China Ramps Up Rare Earth Production to Maintain Its Global Chokehold

rare earth minerals
RODGER BOSCH/AFP via Getty Images

President Donald Trump’s stand against China’s trade practices includes ending the Communist regime’s dominance of the rare earth mineral market by increasing domestic mining and production of the metals that are essential to U.S. prosperity and national security because of their use in everything from military equipment to electronic devices.

The South China Morning Post reported on the president’s plan earlier this year:

Donald Trump’s directive to boost domestic production of magnets for military equipment with a goal of cutting the U.S. heavy reliance on Chinese rare earths and magnets amid the protracted U.S.-China trade war has opened the door for U.S. mining projects seeking funding.

The move could spur the re-establishment of an integrated supply chain for the extraction and processing of rare earth metals and their utilization to make magnets used not only in fighter jets and tanks, but also electric vehicles, wind turbines and many smart electronic gadgets.

But the Chinese are not backing down on their efforts to monopolize the market, according to a Global Times report that said China’s Ministry of Industry and Information Technology announced the country has raised its annual rare-earth mining quote to 132,000 tons — a ten percent increase over last year’s levels and a new record high.

The Global Times report claims that China does not fear competition in the market, given its dominance:

It is no secret that the excessive reliance of the U.S. on China’s rare-earth supplies is a form of leverage that China has in the trade war with the U.S. China controls at least 85 percent of the world’s rare-earth processing capacity, according to research firm Adamas Intelligence. Over the years, the U.S. sourced about 80 percent of its rare-earth imports from China. China may not need to play the rare-earth card for the time being, but it is still essential to keep vigilant and to ensure the deterrent effect of this crucial bargaining chip.

The Global Times report said that part of the Trump administration’s plan to end dependence on China for rare earth supplies includes looking to other countries for a supply chain.

“Media reports indicated that the U.S. had talks with some rare-earth mines in Africa, and just last week, U.S. and Australian officials agreed to formalize a partnership to boost supply of rare earths from outside China,” the Global Times reported.

Trump invoked the Defense Production Act in July, which encourages the domestic production of rare earth minerals.

The U.S. was a world leader in rare earth production from the 1960s until the mid-1990s when the sector faced tough new regulations that led to mines shutting down and China flooding the international marketplace with its products.

Pini Althaus, CEO of USA Rare Earth, said in the South China Morning Post report:

China is so far ahead of the U.S. on manufacturing and utilization of rare earths. The U.S., as far as advanced manufacturing capabilities are concerned, is lagging far behind because it does not have domestic sources of the materials.

Backed by private investors in the U.S. and Australia, Althaus said his company is going to invest millions that could lead to a pilot processing plant that would start production in 2022.

“The preliminary study estimated the project will require $350 million of investment, which could be paid back in as few as 1.4 years,” the Post reported.

Follow Penny Starr on Twitter



Please let us know if you're having issues with commenting.