Chinese rare earth exports data show that the most important Western countries continue to worryingly depend on the Asian giant.
From smartphones and electric vehicles to X-rays and guided missiles, several modern technologies would not be what they are now without rare earths. An iPhone, for example, contains eight different rare earth metals.
Rare earth deposits are scattered all over the world, but most of the mining and refining activities take place in China, which dominates the global supply chain. According to the CSIS China Power Project, about 88% of China’s rare earth exports in 2019 concerned 5 countries, which are among the world’s leading technological and economic powers:
1. Japan 36.0%
2. United States 33.4%
3. Holland 9.6%
4. South Korea 5.4%
5. Italy 3.5%
6. Rest of the world 12.1%
In the case of Italy, Chinese exports concern cerium (455 tons), lanthanum (368 tons), neodymium (15 tons), yttrium (419 tons) and other elements (350 tons). These are marginal quantities compared to the two leading countries Japan and the United States, which alone account for more than two thirds of the Chinese rare earth exports.
As the world is trying to secure a greener future, demand for rare earths is expected to be almost doubled by 2030 and the supply chain will become even more crucial and strategic. Of course, China’s monopoly on these metals gives China itself a big advantage over countries which are heavily dependent on it, like the United States but also Italy. Furthermore, from the perspective of those who matter, depending so much on one country makes the supply chain anything but reliable.
In 2010, for example, China had reduced its rare earth export quotas by 37%. The consequences were a dramatic increase in prices around the world. The scare caused an influx of capital into the rare earth mining sector, resulting in more than 200 exploration projects outside of China. Unfortunately, it was a short-lived boom that led to the start-up of too few production sites in other parts of the world.
China’s dominance in the rare earths’ field is the result of years of industrial policies dating back to the 1980s. Only a few years ago, Europe, the United States and Japan have made it a priority to diversify their rare earths’ sources to reduce their dependence on China.
The increase in rare earths’ mining outside of China has reduced China’s global share of mining from 97.7% in 2010 to 62.9% in 2019. However, mining is only one part of the market.
Another important part is refining, 80% of which still takes place in China. Therefore, even rare earths extracted abroad are sent to China for refining. Refining is a process that has a heavy environmental impact and Western countries have preferred to move this burden away from the eyes of their citizens.
But, even to power green technologies, you need someone to do the dirty work. Outsourcing it outside your borders so as not to see it is a bad long-term strategy. China has taken on the burden of the dirty work but has obtained almost total control of the supply of essential elements to make our society work, a society that is getting more and more technological and greener.
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