The ubiquitous presence of specific 17 rare earth minerals in everything from mobile devices, defense gear to electric cars is driving the future. China, being the world’s foremost producer and refiner, is consolidating its hold, posing considerable threats to the major automakers in the United States. Over three decades, China has strategically dominated the market of mining and refining rare earth minerals that contribute to the production of various norms including consumer vehicles and day-to-day electronics.
This dominance is being wielded by China in the midst of escalating trade tensions under the Trump administration and exposes the American automobile industry to significant risks. ‘We’re closing in on a crisis that could break out within the next three months,’ warns Ambrose Conroy, the founder of Seraph Consulting and an important stakeholder in mining operations in the Democratic Republic of Congo.
Industry analysts show that, in excess of 90 percent of global supplies of these 17 elements, usually found at the base of the periodic table, undergo mining, refinement, and transformation into rare earth magnets in China. Following Trump’s declaration of tariffs peaking at 145 percent on Chinese imports, China has struck back with an array of tariffs and export regulations.
As a more impactful move, China has overhauled it’s export policy for rare earths in early April. Currently, Chinese businesses are required to secure specific permits to export rare earths, with a keen focus on neodymium, dysprosium, and terbium, along with rare earth magnets which are integral to practically all tech products on the market.
These elements and the magnets produced from them are fundamentally essential to the automobile industry. Found in electric and hybrid vehicles motors, these rare earth magnets are also present in conventional internal combustion vehicles, serving roles in catalytic converters, LiDAR and radar gear for progressive driving systems, music setups, power steering units, fuel, and cooling infrastructures, transmission parts, and more.
China is in the process of establishing control through the new export regulations, and this could result in dwindling stockpiles. As the supplies taper and prices rise, auto giants like Tesla, GM, and Ford have begun to feel the pressure, a situation that could worsen, though recent US-China talks have offered some reprieve. The recent agreement indicates that the US should be able to secure the rare earth permits with greater ease, says Reuters.
Although the term ‘rare earths’ could be misconstrued to mean that these minerals are in short supply, they really aren’t. They are found all around in small quantities. Extraction of rare earth ores does not pose a significant challenge, and while they can be sourced worldwide, separating them is a complex task. The supply chain delicately hangs on these factors. The last manufacturer of rare earth magnets in the US was sold off by GM in the mid-90s, and the specialized equipment was taken overseas by the Chinese buyer.
The process of refining rare earth minerals and producing magnets out of them has a significant environmental impact, and Western nations are reluctant to dirty their hands. Auto manufacturers are now voicing their concerns about the developing rare earths trade war. Ford has publicly aired the significant influence the restrictions on rare earths are projected to exert on their business, going so far as to predict a profound impact on the auto sector as a whole.
While President Trump champions his tariffs as a strategy to bring back manufacturing jobs, the truth is that they’re affecting the global and American economy negatively. The heightened tension in trade with China could worsen conditions for automakers, although some like GM have taken steps to shield themselves from potential shortages of rare earth materials during the pandemic.
Companies such as Niron Magnetics are channeling their efforts towards developing alternative magnet materials that employ iron nitride instead of rare earths. Concurrently, materials scientists are working tirelessly on researching ways to recover dysprosium from old magnets without sacrificing performance.
A recent agreement between the US and Ukraine sets the stage for future mining of critical minerals, inclusive of rare earths, after some tough negotiations. While it still requires approval by the Ukraine parliament, under the terms, Ukraine retains complete ownership of its resources and profits from the mining, while the US gets privileged access and extraction rights to rare earths and other critical minerals like titanium, lithium, and uranium.
This is not the first time the US has found itself in such a predicament. A similar situation occurred in 2010 when China limited exports of rare earths to Japan due to a maritime disagreement. The dispute triggered global anxiety and drove up prices for materials and magnets.
Today stands different. The demand for rare earths and rare earth magnets globally is noticeably higher than in 2010 according to the International Energy Agency. The dependency of the US on China for rare earth minerals and magnets is immense and currently, the infrastructure, equipment, and workforce needed to match the overseas output and meet demand are lacking.
A significant financial investment and environmental compromises would be needed to establish these processes onshore. With a $200 million investment, the US could theoretically produce and refine its own dysprosium. But even with the willingness to invest such an amount, initiating and permitting a new mine could be a slow process, possibly taking seven to ten years.
‘China adopts a millennia-long perspective on matters, and they’ve cornered everything,’ states Conroy. ‘They’ve vertically integrated, they have all the resources. They’ve subsidized everything on a state level, creating a marketplace they control, shifting the economic balance, optimizing processes, and products to use the materials they have mastered. Contrastingly, we in the West have a significant amount of ground to cover, to catch up.’
The post China’s Dominance in Rare Earth Minerals Puts US Auto Industry at Risk appeared first on Real News Now.
About Author
