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Wednesday, October 27, 2021

US-China war for defense-critical rare earth metals

U.S. companies partner with state-owned Chinese state-owned partners

Analysis

Over the years, China has dominated the world market by reducing the production and refining of defense-critical rare metals to other countries.

China currently controls 5 percent of global supplies. The Chinese Communist Party (CCP) uses the threat to cut off the supply of rare earth minerals as a bargaining chip. It did so when the United States sold arms to Taiwan, and again when Japan captured the captain of a Chinese fishing boat, demanding the return of the captain before questioning. China cut off supplies to Japan in 2010 amid a dispute over the Senkaku Islands.

As the United States seeks to create a domestic supply chain for rare earth minerals, it has partnered with a Chinese company called Shenghe Resources, whose largest shareholder is a government entity. Even more worrying is that the U.S. Department of Defense is funding this partnership. This puts China back in control of the global supply chain.

Rare earth metals, such as dysprosium and terbium, are vital to defense technology. They are also used to make electric vehicles. Two of the rare minerals, neodymium and presodium are used in motors, turbines and medical technology. Lanthanum is used in high-end camera lenses, with intelligence, surveillance and renewal applications. Phosphorescent Europium is used in LED lights and plasma displays as well as in nuclear reactor control rods.

In the 1900s, the United States dominated the world market for rare earth metals. The tide shifted to China, but pressure from environmentalists in the United States led to lower production abroad with lower labor costs.

The U.S. Department of Defense believes that China has deliberately flooded the world with cheap rare earth minerals, lowered prices, and forced U.S. manufacturers out of the market.

A loader transfers soil containing rare earth minerals to be loaded at a port in Lianyung, Jiangsu Province, China for export to Japan, in this undated photo. China controls the world’s rare mineral supply and the United States is seeking partnerships with allies to reduce its dependence on China. (Via STR / AFP Getty Images)

Terbium, which is used in magnets, is one of the rarest and rarest minerals in the world. Currently, China is centralized in extraction and magnet making. The U.S.-China trade war has threatened to continue U.S. entry into Terbium. This is particularly worrying, because in 2011, when China restricted exports of rare earth metals, prices skyrocketed, showing that China is a price maker, controlling global supply.

Rare earth metals exist in Wyoming, Texas and California in the United States. A US company called MP Materials bought a mine in California in 2011 in the hope of restoring supply to the United States. The agency even received funding from the Department of Defense and the Department of Energy. One of the largest customers and shareholders of the company is the Chinese company Shenghe Resources, which supplies mining products to Asia for processing.

Linus Corporation of Australia is one of the biggest players outside of China. It is extracted in Australia and refined in Malaysia. A Linas spokesman stressed the importance of building a supply chain to bypass China. Meanwhile, another Australian company, RareX, has signed a memorandum of understanding with Shenghe Resources.

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Deposits of rare earth minerals exist in many places, including the European Union, but most countries lack the skills to extract and refine them. In addition, environmental regulations sometimes prevent Western countries from lifting them. These minerals are often attached to radioactive deposits that can leak into the water table. China does not operate within the same environmental constraints as other environments in the world, which gives itself a great advantage.

Shenghe resources seem to be part of the CCP regime’s plan to control global supply of rare earths. The company’s largest shareholder is a state-owned company in the China Geological Survey. In 2019, Shenghe announced a partnership with the state-owned China National Nuclear Corporation (CNNC), a major nuclear producer linked to China’s military.

The company transforms every step of the supply chain from refining minerals to real metals used in the production of high-tech products. Shenghe is forming alliances around the world, including Australia, Vietnam, Greenland and the United States.

Afghanistan has more than ১ 1 trillion in rare earths, and the CCP appears to be already helping the Taliban gain access.

In an effort to bypass China, the United States established a rare earth supply chain connecting the state of Utah with the Estonian city of Silamai. Processing at both ends of the supply chain will be done by two companies, Neo Materials and Chemurs, both of which have significant exposure to China. Neo is a non-Chinese company, but it does most of its processing and production in China. Chemours, China has three manufacturing facilities, two of which are joint ventures with Chinese partners. According to the China Daily, Kemurs was in talks with Chinese state-owned energy companies on possible cooperation.

The production of rare earth metals is extremely complex, requiring many steps and players, making it impossible for any country to make itself fully self-sufficient. On the other hand, the CCP has already shown that it will cut off supplies if other countries misuse it. China’s new export control law will apply to rare earth metals, which will further tell the CCP who can get them and how much. Of course, in the case of war, obviously, China will not sell the rare world to its opponents. This raises serious questions about national security.

The opinions expressed in this article do not necessarily reflect the views of the author and The Epoch Times.

Antonio Gresefo

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PhD, Antonio Gresefo has spent more than 20 years in Asia. He is a graduate of Shanghai University of Sport and holds a China-MBA from Shanghai Xiaotong University. Antonio works as a professor of economics and economic analyst in China, writing for various international media. Some of his Chinese books include “Beyond the Belt and Road: China’s Global Economic Expansion” and “A Short Course on the Chinese Economy.”

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This News Originally From – The Epoch Times

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