~ Linn Maung ~
Taking advantage of its abundant availability of rare earth elements and putting in the backburner the welfare of the common people of China, the rulers in Beijing have been dominating its global supply chain of this element of nature with widespread civilian and military uses.
But now the U.S. has devised an ingenious pricing strategy for rare earths that will encourage their mining and processing domestically and prevent China from undercutting the American producers.
Rare earths are a family of 17 elements in the periodic table, all metals with similar physical and chemical properties, found in the earth’s crust as compounds with other metals. With unique electronic and magnetic properties, these allow them to have special use in niches technology. But their extraction and separation from other metals are expensive, difficult and fraught with environmental hazards.
They are important ingredients in numerous uses, from smartphones to submarines to electrical vehicles and fighter jets. Some of the most modern weapon systems rely on parts made of rare earth elements. Features like magnetic properties, high energy density and resistance to heat make them indispensable for the manufacture of high-performance electronics, sensors and control mechanisms in military equipment. They have wide use in areas like radar, sonar, missile guidance systems and communication systems.
Some of them are used to manufacture lightweight materials used in fighter jets, some used in modern battery production and some essential for electronics; including semiconductors. Rare earth elements neodymium and samarium are used to manufacture resilient magnets that withstand high temperatures, making them ideal for mission-critical electronic and defence applications whose failure can have serious consequences for the entire operation.
According to various estimates, at 44 million tons, nearly 40 percent of the rare earths reserves can be found in China where the rate of mining of these metals is also high. The rare earths reserves in the U.S. have been estimated to be between 1.5 million tons and 1.9 million tons, accounting for 1.3 percent of the total reserves in the world, China produces more than 80 percent of the total rare earths output in the whole world. The U.S. is the second largest producer of rare earths metals, but its output is a far cry from that of China.
With its scant regard for environmental pollution that the processing of rare earth metals entail, China has gone full throttle to mine and produce rare earths elements in an effort to monopolize the global supply chain. Beijing has also set prices of rare earths materials low, to undercut producers in other countries. In the bargain, however, the common people of China are suffering.
The Southern Jiangxi province in south-east China has been a centre of mining of rare earths elements. In the lower reaches of the mountainous region, attempts have been made to replant tropical pines and navel orange trees in old and abandoned mining areas to recoup the environment. But higher up in the mountains, where replanting is difficult and erosion has further worsened the topography, surveyors have found every mountain top scarred with mining activity. “Black rubber hoses curl in the sun. PVC pipes, their ragged edges protruding from the red clay, mark where miners had injected tons of ammonium sulphate, ammonium chloride, and other chemicals into the earth to separate the valuable rare earth metals from the surrounding soil,” a Yale School of Environment study says. “The removal of these elements from the earth’s crust, using a mix of water and chemicals, caused extensive water and soil pollution. Today, concrete leaching ponds and plastic-lined wastewater pools dot the hills.” A landslide or a barrier failure will spill the contaminated contents into waterways or groundwater.
Environmental scientists say excessive amounts of ammonia and nitrogen compounds have been dumped into the ground and surface water in these mining areas; along with other pollutants like cadmium and lead. Rare earths mining done in areas near uranium deposits has led to radioactive materials clinging to the elements. “The end impact could be on the central nervous system, bone cancer, skin cancer and cardiovascular and respiratory issues,” research scholar at the University of Waterloo Xiang Huang has been quoted. He had done his Ph. D in Beijing University on environmental and health impacts from rare earth mining.
Besides, the pollution resulting from mining of rare earths has created soil incapable of supporting crops. Water supplies have been contaminated.
China is using its abundant production of rare earth metals obtained at the cost of environmental hazards to arm-twist other countries. On April 4 last, China imposed export restrictions on seven rare earths elements and magnets used in defence, energy and automotive sectors — among them samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium — to retaliate against the U.S. imposing tariff on Chinese products. Beijing has also imposed restrictions on the export of rare earth elements to India.
Strategic thinkers in the U.S. have, however, devised a plan to break China’s dominance of the rare earths market and to encourage producers in the U.S. to invest more in rare earths. Early in July, the U.S. Department of Defence unveiled for its only rare earths mining company M. P. Materials a minimum support price for rare earths at nearly twice the current market price, now set by China. The minimum support price has been set at $110 per kg for the two most used rare earths, with the Department of Defence paying M. P. Materials the difference between $110 and the current market price. But if the price rises above $110, the Department of Defence will get 30 percent of the additional profit. Other producers of rare earths metals, like the Belgian chemical group Solvay, are also likely to benefit from the higher pricing structure.
MP Materials suffered a net loss of over $65 million in 2024 while producing nearly 45,500 tons of rare earths oxides, mainly because of the low pricing of Chinese products. It will build up magnet production facilities at its Texas plant with an initial capacity of 1,000 tons a year; expanding to 3,000 tons later. MP Materials has also announced a new $500 million agreement with Apple to produce more of the powerful magnets used in iPhones as also hi-tech products used in electrical vehicles. The U.S. Defence Department will invest $400 million in shares of MP Materials, helping it to increase its magnet production.
China’s days of dominating the world rare earths market, at a great cost to the Chinese people, are thus now over.
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