Taipei, Taiwan – As US President-elect Donald Trump prepares for a second trade war with China after taking office on January 20, the rare earth mineral needed to make electricity, cars and weapons is one of the things expected to be caught up in the war. .
Although the world's rarest countries are abundant in the world – regardless of their name – China controls about 70 percent of the production and 90 percent of the recycling, according to estimates by the US Geological Survey and the International Energy Agency.
The 17 elements, which include scandium, promethium and yttrium, are used to make everything from cell phones, semiconductors, and EV batteries, to F-35 fighter jets, drones, wind turbines, radar systems and weapons. nuclear.
The threat of global supply chains has been a concern of governments around the world during the financial crisis.
Last month, China banned the export of gallium, germanium and antimony to the US after the administration of President Joe Biden announced its latest measures to sell a lot of chips and machines to the country.
The move was seen as symbolic as the US has other sources of gallium and germanium.
But it also marked a rise in Beijing's use of the rare earth as a tool to counter international pressure after declaring it a major government asset in October and banning the export of technologies used to dismantle and dismantle weapons late last year.
It also recalled the Chinese government's decision in 2010 to briefly ban the export of such minerals to Japan amid a maritime boundary dispute between the sides.
With Trump promising to impose new trade restrictions on China – ranging from 10 percent tariffs on the Chinese economy for Beijing's failure to curb fentanyl exports, to 60 percent tariffs on unfair trade practices – Beijing could also prevent the needy countries to respond. kind.
Although the Chinese government has not reimposed export restrictions, Trump's tariffs could make salt more expensive to obtain.
“Looking ahead 12-18 months, the global landscape has some wild cards that could immediately affect the way they get to the economy and the economy they serve,” said Ryan Castilloux, a global analyst at a Canadian research and consulting firm. Adams Intelligence, told Al Jazeera.
Washington is particularly concerned about rare earth elements such as neodymium, praseodymium, dysprosium, and terbium, Castilloux said, which are used to make powerful neodymium magnets – also known as NdFeB magnets.
Rare earths and finished products such as rare earth magnets, which are several times stronger than ordinary magnets, are considered a “threat to US manufacturers and defense companies” because the US and its allies have not yet developed an alternative to China, Castilloux said, despite mining operations it is moving elsewhere, including three US states and Estonia.
Washington has made the establishment of “sustainable mine-to-magnet chains” a priority.
In March, Danielle Miller, the deputy assistant secretary for defense industry, said that efforts to build such a pipeline that could support all of the defense needs of the US by 2027 are “well underway”.
Although there are large reserves of rare earth in many countries, from Angola and Australia to Brazil, Canada and South Africa, expanding trade routes beyond China is a difficult task.
China has been able to maintain its dominance of the industry thanks to its wealth, government support, and accumulation of large reserves that have allowed it to undercut competitors with “absurdly low prices”, said Neha Mukherjee, an expert on minerals. at Benchmark Mineral Intelligence.
Rare earths are produced from other minerals such as iron, and are not produced in large quantities. As a result, the abundance and therefore the prices of different types of rare species can vary greatly between the 17 minerals.
Mukherjee said China is focusing on keeping global prices stable to support its domestic EV business, even if doing so could hurt the mining sector.
China's oversupply and unbeatable prices have made rare mining and processing facilities unattractive to many investors.
“He is preventing anyone from competing with him. It doesn't make it economically viable to mine when you can buy things that are partially processed,” Mike Walden, CEO of TechCet, a consulting firm specializing in electronics, told Al Jazeera.
The timeline is long, taking 10-20 years from research to construction, Walden added.
The most critical moment in the US's efforts to find the world's rarest materials was the reopening of the Mountain Pass Mine in California's Mojave Desert – which was first discovered in the 1870s – by MP Materials in 2018.
The company has opened a magnet factory in Texas.
Other rare earth related sites outside of China include a mine in Yellowknife, Canada, a magnetic recycling machine in the US state of Texas, and a US earth magnet factory in South Carolina, with many projects underway in North America.
Since 2022, the US Department of Defense and the Department of Energy have provided more than $440m to the world's neediest companies, with additional tax credits provided by the Inflation Reduction Act.
Such projects could help the U.S. weather the storm if China cut off exports to the poor, though the country would still struggle to become self-sufficient, Walden said.
“The important thing here is that there is a place to work in North America. Is it enough to support all the interests of North America? The answer is no. Is it enough to support the interests of North America? The answer seems to be yes,” he said, referring to the most important areas. of Washington as security and power.
Although mines have been opened or reopened outside China, rare earth minerals are often shipped there for processing, experts say.
China controls 99 percent of the processing of rare earths, a small but important part of which is used in the production of EVs, wind turbines, and fiber optic cables.
North America is not the only region that is trying to exercise. In January, Brazil's first rare earth mine in Serra Verde opened for commercial production after 15 years of development.
Europe has rare earth deposits in France, Estonia, and Germany, but they have not opened any mines despite having the world's largest rare earth deposits in Sweden, Finland, Norway, and Spain.
Australia also has many mining and processing facilities, and the government is spending hundreds of millions of dollars to develop them.
Benchmark Mineral Intelligence's Mukherjee said such initiatives are not enough to reduce dependence on China.
“There is a great need for a circular economy. There is a great need for recycling. There is a great need for middle and high-end places to be created in the US, and there should be a lot of money that will be sent that way,” he said.
Some of the skepticism – especially in Europe – has been due to the environmental costs associated with foreign mining and processing, including the separation and removal of radioactive materials uranium and thorium.
Mining and processing produce large amounts of waste and can release trace amounts of rare earths, radionuclides, heavy metals, and acids into the surrounding air, soil and groundwater, according to a 2021 Canadian study.
Australia's Lynas Rare Earths, the world's largest rare earth company outside of China, faced massive protests in Malaysia in 2019 over the toxic waste generated by their rare earth sites.
Researchers say some of these concerns could be addressed with new technology and automation to meet the high environmental standards many governments are demanding, but that would take time and money.
The industry could, ironically, continue to thrive if Beijing clamps down on exports, said Castilloux of Adamas Intelligence.
“The last time China reduced exports, it led to many years of losses as many users looked to reduce their consumption or make other changes in the following years,” he said.
“Banning magnetic exports, even for a short period of time, would divert more government funds into other domestic and foreign trade.”
With days to go before Trump re-enters the White House, there is a lot of uncertainty about how he will approach the world's rarest companies.
During his first term in office, he issued an executive order declaring the Rare Earths an emergency because the US was relying on a “foreign enemy” to find them.
Trump is expected to roll back environmental regulations that prevent the opening and operation of mines, but he has also vetoed major funding measures such as the Inflation Reduction Act and the Bipartisan Infrastructure Law.
Some experts have complained that Trump could invoke the International Emergency Economic Powers Act to impose tariffs on rare minerals, or order the Commerce Secretary to open a Section 232 investigation into the national security implications of such exports, as he did. aluminum in 2018, despite its economic importance.
For now, the industry is preparing for a tough road ahead, Walden said, and keeping things in balance.
“There have been preparations. Everyone is waiting, not for the cold, but actually more. So tit-for-tat: revenge, next step, revenge, next step,” he said.