China controls most of the rare earth market, putting the economic and national security of the United States and the EU at risk. Asymmetric interdependence with Beijing becomes a crucial geopolitical weapon
In the current geopolitical landscape, rare earths emerge as strategic resources of primary importance, at the center of global competition. These elements, fundamental to advanced technological production and national security, see China as the main controlling actor. Western nations, dependent on Chinese supplies, face the critical challenge of diversifying their supply chains to reduce economic and geopolitical vulnerability.
The vulnerability of global supply chains
The Covid-19 pandemic and resulting economic dislocation have highlighted long-standing vulnerabilities in global supply chains. The pandemic's drastic impacts on demand patterns for a wide range of medical products, including essential medicines, have devastated the healthcare system of many countries. There has been a global shortage of many essential goods, including semiconductor chips, which has negatively impacted automotive, industrial and communications products.
The world is also shocked by the war in Ukraine. Major parts of that country are completely destroyed, the world economy is fractured, and supplies of grains, fertilizers and key industrial inputs are disrupted.
In this very serious context, the West has also realized, belatedly, how in recent decades China, ergo the Chinese Communist Party (CCP), has been waging an economic war against the rest of the world, eroding production chains with 'goal of making states dependent, and this plan is succeeding.
The corollary is that the more industries weaken (semiconductors, telecommunications, critical minerals and rare earth elements, high-capacity batteries, pharmaceuticals and medical equipment), the more states' national security is at risk.
The asymmetric interdependence that Beijing uses as a geopolitical weapon
Without access to secure supply chains, no country is able to support its economy and develop weapons systems for national defense.
None of this means excluding China from global supply chains that intersect with those of other countries such as the US and EU; however, it is necessary to understand which circumstances create unacceptable risks and which ones create tolerable or benign risks. In particular, one should be concerned about the so-called asymmetric interdependence that Beijing uses as a geopolitical weapon. These are critical supply chains, i.e. they generate a risky strategic dependence that arises when limited access to a category of products can upset the economy of a country or leave it otherwise vulnerable. This must take into account the technology, know-how, costs and time required to create alternative sources for viable industrial production. Shock preparedness is only one factor, and trade diversification, not autarky, is the key to the solution. The objective is threefold: safety, openness and prosperity of the chains.
The United States has a strategic dependence on China for several products: 80% for critical minerals; 20/25% for semiconductor chips (while 92% depend on Taiwan for the most advanced ones); 60% for consumer electronics, including telecommunications equipment;; 75% for lithium-ion batteries and 100% for many pharmaceuticals and medical supplies.
The EU also has a strategic dependence on Chinese imports for 103 product categories in the electronics, chemicals, minerals/metals and pharmaceuticals/medical sectors.
Furthermore, more than 70% of global production of cobalt, rare earths and tungsten is subject to export restrictions.
American and European dependence on rare earths
Although China has only about 30% of global rare earth reserves, controls 50-60% of their global extraction and 80-90% of the market in the intermediate processing phase. Currently, 98% of the EU's supply of rare earths comes from China. Since the EU does not produce all the raw materials needed to satisfy the internal demand of the Member States, European industry also faces global competition when it comes to access to raw materials.
Dependence on the United States is estimated at around 80%. In 2015, the United States had only one national rare earth mine in production which was located in Mountain Pass, California, and was operated by Molycorp, Inc.
What are rare earths (REEs) and why are they important?
Rare earth elements (REEs) and critical minerals are a group of 17 metals: 15 elements from the lanthanide series and two chemically similar elements, scandium and yttrium. Each with unique and vital properties, they support the production, development, distribution and support of essential services such as telecommunications and computing, food and agriculture, finance, healthcare, education, transportation and public safety. In the civilian sectors of the economy, strategic and critical materials and their supply chains are essential for countless manufactured goods, ranging from personal electronics (an iPhone, for example, contains eight REEs) to consumables for fuel, food and medical supplies, to building homes and supporting critical infrastructure.
In the defense sector, strategic and critical materials ensure the expansion of the production and development of military goods (an F-35 fighter contains approximately 420 kg of REEs and these are essential for guided missiles) and the conduct of forces operations armies. Their demand is expected to increase over the next two decades, especially as the world moves to eliminate net carbon emissions by 2050.
How did we get to this point?
China occupies a leading position in the global supply chain of rare earths (REE) and essential minerals, from extraction to processing up to final use.
The reasons for this success are mainly two. The first is the serious strategic error committed by the United States with the abandonment of public support for the mining sector which led to the abandonment of private entrepreneurs.
The second was Beijing's great ability to move up the value chain with huge investments in research and development and with the experience accumulated in the intermediate stages of production.
The United States was the major global player in the rare earths industry from World War II until the early 1990s. Since the 1980s, however, government investment has ceased and basic research has stopped.
In the 1990s, the public-private investment mechanism disappeared, while China began to effectively use very similar policies to facilitate the growth of its domestic sector.
Currently, Beijing's dominance is due more to its investments in separation and refining than to trade or industrial policies.
In 2012, the Chinese government initiated an industry consolidation process that transformed the industry into six state-owned regional conglomerates. In December 2021, further industry consolidation occurred with the creation of a new mega-firm.
China Rare Earth Group is the result of the merger of three large mining conglomerates and two research institutes. It will control China's heavy and medium rare earths, under the control of the State-owned Assets Supervision and Administration Commission of the State Council (the highest administrative level).
The new conglomerate will control around 30-40% of global supply. In the future, companies in northern China will also be consolidated, around the Baotou mine in Inner Mongolia, and Beijing will have only two huge, vertically integrated state-owned enterprises capable of handling rare earth extraction and post-processing. The southern company will focus on heavy minerals, while the northern one will focus on light minerals (including neodymium).
As mentioned, today China occupies a leading position in the global supply chain of rare earths, from extraction to processing up to final use.
Beijing uses numerous tools to maintain its dominant position, such as export controls (economic coercion), production quotas, state investment in basic research, nationalization of industry, and, more recently, state consolidation in an integrated mega-corporation.
Economic coercion
On December 3, the Chinese Ministry of Commerce announced severe restrictions on the export of "dual-use" technologies. Dual-use technologies are those developed for civilian markets but which also have military utility or can be applied to military platforms and munitions.
The export ban specifically targets the United States, also banning exports of essential minerals such as antimony, gallium and germanium, used in the production of semiconductors and defense technologies. These critical minerals are critical to U.S. economic and national security and have supply chains vulnerable to disruption.
The day before this announcement, the U.S. Commerce Department's Bureau of Industry and Security (BIS) announced new rules aimed at limiting China's ability to produce advanced semiconductors, which are critical for military applications. The rules include new export controls on 24 types of semiconductor manufacturing equipment and three types of software tools for semiconductor development or manufacturing, new controls on high-bandwidth memory, and the addition of 140 entities to the restrictive Entity List of BIS who are involved in the advancement of the Chinese government's military modernization.
It is important to note that the BIS also created two new Foreign Direct Product (“FDP”) rules that extend the jurisdiction of U.S. export controls over certain foreign-made (i.e., not made in the United States) items related to manufacturing of semiconductors that are manufactured or developed using U.S.-origin technology or software, or that contain a foreign product manufactured with equipment that is a product of U.S.-origin technology or software. Exports, re-exports and in-country transfers of items subject to newly imposed export controls will likely require a license from BIS, unless a licensing exception applies.
As global demand for critical minerals continues to grow, ensuring a robust and resilient supply chain is critical to national interests, economic stability and technological progress. This move by China further highlights trade issues impacting critical minerals from a national security perspective.
It should also be said that the Biden administration has imposed a series of increasingly broad restrictions on the export of "dual-use" products to China, i.e. those with civil and military applications. These restrictions have included transshipment bans. On Dec. 2, Washington added more than 100 Chinese companies to a restricted trade list and banned the sale to China of some of the fastest semiconductors and the equipment to make them.
From the discriminatory system of national prices to that of production quotas
To beat competition, Beijing has in the past used a discriminatory system of domestic versus foreign prices and export controls. However, in a lawsuit brought by the United States, the European Union and Japan, export controls were declared illegal in 2015 because they violated China's WTO accession agreement. Beijing then abandoned the control system and relied on production quotas, which it used to maintain limited supply and constantly low prices. Production quotas for regional conglomerates are set centrally by the Ministry of Commerce and enforced by local governments. In recent years, production quotas have failed to meet demand and are starting to take a toll on the nation's rare earths industry.
Currently, domestic demand has exceeded domestic supply.
The 2016 “Rare Earth Industry Development Plan”, published by the Ministry of Industry and Information Technology (MIIT) together with the 13th Five-Year Plan, outlines many of these policies with objectives of greater profitability and improvements in the high added value of certain segments of the industry that meet higher environmental standards. One goal was to “improve mechanisms to keep prices of higher minerals stable by limiting production.” The 13th Five-Year Plan, in particular, focused on the transition from a "political" economy to higher value-added products with greater environmental sustainability. The objectives included strengthening “geological environmental governance and ecological restoration in regions of intensive mineral resource extraction” and “green mining”. When the 14th Five-Year Plan was announced in 2021, many of the goals had been achieved or were underway.
China, therefore, has moved up the value chain with huge investments in research and development and with the experience accumulated in the intermediate stages of production.
Recent Chinese policies on rare earths
In July, China has announced i Regulations on the management of rare earths clarifying that REEs are state property and that the CCP will implement protective exploitation of these strategic resources. The measure came into force on 1 October 2024.
In clarifying the context of the Regulation, Beijing said that there are still some unresolved problems in the domestic management of rare earths, including “insufficient means and sanctions to correct illegal behavior such as illegal mining or illegal smelting and separation, production without or above targets and trade in illegal rare earth products.”
At dinner he adopted such “Regulations” to protect the supply of rare earths through a high level of national security.
The introduction of these “Regulations” aims to firmly control the strategic rare earth resource and “protect its important reserves of industrial metals”.
The introduction of the new "Regulation", composed of 32 articles in total, includes:
clarify the management principles of mining activity;
strengthen the protection of rare earth resources;
improve the management system;
promote high-quality development of the rare earths sector;
improve the supervision system of the industrial supply chain of rare earths;
clarify supervision and management measures, legal responsibility and six other aspects of the content.
In addition to clarifying that rare earth resources belong to the state, the new rules require:
that extraction companies and those involved in the fusion and separation of rare earths are identified;
that the total amount of extraction, smelting and separation of rare earths is regulated;
that dynamic management is optimised; that a product traceability system be established;
that traffic is strictly managed.
Furthermore, the regulations clarify that the State shall “implement unified planning for the development of the rare earth industry and encourage and support research, development and application of new technologies, new processes, new products, new materials and new equipment in the rare earths sector”.
The provision also states that companies violating the relevant provisions can be fined five to ten times their illicit profits and receive fines of up to 5 million yuan.
Many analysts believe these regulations will outline new legal sanctions for illicit practices related to rare earth mining and smelting. Towards the end of 2023, China expanded its list of limited exports to include numerous technologies related to the production of rare earths. The list updated by the Chinese Ministry of Commerce refers to "rare earths" a total of 17 times.
According to Chinese state media, the update concerns items that Beijing wants to ban from free export to protect the nation's "economic and technological rights and interests." Meanwhile, external analyzes indicate that the expanded list prohibits technologies for the production of rare earth magnets, the mining of rare earths and the refining of these substances.
The Ministry of Justice and the Ministry of Industry and Information Technology said, in response to a reporter's question about the regulations on June 29, that "in recent years, China has introduced a series of policies and measures regarding rare earth industry access standards, industry consolidation, environmental protection and so on, which have effectively promoted and safeguarded the sustainable and healthy development of the industry.”
As mentioned, China is the largest producer of rare earths in the world. Rare earths are a dozen metallic elements critical to modern technology, from electric cars and wind turbines to robots and military weapons. At the same time, rare earths require rigorous processing to produce usable materials, and China is also a leader in rare earth refining technology.
The West has a real opportunity to secure essential metals for the future
Two recent developments in Europe, including a potentially game-changing acquisition in Greenland, suggest that the West has a real opportunity to secure essential metals for the future.
In a recent development, Norwegian mining company Rare Earths Norway has discovered one of the largest rare earth deposits in Europe. The discovery was made within the Fen Carbonatite Complex in southern Norway, marking a significant discovery for the region and presenting a valuable opportunity for the West to promote rare earth independence.
Towards a new industrial policy with higher added value
The latest plan focuses heavily on a new industrial policy to move towards higher value-added manufacturing, green technologies and an economy more driven by domestic production and demand. Many of the future goals (electric vehicles, space technology, new materials, computing and more) will require a reliable source of rare earths, both for Chinese manufacturers and foreign manufacturers based in China.
Beijing also imports rare earths, particularly those needed for permanent magnets. It also imports unprocessed concentrate from the United States, which is then refined within China's integrated industry. However, the majority of US rare earth imports are finished products. Although US mining production has increased in recent years, China's leadership in the midstream is unmatched.
China's investments in R&D
China's investments in R&D and the extent of its experience compared to other countries are evident in the permanent magnet sector and patent grants. In 2021, while China received only 48% of overall patents on permanent magnets, 99% of patents on neodymium magnets and 86% of patents on samarium-cobalt magnets were Chinese. Patents in the rare earth sector also have this tendency.
Supply chain vulnerabilities therefore arise from market concentration in China. Beijing, however, will not be able to meet its own growing domestic demand, nor global needs, particularly for neodymium and other key rare earths needed for permanent magnets. Without these rare earths, global energy transition policy will also be difficult to implement.
China has discovered two new rare earth minerals
Chinese geologists have recently discovered two new minerals, oboniobite and scandium-fluoro-eckermannite, at Bayan Obo, Inner Mongolia, the largest rare earth mine in the world. Second, what was reported in the media , the discovery was a joint effort of the CAS Institute of Geology and Geophysics, Inner Mongolia Baotou Steel Union Co., Ltd., Baotou Research Institute of Rare Earths and Central South University.
As announced by Li Xianhua of the Institute of Geology and Geophysics of CAS, the International Mineralogical Association officially recognized the findings and duly approved the new names of the minerals.
What makes these minerals truly exceptional is not only their scarcity, but also the presence of precious elements that have immense potential in multiple fields. Of particular importance are the rare and strategically critical metals, niobium and scandium, incorporated into these minerals. Experts say the applications are wide-ranging, from new materials and energy technologies to computer, aerospace and defense technology.
Does Beijing also have its Achilles heel?
In recent years, China has also begun to rely on rare earth mining in neighboring Myanmar. The imports come from poorly regulated mines and probably also from Chinese minerals mined illegally and recycled across the border.
China also faces supply chain vulnerabilities. For example, when Covid-19 policies temporarily closed the border between China and Myanmar, the price of rare earths began to rise sharply. These pricing pressures have been alleviated to some extent with the reopening of the border and could be further improved by the creation of the aforementioned mega-firm.
The risks to Beijing's strategic autonomy in national antimony mining
Last August 15, the Ministry of Commerce and the General Administration of Customs announced that, starting September 15, controls would be imposed on exports of antimony and related substances. The export controls covered six types of antimony-related products, including antimony ore, antimony metal and its products, antimony oxides, organic antimony compounds, antimony hydrides, and antimony indium. Exports of gold and antimony smelting and separation technology have also been restricted.
The reason for the export controls is that antimony is China's dominant resource, with the largest reserves and largest production in the world. At the same time, antimony is a strategic resource, linked to national security and strategic interests.
Antimony is used in a wide range of industrial and military applications, such as flame retardants, catalysts, semiconductors and other uses, such as in ammunition engines, infrared missiles, nuclear weapons, night vision equipment, aircraft and rockets . Furthermore, antimony is used in the manufacture of batteries and photovoltaic equipment.
However, antimony is a kind of rare metal resource, the abundance in the earth's crust is only 0.2 ppm, which is 0.2 parts per million. Globally, antimony resources are also relatively scarce, current global reserves of antimony resources are approximately 2.2 million tons.
In the top five countries for antimony reserves they are China (640,000 tonnes), Russia (350,000 tonnes), Bolivia (310,000 tonnes), Kyrgyzstan (260,000 tonnes) and Myanmar (140,000 tonnes). It can be said that China is the richest country in the world in antimony resources, and 30% of the world's antimony is found in China.
About 120 antimony-containing minerals are known, but only 10 minerals have industrial use value and contain more than 20% antimony.
In the world, industrial types of antimony ore are divided into single types of antimony, lead type of antimony, tungsten type of antimony gold and mercury type of antimony. Over 68% of antimony ore reserves in China are single-type.
China's antimony mines are mainly distributed in Hunan, Guangxi, Tibet, Guizhou, Yunnan and other provinces. Among them, the tin mine in Leng Shuijing City, Hunan Province, is the largest mine in the world, the annual production of antimony accounts for one third of the country, known as "the antimony capital of the world".
Beijing controls the entire global antimony supply chain, from extraction to final processing.
In fact, China not only possesses rich antimony resources, but also a more complete industrial supply chain; the industrial chain has been gradually expanded, the added value has been gradually increased, basically forming a more complete industrial system of extraction, separation, smelting, processing, trading and other products mainly based on antimony trioxide, antimony ethylene glycol, antimonate sodium, flame retardant masterbatch and so on.
Although China's antimony industry is a world leader, high-end product research and development and production still lags behind. Currently, the main products of Chinese antimony enterprises are mainly processed primary products, such as metallic antimony and antimony oxides; the share of downstream processed products, especially high-purity antimony oxide and other processed products, is gradually increasing, but there is still a need to strengthen technological innovation and increase the added value of products.
Although the domestic reserves and production are the first in the world, Beijing has paid a high environmental price for producing antimony products. In particular, Lengshuijiang city, the world antimony capital, has caused serious environmental pollution and ecological damage, so the state has cleaned up the industry in Lengshuijiang.
In March 2010, Hengshui Jiang City began a series of cleanups of antimony-related enterprises in the tin mine area. Antimony-related enterprises, which contribute 150 million yuan in tax revenue annually but cause serious pollution, have undergone comprehensive cleanup, while a number of unqualified enterprises have been closed in accordance with the law and are Only eight legal antimony smelting enterprises with an annual production capacity of more than 5,000 tons were maintained, and the backward equipment of the eight legal antimony smelting enterprises was eliminated.
From the environmental point of view, in recent years, after a series of adjustments, the production equipment of enterprises in the tin mine area has been upgraded, the production process has been improved, polluting emissions have been significantly reduced, and the Pollution control capacity has been improved. Antimony-related enterprises have gradually emerged from the vicious circle of high pollution, high energy consumption, low prices and competition and entered a path of positive development.
Currently, the main antimony consuming countries (regions) globally are the United States, China, Europe, Japan and Southeast Asia. The main areas of antimony consumption are flame retardants, battery alloys, catalysts and glass clarifiers. Among these, flame retardants account for approximately 55% of total antimony consumption.
So, except for China, most of these countries do not have antimony resources and have to rely on Chinese antimony products. But China, as the largest antimony producer, does not have the bargaining power.
Despite such a high environmental price, antimony and antimony-derived products have not been sold at a good price.
2011 was the highest point of antimony ore price, reaching 90,000 yuan/ton. 2012, influenced by the slowdown in economic growth, saw a decrease in demand for antimony resources. Antimony prices have gradually declined from a high level. By 2018, they dropped to 50,000 yuan/ton. Since then, the price was low until 2021, when it started to rise.
Prior to 2021, the depth and difficulty of antimony mining in the country continued to increase, along with the gradual increase in labor costs and other related expenses; the overall cost of producing antimony ore continued to rise once it approached the production cost threshold.
Before 2017, China's antimony production accounted for about 90 percent of the world's. High-intensity mining development has led to resource depletion, and most of the production of large mines is more than half a century old, and some of them are even considered in crisis due to resource shortages.
Over the past 10 years, China has increased supervision of antimony resource production, with the Total Mine Control Index issued annually to manage the scale of antimony production. Therefore, China's antimony production has followed a downward trend. Since 2018, China's antimony production has fallen to about 60 percent of global production, to about 50 percent in the past two years.
Since 2021, China's imports of antimony resources have increased year by year, and the degree of foreign dependence has exceeded 50%.
Since 2021, China's antimony resource imports have increased year by year, and the degree of foreign dependence has exceeded 50%. According to a comparison of storage and extraction, it appears that several countries with large resources have a significant gap with China, such as Russia, with reserves of 350,000 tons extracting 4,300 tons per year, and China with reserves of 640,000 tons per year but which extracts 40,000 tonnes.
Based on current annual production, China's reserves are sufficient only for 16 years.
Currently the situation in Russia, Ukraine and the Middle East is tense and the scale of the conflict is destined to increase, therefore the importance of Beijing's control over antimony exports is evident, as it is a strategic resource with military uses and a large market for its export prospects.
Currently the situation in Russia, Ukraine and the Middle East is tense and the scale of the conflict is destined to increase, therefore the importance of Beijing's control over antimony exports is evident, as it is a strategic resource with military uses and a large market for its export prospects.
For these reasons, last August Beijing asked to impose further controls on antimony exports.
US politics
In February 2021, President Biden signed Executive Order (EO) 14017 “America's Supply Chains,” in which he directed the government to undertake a comprehensive review of critical supply chains “to identify risks, address vulnerabilities, and develop a strategy to promote resilience”. An internal task force comprising more than a dozen federal departments and agencies has also been established. Administration officials consulted with hundreds of stakeholders from business, academic institutions, Congress and partner states to identify vulnerabilities and develop solutions. Executive orders issued by the newly elected President Trump during his first presidential term led, among other things, to conducting preliminary studies on the United States' dependence on China for critical minerals and pharmaceuticals and to the removal of Chinese companies from supply networks of US telecommunications.
The Biden Administration's actions in 2021 highlight a continued focus on both mitigating risks arising from bilateral economic interdependence in select sectors and increasing U.S. capabilities in other sectors to better compete with China. On June 8, 2021, the White House released a 250-page report assessing supply chain risks and vulnerabilities in the manufacturing of semiconductors, high-capacity batteries, critical materials and minerals, pharmaceuticals, and active pharmaceutical ingredients (APIs) . The US relies on imports, but also faces risks of supply chain disruption, with China either dominating much of it (for critical materials and minerals, active pharmaceutical products and ingredients) or seeking global leadership (e.g. for semiconductors and large capacity batteries). The review builds on initial investigations undertaken by the Trump administration and prioritizes reshoring manufacturing to the United States to strengthen its economic competitiveness. The report is also noteworthy in highlighting the use of enforcement actions against China's unfair economic practices.
With the November elections behind us and the advent of a Republican administration, there are many questions regarding possible changes to environmental regulations and the financing of US energy projects. Given the Trump administration's focus on building American business and manufacturing, many believe he will continue policies adopted during his first administration to improve the management of critical minerals needed for economic prosperity and energy security.
During his first term, President Donald Trump prioritized boosting domestic mining as part of his broader agenda to promote energy independence, economic growth and the revitalization of U.S. industry. Mining has been framed as part of achieving “energy dominance,” a strategy to make the United States a global leader in energy and mineral production. Trump has supported the extraction of domestic resources, including coal, oil, gas and critical minerals such as lithium, cobalt and rare earth elements, to reduce dependence on imports. Domestic mining has also been presented as a strategy to create jobs, particularly in rural and economically distressed regions.
The Trump administration viewed mining as critical to securing supplies of minerals needed for infrastructure, manufacturing and national defense. In 2019, as mentioned, President Trump's administration published a federal strategy to ensure a reliable supply of critical minerals . The strategy directed the U.S. Department of the Interior to identify domestic supplies of such minerals, ensuring access to information needed for mineral exploration and production, and expediting permitting for mining projects. Trump has supported accelerating controversial projects such as the Twin Metals copper-nickel mine in Minnesota and uranium mining near the Grand Canyon. He approved the massive Thacker Pass lithium mine near the Nevada-Oregon border, one of several projects fast-tracked in the waning days of the first Trump administration to expand mining on public land.
In 2017, President Trump signed Executive Order 13817 , which directed agencies to identify critical minerals essential to national security and the economy. It also encouraged the reduction of permitting delays for mining projects involving these minerals.
He also issued Executive Order 13807 , creating a “One Federal Decision” framework to streamline environmental review and permitting processes across multiple federal agencies. Trump has also promoted greater involvement of state governments and private companies in the permitting process to reduce federal oversight. At the end of the mandate, the Trump administration revised the National Environmental Policy Act (NEPA) to limit the scope and duration of environmental reviews. The new rules establish a two-year period for completing environmental impact statements and a one-year period for environmental assessments.
While these actions have shortened permitting times for some projects, they have been controversial. Critics argued that the changes weakened environmental protection and community input. However, advocates have hailed them as necessary steps to revitalize mining and secure critical mineral supply chains. Many of these measures have been revoked or revised under the Biden administration.
Many people believe that the new Trump administration will invest heavily in domestic shoring of all parts of the mineral supply chain, particularly mining.
Gov. Doug Burgum, Trump's pick for Interior Secretary, has expressed enthusiasm for expanding domestic production of minerals needed for battery production. In 2022, he praised approval of a nickel processing plant in North Dakota that received $144 million in federal funding through the bipartisan infrastructure bill in 2022.
However, the incoming administration will face a multifaceted challenge in promoting the extraction of green materials such as copper, lithium and rare earth elements, which are key to technologies such as electric vehicles, batteries and renewable energy systems.
Finally, the Critical Minerals Policy Working Group of Select Committee, chaired by Rob Wittman (R-VA) and Kathy Castor (D-FL), spent months assessing the United States' deep dependence on CCP for critical minerals and developing solutions. Members presented the bipartisan report in December Creating Resilient Critical Mineral Supply ChainsThe report outlines the rationale for creating the Policy Working Group, summarizes the working group's meetings, and recommends legislation to address supply chain vulnerabilities for critical minerals. The report also highlights bipartisan legislation introduced by members of the House and Senate that would improve supply chain resilience.
The EU's reaction
Currently, 98% of the EU's supply of rare earths comes from China, while 98% of its borate supply comes from Türkiye. In turn, 71% of platinum needs come from South Africa and few companies supply hafnium and strontium to the EU.
In February 2022, the European Commission presented the second in-depth study of Europe's strategic dependencies. The analysis examines five areas in which Europe is increasingly dependent on third countries, especially China. The areas are:
Rare earths and magnesium, where the EU is heavily dependent on China. Beijing accounts for 93% of the world's production of rare earth magnets and 89% of magnesium. Rare earth permanent magnets are crucial inputs for electric vehicles and wind turbines. Magnesium is an important alloying material in the production of aluminum;
Chemicals, where the EU has a dependence on a limited number of exporting countries. Some of these substances are of particular strategic importance, such as iodine, fluorine, red phosphorus, lithium oxide and hydroxide, molybdenum dioxide and tungsten, of which Eurasian countries, such as Kazakhstan, Russia and China are important exporters to the EU. These are substances that have a wide range of end uses, for example for energy storage, food production, the production of semiconductors used in solar panels and the production of batteries for electric vehicles; Solar panels, where China holds 96% of the world's solar wafer production, while the EU has only 1%;
Cyber security. Only 14% of the world's 500 largest cybersecurity companies are based in the EU. Most of the hardware and software currently used in the EU for cyber defense is developed in the United States and produced in China. Most of the EU cybersecurity companies are also small or very small and rely on third parties;
Cloud and edge IT software. The market for these technologies has a limited number of foreign global cloud service providers. The market share of EU cloud service providers fell from 26% in 2017 to 16% in 2020.
Furthermore, in his Action Plan on Critical Raw Materials del 2020 , the EU has defined various actions to support the development of a resilient raw materials supply chain. Achieving resource security requires diversified supply from primary and secondary sources, reduced dependencies, and improved resource efficiency and circularity, including sustainable product design. Key actions taken by the Commission have included the creation of the European Raw Materials Alliance. Founded in 2020, the Alliance aims to build a resilient raw material supply chain, with a specific focus on rare earth magnets and motors. To do so, the Alliance has already identified 14 investment projects from Member States and industry to support the increase in EU production of rare earth magnets.
The EU is also coordinating efforts to increase magnesium production in Europe, following supply constraints in 2021. It is also evaluating further international partnerships on raw materials, paying more attention to recycling and material substitution.
Global demand for rare earths is increasing
The demand for rare earths, especially heavy ones that can be used in permanent magnets, is increasing and is expected to continue to grow in the coming decades.
Neodymium, but also dysprosium, praseodymium and samarium are expected to increase significantly in the coming years, largely due to green technologies, particularly in the automotive industry, where neodymium iron boron (NIB) permanent magnets are being used for engines (technology and mineral requirements are similar for wind turbines). Neodymium is found in MRI machines and lasers, while NIB magnets are found in computers, cell phones and other electronic devices, as well as wind turbines and motors. End uses include healthcare, green energy, defense, and everyday consumer products. NIB magnets are ubiquitous.
By 2025, total demand for major rare-earth permanent magnet applications is expected to be 94,500 tons. In 2020, global production of rare earths was 240,000 tonnes, including all 17 elements, not just the key ones.
Environmental and health costs
The extraction of rare earths is highly polluting and entails high environmental and health costs for local communities.
After being removed from the ground, they must be separated, refined into oxides and then transformed into metals and alloys before being ready for industry. The secondary process is also highly harmful to the environment.
While the shift in control of the global supply chain from the United States to China was initially made possible by Beijing's more lax environmental and regulatory standards, it is not true that China now maintains its advantage because of this.
Over the past decade, Beijing has introduced new environmental regulations, enforced existing ones and innovated some extraction and refining processes, making them cleaner.
China's dominance in the rare earth sector is therefore a political question, not a geographical one.
The separation and refinement process is an area in which China has invested a lot of intellectual capital and state resources.
However, human rights and environmental risks in the mining supply chains where Chinese companies operate are very high. From January 2021 to December 2022, the Resource Center for Business and Human Rights recorded a total of 102 reports of abuse.
And give:
Practical guide to the environmental safety revolution with AI and Computer Visio
Despite the significant number of complaints recorded, only seven of the 39 companies published human rights policies, indicating that there is much room for improvement in both policies and practices.
Indonesia has the highest number of recorded abuse reports (27), followed by Peru, the Democratic Republic of Congo (DRC) (12), Myanmar (11) and Zimbabwe.
Over 2/3 of the allegations concern human rights violations against local communities. The most obvious risks concern impacts on livelihoods, the rights of indigenous populations and lack or insufficient consultation.
Over half of the complaints concern negative environmental impacts, where water pollution, effects on wildlife and species habitat and problems with access to water are frequently recorded.
Over 1/3 of the charges concern workers' rights. Most relate to health and safety risks in the workplace.
The report was originally published on the website Agenda Digitale (Italian version)
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