China’s Dominance in Rare Earth Metals
Did you know that a single iPhone contains eight different rare earth metals?
From smartphones and electric vehicles to x-rays and guided-missiles, several modern technologies wouldn’t be what they are without rare earth metals. Also known as rare earth elements or simply “rare earths”, this group of 17 elements is critical to a number of wide-ranging industries.
Although deposits of rare earth metals exist all over the world, the majority of both mining and refining occurs in China. The above graphic from CSIS China Power Project tracks China’s exports of rare earth metals in 2019, providing a glimpse of the country’s dominating presence in the global supply chain.
China’s Top Rare Earth Export Destinations
Around 88% of China’s 2019 rare earth exports went to just five countries, which are among the world’s technological and economic powerhouses.
|Export Destination||Share of China's Rare Earth Exports||Top Rare Earth Import (tons)|
|Rest of the World||12.1%||Cerium|
Japan and the U.S. are by far the largest importers, collectively accounting for more than two-thirds of China’s rare earth metals exports.
Lanthanum, found in hybrid vehicles and smartphones, was China’s largest rare earth export by volume, followed by cerium. In dollar terms, terbium was the most expensive—generating $57.9 million from just 115 metric tons of exports.
Why China’s Dominance Matters
As the world transitions to a cleaner future, the demand for rare earth metals is expected to nearly double by 2030, and countries are in need of a reliable supply chain.
China’s virtual monopoly in rare earth metals not only gives it a strategic upper hand over heavily dependent countries like the U.S.—which imports 80% of its rare earths from China—but also makes the supply chain anything but reliable.
“China will not rule out using rare earth exports as leverage to deal with the [Trade War] situation.”
—Gao Fengping et al., 2019, in a report funded by the Chinese government via Horizon Advisory.
A case in point comes from 2010 when China reduced its rare earth export quotas by 37%, which in part resulted in skyrocketing rare earth prices worldwide.
The resulting supply chain disruption was significant enough to push the EU, the U.S., and Japan to jointly launch a dispute settlement case through the World Trade Organization, which was ruled against China in 2014.
On the brighter side, the increase in prices led to an influx of capital in the rare earth mining industry, financing more than 200 projects outside China. While this exploration boom was short-lived, it was successful in kick-starting production in other parts of the world.
Breaking China’s Rare Earth Monopoly
China’s dominance in rare earths is the result of years of evolving industrial policies since the 1980s, ranging from tax rebates to export restrictions. In order to reduce dependence on China, the U.S. and Japan have made it a priority to diversify their sources of rare earth metals.
For starters, the U.S. has added rare earth metals to its list of critical minerals, and President Donald Trump recently issued an executive order to encourage local production. On the other side of the world, Japan is making efforts to reduce China’s share of its total rare earth imports to less than 50% by 2025.
Increasing rare earth mining outside of China has reduced China’s global share of mining, down from 97.7% in 2010 to 62.9% in 2019. But mining is merely one piece of the puzzle.
Ultimately, the large majority of rare earth refining, 80%, resides in China. Therefore, even rare earths mined overseas are sent to China for final processing. New North American refining facilities are being set up to tackle this, but the challenge lies in managing the environmental impacts of processing rare earths.
Charted: America’s Import Reliance of Key Minerals
The U.S. is heavily reliant on imports for many critical minerals. How import-dependent is the U.S. for each one, and on which country?
Charted: America’s Import Reliance of Key Minerals
The push towards a more sustainable future requires various key minerals to build the infrastructure of the green economy. However, the U.S. is heavily reliant on nonfuel mineral imports causing potential vulnerabilities in the nation’s supply chains.
Specifically, the U.S. is 100% reliant on imports for at least 12 key minerals deemed critical by the government, with China being the primary import source for many of these along with many other critical minerals.
This graphic uses data from the U.S. Geological Survey (USGS) to visualize America’s import dependence for 30 different key nonfuel minerals along with the nation that the U.S. primarily imports each mineral from.
U.S. Import Reliance, by Mineral
While the U.S. mines and processes a significant amount of minerals domestically, in 2022 imports still accounted for more than half of the country’s consumption of 51 nonfuel minerals. The USGS calculates a net import reliance as a percentage of apparent consumption, showing how much of U.S. demand for each mineral is met through imports.
Of the most important minerals deemed by the USGS, the U.S. was 95% or more reliant on imports for 13 different minerals, with China being the primary import source for more than half of these.
|Mineral||Net Import Reliance as Percentage of Consumption||Primary Import Source (2018-2021)|
|Graphite (natural)||100%||🇨🇳 China|
|Indium||100%||🇰🇷 Republic of Korea|
|Rare Earths (compounds and metals)||95%||🇨🇳 China|
|Titanium (metal)||95%||🇯🇵 Japan|
|Chromium||83%||🇿🇦 South Africa|
|Aluminum (bauxite)||75%||🇯🇲 Jamaica|
|Platinum||66%||🇿🇦 South Africa|
|Zirconium||50%||🇿🇦 South Africa|
These include rare earths (a group of 17 nearly indistinguishable heavy metals with similar properties) which are essential in technology, high-powered magnets, electronics, and industry, along with natural graphite which is found in lithium-ion batteries.
These are all on the U.S. government’s critical mineral list which has a total of 50 minerals, and the U.S. is 50% or more import reliant for 43 of these minerals.
Some other minerals on the official list which the U.S. is 100% reliant on imports for are arsenic, fluorspar, indium, manganese, niobium, and tantalum, which are used in a variety of applications like the production of alloys and semiconductors along with the manufacturing of electronic components like LCD screens and capacitors.
China’s Gallium and Germanium Restrictions
America’s dependence on imports for various minerals has resulted in a new challenge resulting from China’s announced export restrictions on gallium and germanium that took effect August 1st, 2023. The U.S. is 100% import dependent for gallium and 50% import dependent for germanium.
These restrictions are seen as a retaliation against U.S. and EU sanctions on China which have restricted the export of chips and chipmaking equipment.
Both gallium and germanium are used in the production of transistors and semiconductors along with solar panels and cells, and these export restrictions present an additional hurdle for critical U.S. supply chains of various technologies that include LED lights and fiber-optic systems used for high-speed data transmission.
The restrictions also affect the European Union, which imports 71% of its gallium and 45% of its germanium from China. It’s another stark reminder to the world of China’s dominance in the production and processing of many key minerals.
The announcement of these restrictions has only highlighted the importance for the U.S. and other nations to reduce import dependence and diversify supply chains of key minerals and technologies.
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