concerns.


Could US start its own refining industry for rare earths?


It's certainly possible, but this would take time and the sources of ore could be limited if China were ruled out.

Until the 1980s, the US was in fact the largest producer of rare earths.

China has restricted exports of rare earths before.

In 2010, they did it against Japan, over a territorial dispute.

The restriction of exports to the US, if enforced, could have a major impact on major US industries worth trillions of dollars that rely on rare earth minerals.




Resource: BBC
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