The China-US Trade War and Rare Earth Minerals

The Significance of Rare Earths

The ongoing trade war between the US and China has highlighted the importance of rare earth minerals. These minerals have become a critical focal point due to their essential role in various high-tech and green energy applications.

Rare Earths: Definition and Importance

• What are Rare Earths?
  • Rare earth elements are a group of 17 metallic elements from the periodic table, which include lanthanum to lutetium, along with scandium and yttrium.
  • They are valued for their high density, melting point, conductivity, and thermal conductance.
• Applications
  • Used in products like electronics, wind turbines, electric vehicles, and medical devices.
  • Critical for green energy technologies and in making powerful magnets used in various industries.
• Misnomer of "Rare"
  • These elements are relatively abundant in Earth’s crust but are not found in large concentrations, making them expensive to extract.
  • China dominates the rare earth supply chain, controlling more than 90% of global output at the processing stage.

China's Role and Strategic Moves

• China's Dominance
  • China's control over rare earths dates back to the 1980s, treating them as key strategic resources much like oil in West Asia.
• Trade Weaponization
  • China uses rare earths as leverage in trade, particularly against the US, as seen in their recent export restrictions and countermeasures against US tariffs.
• Recent Measures
  • Added five more rare earth elements to its control list, raising the total of restricted elements to 12.
  • New curbs expected to increase China’s leverage in upcoming trade negotiations.

Global Impact and Responses

• Impact on India
  • India has limited domestic consumption of rare earths, with a significant portion imported from China.
  • Efforts to increase domestic mining and refining, including auctions for seabed blocks in the Andaman Sea.
• Responses from Other Countries
  • The US is working on reducing reliance on China through measures like stockpiling deep-sea metals.
  • Japan has successfully re-entered the rare earth supply chain following earlier Chinese curbs.

Conclusion

The strategic importance of rare earth minerals is underscored by their widespread applications and the geopolitical maneuvering observed between China and other global powers. Efforts to diversify supply chains and mitigate dependency on China are critical for several nations, including the US and India.