Sometimes you find strange, very strange phrases, which over time acquire meaning. Or, at least, you have enough information to understand them. It happened to me with this phrase that I read: “Rare earths keep much of the world in motion “. Its author is a French journalist, Guillaume Pitron, signer of a book entitled The rare metals war: the dark side of clean energy and digital technologies. It was originally published in 2018.
It couldn’t be more timely. Especially in your English translation, already available the following year. The arrival of Donald Trump to the White House and its disapplicating attitude towards Ukraine to take advantage of the exploitation of its mining resources have turned the book into a best seller. He was chosen best economic book that year. And Pitron raised his price as a prestigious newspaper collaborator such as Le Figaro or the Repubblica or reference televisions such as BBC or Bloomberg. Pitron is one of those disseminators who usually like for forums such as Davos or Unesco. In short, the idea that defends the book is that, by getting rid of fossil fuels, we are simply assuming a new dependence on rare metals. Lithium, cobalt, rare earth, tungsten, nickel … have become indispensable for the development of the new “green society” (wind farms, solar panels, etc.) and digital (integrated in our phones, computers, tablets and other intelligent devices that we use daily). However, the environmental, economic and political costs of this unit are (and will be) even greater than those of our current industrial society. Without them, many of our technologies would stop working, and China are (and will) the core of the entire industry.
China’s incursion into the rare earth sector began in the 1980sand at that time, the then leader Deng Xiaoping was clear about the importance of these products for the country’s economy. He knew that where the Middle East had (and has) oil, China has rare earths. Since then, China has become a world leader both as a source of raw materials as a refining destination, with the market leader, China Northern Rare Earth High-Tech Co., some seventeen times larger than its next largest international competitor for stock market capitalization. China extracts about 60% of the rare earths of the world and, although that figure has decreased compared to 90% of 2008, the country is still very ahead of any other, and there are very few signs that this will change in the near future. China has the largest proven reserves of the world. The core of the volume is located in the north of the country, and mainly produces light rare earth, while the smallest reserves of the south contain clays containing heavy land, whose presence is scarce. They have taken advantage of both advantages.
After acquiring various processing technologies in France during the 1980s, China also began working to become a processing superpower. Almost 90% of the world’s rare earth processing is currently done in China. It is estimated that the country produced 70 kilotons (one kiloton = 1000 tons) of rare earth refined in 2023. Rare earth processing is quite complex and China has been working for two decades to improve its capacity. But unlike critical mineral processing [como el cobalto]where the volume imports, in the case of rare earths, China’s refining capacity is also backed by its enormous reserves, which gives them a huge advantage. There are three key areas through which China is taking advantage of its control in the market: financial domain, technological experience and export controls.
In terms of financial viability, Rare earth occupy a curiously contradictory position in the world manufacturing industry. Its value for technology is enormous, with articles such as neodymium magnets (of unparalleled efficiency, experts say) and used in all types of products, from smart toothbrushes to tough computer discs and electric vehicles. However, the total financial value of the market is relatively small compared to the mining and refining of other minerals and metals.
-Metals are rare by name, and cannot be replaced with equivalent efficiency alternatives, but they are not as valuable as others, says Pitron. To maintain its leadership, China usually operates with losses in the rare earth supply chain to maintain low prices. However, given the ability of the country’s centralized system to absorb these losses, this seems to be an option that Chinese leaders are willing to take to maintain control of the country on these critical elements.
While the new discoveries of deposits worldwide are relatively common, The development of operational mines can have been Due to the legal and environmental requirements, in addition to the practical opening difficulties. The costs of overcoming all these obstacles can be prohibitive for newcomers compared to potential income, and finding investors willing to wait for more than a decade to obtain a return of investment is difficult. The agreement signed by Trump with Volodimir Zelensky turns the US into that investor.
What has been observed so far is that every time a company does not begin to develop rare earth extraction capacity, China increases its exports, which makes the new mine cease to be commercial. And this has given rise to accusations of dumping against China. But the Chinese care about three hygas. They love losing money if that hurts potential competitors. While producing rare earths at such a low price, it will be impossible for others to produce resources with a decent business model.
In technological terms, especially in rare earth processing, China also far exceeds competition. Between 1950 and 2019, China requested almost 26,000 patents related to rare earths, compared to the 13,920 in Japan and the 9,810 of the United States. And while technologies themselves are incredibly advanced, regulations in China are also less strict in terms of environmental impact. China is willing to pay a high cost, social and environmental, for having much of the refining process in the country. And for this they have created a bottleneck in the international supply chain and have publicly declared their willingness to limit the access of other countries to rare earth technologies. And here the rare are not the Chinese. The current geopolitical environment is much more complex than before, and the United States attempts to control China’s access to the technologies and resources it needs to produce semiconductors have led China to more and more control the supply of rare earth and associated technology. And in this the Chinese are not the rare.
China’s domain in the rare earth sector will be difficult to eliminate. It has great market control and has several buzas to keep it. Meanwhile, the EU and the US have promoted policies to increase national production capacity. The long -term objective is to diversify production and stop depending on China for rare earths. While the process is slow, the situation seems to be changing.
