By Cate Hull
As trade relations between the U.S. and China continue to deteriorate, rare earth metals have emerged as a potential trading chip.
Rare earth metals are common in many consumer products. Makers of magnets for use in electric vehicles, drones and robots rely on rare earth metals.
Beijing has made some not-so-subtle threats that if the U.S. persists in tariffs on Chinese goods that China will cut off the supply of rare earths to the U.S. China controls roughly 80 percent of the mining, refining, and processing of rare earth metals.
If the U.S. is forced to find alternative sources for rare earths, there are a few countries positioned to fill the void. According to Bloomberg.com, here are the likely sources:
The largest miner behind China boosted output last year to 20,000 metric tons, from 19,000 tons a year earlier, according to the U.S. Geological Survey. Australia is home to the mine run by Lynas Corp., the largest rare earths producer outside of China. The company said it plans to almost double output of the rare earths neodymium and praseodymium by 2025 and will expand its processing capacity. It also plans to help fill the shortfall in the U.S. through a joint venture with Blue Line Corp. that will build a plant to process the commodities in Texas.
This European country is the second-largest supplier to the U.S., accounting for six percent of the imports of the mineral, according to USGS. It is also host to Neo Performance Materials Inc.’s Silmet facility, which has the capacity to produce 2,500 tons of rare earth products, according to a company filing. The company will likely ship more of the minerals from its operations in Estonia to customers in the U.S., should China decide to curb exports to the North American nation, Scott Fromson, an equity analyst at CIBC, said in a note to clients. Still, the company would expect only “a minor and temporary impact.”
The Southeast Asian nation is the largest producer behind China, the U.S. and Australia, according to the USGS. Myanmar produced 5,000 metric tons of rare earths last year, and much of this year’s output will need to find a home after losing its buyer, China. Beijing banned imports of the ore from Myanmar in May.
The South Asian nation holds the fifth largest rare earth mineral reserves. When China restricted shipments beginning 2007, India was one of the countries that joined the race to increase domestic investment and production, commissioning a monazite processing plant in 2010. Across the globe, prices of the metal soared until China agreed to open trade again.
Brazil and Vietnam
The two countries each have about 22 million tons in rare-earth reserves, according to USGS. They have been slow to develop their mines. While Vietnam doubled its output last year, the total was only 400 tons. Brazil, on the other hand, cut its output to 1,000 tons, from 1,700 a year earlier, data show. Other suppliers include Russia, which has 12 million tons still buried in the ground.
Cate Hull is the CEO of FreightExchange, a freight and logistics company based in Sydney.