Rare earth minerals are essential to make everything, from cell phones to electric cars. China regulates the flow of these vital raw materials.

This isn’t just an infrequent geopolitical trend. It’s a structural issue in the market and could be a threat to Western countries and their economies.

Global Market

The global market for rare earth minerals has been dominated China since its inception. China has the largest inventory of rare earth minerals and is the top exporter and producer.

These minerals are used to make electric vehicles, solar panels and satellites, as well as weapons and other critical technologies. They are an essential component of the manufacturing process and, as such they are highly susceptible to disruptions in supply chains.

However the Chinese stranglehold over the world market for these minerals isn’t a permanent one. These minerals are in short supply for a number of years.

This has resulted in a growing sense of concern among western governments that their dependence on Chinese rare earths is affecting US and EU competitiveness. The US and other countries are trying to decrease their dependence on China for REE production and processing, and storage.

Many governments in the US, Australia, Canada, and Canada are looking for new sources for these minerals. Moreover, there is a growing need in Africa to look at new opportunities for mining rare earth.

In the United States, the reliance on Chinese rare earths has become an issue of national interest that is being debated in Washington, D.C. Bloomberg reported that the president Trump ordered his cabinet to study the situation and come up with ways to reduce the country’s dependence on Chinese REEs.

Bloomberg News reports that the European Union, Japan, and other countries are looking to create trade agreements that will eliminate China from their supply chain for these minerals. This is due to the fact that they are worried that the US which accounts for about one-third of the world’s rare earth elements imports, will be dependent on Chinese REEs to make wind turbines, batteries and other energy-efficient devices.

Another factor accelerating the growth of the market is the increasing demand for Neodymium magnets, which use rare earth elements in their design. They are also utilized in consumer electronics, and turbines.

Furthermore, the rise in the population of tech-savvy individuals and their increasing reliance on electronic devices is a major factor in the growth of the global market for rare earth elements. In addition, the production of green-energy products is also likely to significantly impact the market growth.

Rare earth Minerals

The United States has been concerned for years about China’s influence over Rare earth Minerals, the primary raw material used to create jet engines as well as other vital components of military equipment, could pose a threat to its military. When the Chinese government first began restricting exports in 2010, the fear was that it would create an insufficient supply of essential rare earth metals, which are vital for powering technology like batteries and computers.

Washington has taken steps to fight the threat by trying to diversify the supply chain of rare earths and collaborating with other nations around the world to boost the processing capacity of these minerals. This has been a success in Japan, where it has reduced its dependence on China for almost all its rare earths needs.

It’s unlikely that the U.S., or any other country will be able to completely break away from China’s market dominance. This will require a significant investment in time and money and could take a long time.

However, If Washington and its allies cooperate to improve their supply chains in the appropriate ways, they’ll build a resilient and robust system that isn’t susceptible to disruptions in policy or economic coercion.

Jane Nakano, senior fellow at CSIS said that creating a more diverse supply chain isn’t something that can be achieved in a matter of days. To completely end China’s control of the supply of crucial minerals, it’ll require a decade.

To diversify the processing of rare earth and to diversify rare earth processing, the United States should work with its allies in Canada, Mexico, the Quad and South America. This will help ensure an increased resilience and dependable supply of these essential elements to the global economy.

CSIS recently discovered that China’s rare Earth production is based on a strategy of influence on geopolitics. The Chinese government views the minerals as a trump card to be used in retaliation against foreign policies.

This strategy is in force. Xi Jinping visited a Jiangxi province rare earth processing facility last year and reiterated China’s belief that crucial minerals are geopolitical resources. This approach raises questions for Western policymakers because it could lead to China’s strategic leverage being used to weaken Western economies, Nakano stated.

China’s Coercion

China remains the dominant producer of rare earth and mining in spite of the rise of other competitors. China is the largest producer of the world’s rare earth mines, and 85% of the refined products.

The US, Japan, and other Western countries are worried about China’s monopoly on rare earth minerals. These vital resources are essential to many advanced technologies, like smartphones and electric battery packs for vehicles. The market for these materials is growing as the renewable energy infrastructure expands and green technologies continue to advance.

The United States has many options to diversify its supply including tax breaks and cost-assistive policy to boost domestic production. Analysts warn that the United States and its allies may require patience to get rid of China’s dependence on these minerals.

One method is through an alteration in market dynamics, which will allow suppliers from outside China to compete. Changes in market conditions may lead to lower prices and better deals with suppliers. This could enable new companies to join the industry.

Another way that the United States can help diversify its supply of minerals is by exporting them. The United States has a large stockpile of rare Earth elements. However the market is expected to grow quickly over the next few decades as more people turn to renewable energy sources like wind and solar.

The market for rare earths can be extremely competitive, and many players are keen on creating an industry that is not dependent on China. Some of the newcomers are focusing on the African continent, where there are significant mineral deposits.

Those efforts have been supported by the US government and Congress and is looking for ways to reduce the country’s dependence on Chinese rare earths. While different administrations might prioritize national defense or dealing with the climate crisis, there is a bipartisan support for reducing our dependence on foreign sources of rare earths.

One of the major challenges facing the US and its allies is to overcome the problems in mining and processing rare earths. This is because all minerals are mixed and it is hard for processors to differentiate them based on their individual characteristics. The thorium element in these minerals can pose a health risk to people who use them. There are also environmental issues that could limit the opportunities for Western companies to get involved in this field.

Strive to diversify

The world’s supply of Rare Earth Minerals (REEs) has been heavily dominated by China for a long time, but recent trends in the decarbonization of technologies have made it more important for countries to diversify their REEs supply. This is especially relevant to elements like nickel, cobalt, lithium and copper that are utilized to power EVs and turbines.

The demand for these minerals is expected to increase as the world works to meet climate change targets by implementing decarbonization technology. This means that REEs are more essential than ever before to the global economy.

REEs are also vital for the production of semiconductors or batteries. These technologies are vital for modern societies to thrive. If REEs weren’t readily available, these industries could be severely affected.

Many countries are making efforts to diversify their REE production facilities and sources. In the United States, for example numerous companies have invested millions in new rare earth refineries.

One of the best examples of this effort to diversify was Japan, which was one of the first to recognize the importance of decreasing its dependence on China for REEs. Its diversification strategy included joint ventures, new economic partnership agreements, and mining exploration.

Another country with a long track record of diversification is South Korea. It is an economic powerhouse, and is an innovator in technology development. It was keen to diversify its resource base of rare earths. Its diversification efforts include developing partnerships with universities to develop a cleaner, less polluting method of turning rare minerals into metals.

A number of other countries, including Argentina and the United States, have taken steps to lessen their dependence on China for REEs. However, diversification away from China has been slow.

This could be a sign that Western countries are increasingly skeptical of Chinese policies, particularly those that involve foreign minerals or other natural resources. They are now more concerned about how China’s policies could impact their REE production.