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Chad Bray

Rare earth elements could be a point of leverage that China may deploy against the United States as a trade war between the world’s two largest economies escalates, particularly after Chinese President Xi Jinping visited a production facility this week.
The Trump administration has threatened to place tariffs on the imports of Chinese-produced rare earths several times in the past year, but has so far left them off any tariff lists, given their uses from Apple iPhones to hi-tech missile guidance systems.
What are rare earths?
Rare earth materials are a group of 17 elements on the periodic table: cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La), lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (Tb), thulium (Tm), ytterbium (Yb), and yttrium (Y).


What make rare earths rare?
Rare earths are actually more plentiful in the earth’s crust than precious metals such as gold and platinum, but they are “rare” because they usually exist in nature as compounds fused with other metals. Refining and extracting them in commercially viable quantities are expensive endeavours, especially in jurisdictions with strict environmental and effluent standards. That makes them scarce, and therefore rare.

Where are rare earths found?
Rare earth deposits exist in China, California, Australia, Brazil, Burundi, India, Malaysia, Myanmar, Russia, Thailand and Vietnam, with global deposit reserves estimated at 120 million tonnes.
The US was the world’s largest producer of rare earths for decades, until the 1980s. Since the Chinese government undertook a concerted effort to exploit the country’s reserves of rare earths – mined and processed in Inner Mongolia, Jiangxi, Shandong, Sichuan, Guangdong, Fujian, Hunan, Yunnan and Guangxi – China has accounted for more than 90 per cent of the world’s production, according to the US Geological Survey.
Last year, China mined about 120,000 tonnes of rare earth elements, or about 71 per cent of global output, following an increase in production in the US, according to the Geological Survey.


How are rare earths used?
The glass industry is one of the largest consumers of rare earths, where the compounds of cerium, lanthanum and lutetium are used in polishing, and as additives to provide colour or add special optical properties.
Permanent magnets are the next big category where rare earths are used. Neodymium iron boron (NdFeB, or “Neo”) magnets are the most widely used and strongest variety that is commercially available. They are found in hard disc drives, miniature motors, loudspeakers and headphones, smartphone speakers, electric turbines and generators.
Dysprosium, gadolinium and praseodymium are also used in magnets.
Yttrium, cerium, lanthanum, europium and terbium are used to manufacture cathode ray tubes and flat panel display screens.
Raytheon’s Patriot Missile air defence system uses radio frequency circulators to magnetically control the flow of electronic signals in radar and missiles. The rare earths used are gadolinium, samarium and yttrium.
Rare earth elements also are found in synthetic gems used in lasers, microwave equipment and superconductors.


What is the relationship between the US and China in rare earths?
The Mountain Pass mine in California is the only US producer of rare earths. It closed in 2015 after its operator went bankrupt and was sold to an American consortium backed by China’s Shenghe Resources Holding two years later. It resumed production last year and ships its production to China for refining.
China also is, by far, the largest exporter to the US, the source of 59 per cent of the US$155 million in rare earths that America imported last year, according to the US International Trade Commission’s data.
“Concerns about the availability of rare-earth supplies have stimulated efforts in recycling, substitution, and improving material efficiencies,” the Geological Survey said in its report. “These efforts are being led by the leading consumers” of rare earth elements, the agency said.


Has China ever used the country’s dominance in rare earths to its advantage? 
In 2010, a diplomatic row ensued after a Chinese fishing trawler collided with Japanese coastguard patrol boats near the disputed Diaoyu island, known as the Senkaku in Japan. China reduced the export quota of rare earths, upon which Japanese carmakers like Toyota Motor Corporation and battery makers like Matsushita Electric’s Panasonic unit depend for their electric vehicles and battery packs.
Japan just found enough rare minerals for 780 years of local demand
Japan has been seeking alternative sources since the 2010 row. Around the same time, China attempted to restrict the supply of rare earths through quotas, licenses and taxes, according to the Geological Survey. Those restrictions were removed in 2014, but have fuelled an increase of stockpiling of the materials and exploration efforts outside China.
Japanese scientists indicated last year that they had discovered a concentrated cache of rare earth minerals on the seabed off the country’s coast.
Is China a net importer of rare earths?
By tonnage, China imported more rare earth elements in 2018 and the first quarter of 2019 than it exported, as the US and Myanmar increased their exports of the metals. On a yuan basis, China, however, exported much more than it imported because it is the world’s biggest refiner of rare earths. The only operating mine in the US sends all of its raw material to China to be refined into higher valuable, usable forms.




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Rare-earth oxides, clockwise from top centre: Praseodymium, cerium, lanthanum, neodymium, samarium, and gadolinium. Photo: AP/US Department of Agriculture

A labourer works at the site of a rare earth metals mine at Nancheng county, Jiangxi province in this October 29, 2010 file photo. The United States, Europe and Japan joined forces on March 13, 2012 to challenge China's restrictions on exports of rare earth minerals critical to the manufacture of advanced technology. In a formal complaint to the World Trade Organization, the three trade powers accused Beijing of trying to hold down prices for its domestic manufacturers and to pressure international firms to move operations to China. REUTERS/Stringer/Files (CHINA - Tags: ENERGY ENVIRONMENT POLITICS BUSINESS) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA

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President Xi Jinping visits China’s rare earths mining base in Jiangxi province on Monday. Photo: Xinhua

(190520) -- GANZHOU, May 20, 2019 (Xinhua) -- Chinese President Xi Jinping, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, pays tribute to and lays a floral basket at a monument marking the departure of the Long March in Yudu County of Ganzhou City, east China's Jiangxi Province, May 20, 2019. Xi on Monday afternoon visited the starting point of the Long March by the Central Red Army in Yudu County, on an inspection tour of Jiangxi Province. (Xinhua/Xie Huanchi)

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The open-pit Mountain Pass rare earths mine in California, which is now owned by a consortium that includes Chengdu-based Shenghe Resources Holding. Photo: Reuters

*** ONE TIME USE ONLY *** --FILE--Excavators load rare earth onto trucks on a quay at the Port of Lianyungang in Lianyungang city, east Chinas Jiangsu province, 4 November 2012. China is preparing to scrap controversial tariffs and quotas on the export of rare earth materials after a World Trade Organization (WTO) panel branded them discriminatory earlier this year, according to reports. China is responsible for more than 90 percent of global rare earth production, giving it a chokehold over the supply of 17 elements with a wide range of uses in high-tech sectors such as defence and renewable energy. The move to comply with WTO rules would reflect a tactical adjustment for Beijing, but its long-term plan to improve pricing power and gain market share in lucrative downstream industries is expected to remain unchanged.

Human hair to rare earth metals – the items that won a reprieve as the US-China trade war expands

A wig shop in Shanghai. China is the second-largest exporter of human hair to the US, which is often processed into wigs. The category was exempt from new tariffs published on Monday in America. Photo: Reuters

Apple wireless AirPods are tested during a media event at Bill Graham Civic Auditorium in San Francisco, California on September 07, 2016. / AFP PHOTO / Josh Edelson [12DECEMBER2016 FEATURES DIGITAL]

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The little known minerals are used in a variety of industries and hi-tech devices
China has accounted for more than 90 per cent of global production since the late 1990s



The 17 little-known minerals are used in a variety of industries and hi-tech devices and their production has been dominated by China since the late 1990s.


Explainers: Technology

Explainers: Science

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Rare earths

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US-China trade war: All stories

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Explainer

Explainer | Explainer: Used from iPhones to guided missiles, does China’s dominance in rare earths hold potential leverage in trade war?

The little known minerals are used in a variety of industries and hi-tech devices China has accounted for more than 90 per cent of global production since the late 1990s

The little known minerals are used in a variety of industries and hi-tech devices

China has accounted for more than 90 per cent of global production since the late 1990s