Deng Xiaoping already said it: “The Middle East has the oil, China has the rare earths.” Thirty-some years later, his warning is an unavoidable reality for leading companies and governments embarked on the ecological transition, in which they play a fundamental role. For this reason, the announcement that Beijing is introducing stricter controls on its export has caused concern.
Likewise, the novelty strengthens the hand of Chinese President Xi Jinping in his meeting this Wednesday with Joe Biden, precisely in San Francisco, the birthplace of Silicon Valley.
The Chinese Ministry of Commerce has announced, with immediate effect and for a period of two years, the requirement for its exporters of rare earths to notify, practically in real time, the details of each transaction.
Something that puts the focus even on industries that prefer to move with maximum discretion, such as defense and aerospace, which use these elements profusely. Rare earths are key in radars, rockets and weapons of all kinds, apart from flat screens, smartphones or electric scooters and cars.
In the preceding months, Beijing had already announced restrictions on the export of gallium and germanium – key metals for the manufacture of semiconductors – or graphite, for reasons of “national security.”
Rare earth elements – a name that groups 17 elements of the periodic table – are usually light and malleable and have a very high melting point. Hence its usefulness in stealth fighter-bombers, such as the problematic American F-35, for which Washington had to issue a specific waiver, after it was discovered that its engines had several components forged from Chinese rare earths.
More recently, Tesla has stated that its next generation of electric cars will need to do without rare earths.
It should be said that until the 1990s, California was, thanks to the Mountain Pass mine, the world epicenter of rare earths. Today, China, which contains 33% of the world's reserves, extracts 63% and processes 85%. That is, since 2018, it is not only the first exporter, but also the first importer.
It has been pointed out that China has three great assets in the trade war with the United States. One, its status as the largest market in the world. Two, its status as the first holder of US Treasury bonds. And three, its dominant position in the rare earths market.
Tell that to Japan, whose technology trembled in 2010, when China cut off the flow of rare earths, in retaliation for the seizure of a Chinese ship near the disputed islets of Senkaku-Diaoyu.
Since then, Washington (and Tokyo through an agreement with the Sumitomo company) have reactivated extraction in Mountain Pass – about 15% of the world total – although processing must also be done in China. One of the Chinese multinationals has also become a shareholder.
Beijing, knowing that reserves are limited and demand will multiply in the next two decades, has diversified its direct or indirect sources of supply, encouraging its companies to invest in the sector, from Vietnam to Greenland.
Without forgetting Burma – the leading exporter of heavy rare earths – where China acquires a large part of its dysprosium and terbium minerals. This country is not a pasture for guerrillas by chance.
Meanwhile, Apple, through its vice president, Lisa Jackson, says it is already dealing with rare earth recycling companies. A long-distance race.
