Overview of Rare Earths in the China-US Trade War

The ongoing trade tensions between China and the US have prominently featured rare earth minerals as a significant point of conflict. China's recent actions to restrict rare earth exports have intensified the situation, prompting retaliatory threats from the US, including potential tariffs and a possible cancellation of high-level meetings.

Understanding Rare Earths

• Rare earths consist of 17 metallic elements, from lanthanum (atomic number 57) to lutetium (71), plus scandium (21) and yttrium (39).
• Characterized by high density, melting points, conductivity, and thermal conductance.
• Despite being termed "rare," these elements are relatively abundant but not found in large concentrations, making extraction costly.
• Key uses include electronics, weapons, wind turbines, electric vehicles, and numerous high-tech applications.

China's Dominance and Strategic Use

• China controls over 60% of rare earth production and more than 90% of processing globally.
• Positioned rare earths as a strategic trade tool, leveraging them in trade negotiations, notably with the US.
• Recent curbs have added five more rare earth elements to its control list, requiring export licenses.

Global Impact and Response

• Other nations like Brazil, Australia, and India possess reserves but lag in mining and processing due to economic and environmental concerns.
• Potential responses include the US's efforts to reduce reliance on China, exemplified by plans to stockpile seabed metals.
• Japan has managed to re-enter the rare earth supply chain following earlier Chinese trade restrictions.

Impact on India

• India's impact from China's restrictions is limited due to modest domestic consumption, though imports have increased.
• Plans to expand rare earth mining include seabed exploration in the Andaman Sea and new theme parks for rare earths processing.
• India's domestic production is led by IREL Ltd., with government-backed initiatives aimed at enhancing the sector's capacity and strategic importance.

Conclusion

Rare earth minerals remain a critical strategic factor in the China-US trade war, influencing global supply chains and prompting nations to reassess dependency on Chinese sources. The geopolitical significance of these elements highlights the need for diversified supply and increased domestic production in countries like India and the US.