For years, the Chinese government has worked to control the export of rare earths, a group of metals used in common products such as semiconductors and light. Currently, in the trade war with the US, China is moving to further limit the market for these metals, which could have disastrous consequences for American manufacturing and military power. So, what exactly are these metals and why are they so important?
What are rare earths?
There are 17 types of metals known as rare earths, and span the periodic table and are important for industries such as technology, energy, and transportation. Using names such as terbium, praseodymium, dysprosium, and other metals are important components for some of the most advanced technologies.
Rare earths can be divided into two types: heavy and light. Heavy rare earth Earths have a larger atomic mass and are usually more rare. This means that they sell in small quantities and are prone to shortages. In contrast, photometals have a low atomic mass. The two most important are neodymium and praseodymium, which are mainly used to create magnets.
What are they used for?
The use of rare earths is extensive. A semiconductor chip that powers artificial intelligence. Electric vehicle motors; fighter jets and guided missiles used by the US military. Wind turbines; LED lights found in millions of households, among other things.
Many rare earths have chemical properties that enhance heat resistance, making them useful to create high quality magnets, glass, lights and batteries. Magnets made from rare earths are much more powerful and valuable than other types, especially in the production of electric vehicles.
Does the US produce rare earths?
There is only one operational rare earth mine in the United States, located in Mountain Pass, California. It produces around 15% of the world's rare earths.
It wasn't always the case. In the 1980s, the US was a leader in rare earth production, accounting for about a third of the global market. However, in parallel with China's decades of efforts to dominate the market, the proportion of rare earth production in the US declined slowly until it was likely to exist in the early 2000s.
Where do rare earths come from?
Rare earths are mined from rock deposits in the Earth's crust. With nearly 70% of the market, China can control the export and price of metals sold worldwide. Approximately 90% of rare earth magnets are produced in China, and 99.9% of the world's Dysprosium, which Nvidia uses to create capacitors, is mined in China.
In recent years, rare earths have become an increasingly important geopolitical tool. The Trump administration has sought to mediate a contract to acquire the mineral-rich Ukrainian rare earth in exchange for military support. The administration also spoke about the full Greenland acquisition. Part of that is due to its abundant rare earth supply.
What will the impact of China's restrictions on rare earths?
Without a proper supply of rare earths, American production for sectors like the automotive industry will cease. Some American companies have stockpiled rare earths for many years, anticipating a trade war, but it is unclear how long those supplies will last if China cuts off exports.
It could also affect the US military's strategic goals, which could end up with a lack of drones, missiles and aircraft without the rare Earth. Tech manufacturers like nvidia could be affected along with smartphone manufacturers like Apple, as they already lack their chips.
Many rare earth mining businesses in China have been private or even foreign ownership for years, but the Chinese government consolidates the industry and fully controls manufacturing and exports by acquiring the largest local miners of state-owned enterprises.
