Race over Australian rare earth supplies as fears grow over Chinese market ‘monopoly’
Critical minerals needed to boost modern economies and tackle climate change could be cut off from Australia and its allies as tensions with China escalate, experts say.
- Rare earths are essential to modern technologies, from wind turbines to military equipment
- China is the world’s largest supplier of rare earths with 70-80% of the market
- Experts say government support is needed to develop alternative supplies in Australia
Amid the frayed relationship between Beijing and the governments in Washington and Canberra, an Australian think tank has warned that China is using its near-monopoly on rare earths trade as a “weapon” against its rivals.
Jeffrey Wilson, research director at the Perth USAsia Center, said China’s dominance gives it leverage over the ability of other countries to cut emissions or even equip their defense forces.
It comes two years after David Gainer, the United States Consul General in Perth, visited a rare earth mine near Laverton in the hinterland of Western Australia, just days after the start of the job.
That America’s top diplomat in WA made his first order of the day a flight to the state’s remote desert speaks volumes about the growing importance of little-known minerals to the world’s greatest superpower.
The episode also highlights the central nature of rare earths in the 21st century economy and the race between Washington and Beijing over which the superpower should control it.
What is at stake are efforts to tackle climate change, electrify transport and even equip defense forces around the world.
So what are rare earths, and why are they the subject of increasingly intense competition between the United States and its allies on the one hand and China on the other?
China, the world’s “monopoly”
Dr Wilson said the name rare earths was a misnomer and the minerals were relatively abundant.
What was rare about them, he said, was their availability in sufficient concentrations to allow mining on a commercial scale.
Dr Wilson said there are around 15 minerals that make up the stable of rare earths and they are used for technologies ranging from wind turbines and electric cars to smartphones and military hardware.
He emphatically pointed out that China currently dominates global supply, accounting for between 70 and 80 percent of global production.
“China’s monopoly on these technology-critical minerals gives it a really powerful economic weapon,” said Dr Wilson.
“And indeed, it cut off Japan’s rare earth supply in 2010.
“While China’s relations with a number of countries – Australia, Japan, the United States and Europe – have steadily deteriorated over the past 12 months, there is a current threat that China can use his monopoly to deploy the rare earth weapon to punish others. if they fall into diplomatic disagreements.
“Very complicated, very expensive”
China’s preeminence in rare earths, says Dr Wilson, is due to state subsidization of companies that mine and process them.
On top of that, he claimed environmental standards were much lower in China than in developed countries, making it much cheaper to process than what could be done elsewhere.
“It’s very difficult to produce rare earth minerals and it’s not like the classic mining industries that we are familiar with in Australia,” he said.
“Extract the rocks into one thing.
“But they also require very intense chemical processing in a process known as hydrometallurgy to produce the minerals that are actually needed to enter wind turbines or electric vehicles. [electric vehicles] or electronic.
“This means that the effort and technology required to set up a new rare earth project is very complicated and very expensive.”
Government support required
Amanda Lacaze, managing director of Australian rare earths supplier Lynas, called the playing field between Chinese producers and the rest of the world “legendary unequal”.
Lynas, which owns the Mount Weld mine near Laverton in Washington state, is the only major supplier of rare earths outside of China and recently won a tender for $ 30.4 million (40 million of dollars) from the US Department of Defense for the construction of a pilot processing plant in Texas. .
Ms Lacaze said Australia has the potential to become a major rival to China thanks to its large reserves of rare earths and its expertise as a world leader in mining and resources.
But she said the potential might not be realized unless governments at the highest level are willing to help companies compete with China on costs.
“I think the organic growth of the industry presents some challenges,” Ms. Lacaze said.
“The problem of market distortion by having such a dominant position of China has been recognized for some time and market forces have not been sufficient to resolve it.
As part of the push, Lynas is looking to develop a cracking and leaching plant in the Kalgoorlie mining center, about 600 km east of Perth, as the company seeks to repatriate some of its operations to Malaysia.
Call for alternative supplies
At the same time, ASX-listed mineral sands miner Iluka has also offered an estimated $ 1.2 billion rare earth refinery in Eneabba, north of Perth, while a number of smaller companies are trying to capitalize on reserves elsewhere in Australia.
Mr Gainer noted that the rare earth market was relatively small at the moment, but predicted that it would increase dramatically as demand increased.
He said that while the United States would prefer not to interfere in the markets, “we have been working with Australia and other like-minded partners for several years now to see how we can help resolve the issues. supply chain that arise in rare earths “.
“That’s why it’s important to have a diverse, resilient and responsible supply chain for rare earths.
“You know where your rare earths come from, you know the environment in which they are mined and processed.
“And you know at the end of the day that you have supply resilience.”