China presently dominates the global supply of rare earth elements (REE). A vital input to everything from smartphones to electric vehicles, to wind turbines, to intercontinental missiles, and more, Beijing threatens sales bans as a way to intimidate other nations.
Most recently, it has cut off sales of these special metals to the United States in retaliation for Washington’s ban on sales of advanced computer chips to China. The action against the United States isn’t the first time Beijing has employed this tactic. It has done it to other nations at other times. The tactic might pay short-term dividends, but as a long-term strategy, it will fail.
Some 17 metals count in the rare earth basket. Each plays a vital role in modern technology for defense and daily life. Lanthanum, for example, helps produce colors on smartphone and computer screens, as does gadolinium. Two of these metals, neodymium and praseodymium, help speakers produce sound. Terbium and dysprosium allow phones to vibrate during meetings when it’s impolite for them to ring. This is a truncated list, but it should give an idea of the extensive uses of rare earth elements.
According to a study from the prestigious Brookings Institution, China presently produces some 60 percent of the world’s rare earth elements and processes 85 percent of them. This dominance, however, isn’t because of a geological accident that places the bulk of rare earth deposits in Chinese territory. On the contrary, despite the word “rare” in the name, rare earth elements are far from rare. They’re more abundant than both silver and gold. Neither are they especially concentrated. They’re in China’s control presently because the mining and refinement of these metals is environmentally problematic, something that China cares less about than the developed nations of the West. Americans, in other words, eagerly ship the environmental problem across the Pacific.
The United States, once self-sufficient in REE, now has only one operating mine—the Mountain Pass Rare Earth Mine and Processing Facility operated by MP Materials Corp. in California’s Mojave Desert. From time to time, mining has had to stop because of regulatory issues. Even what Mountain Pass brings out of the ground, it ships to China for the environmentally fraught business of separation and refinement.
China’s current dominance cuts two ways. As long as China keeps sales unimpeded, the world will remain willing to let matters stand as they are. But if Beijing too frequently, actively, and severely denies users these vital materials, China will lose that position of dominance, for it’s a good bet that the developed West and Japan would, in such cases, cultivate other sources and develop refining techniques acceptable to their more environmentally sensitive dispositions.
Already, Japan has proposed to the G7 developed nations—Canada, France, Germany, Italy, the UK, and the United States, as well as itself—that they join together to find and finance mining and refining operations in Africa and Latin America. Understandably, Japan would take the lead in such an effort. It has already sustained two Chinese REE bans. One occurred several years ago when Beijing reacted to tensions over uninhabited but disputed islands in the East China Sea. More recently, Beijing again banned REE shipments to Japan because Tokyo joined the American ban on the sale of advanced computer chips to China.
So far, the Europeans and the Americans, without rejecting Japan’s proposal, have shown only limited enthusiasm. But should Beijing go beyond gestures and begin to have a significant economic effect, the other G7 members will almost surely come around to Tokyo’s way of thinking.
Under the circumstances, Beijing would do well to go easy on the export ban game. China, after all, can’t afford the loss of any business. Its exports overall are already in decline, and its economy is slowing uncomfortably. Moreover, a significant ban would induce the West to form around Tokyo’s plan or something like it and begin eroding China’s dominant position.
For Washington, European capitals, and Tokyo, wisdom would induce them to take steps to unwind Beijing’s dominance by taking immediate steps to develop mining and refining operations outside of China’s influence. Even if Beijing resumes regular REE sales, alternative sources would remove Beijing’s temptation to high-handed policies.
