Introduction
China's dominance in the rare earth industry is undeniable, producing more than 90% of the world's supply, as per the United States Geological Survey. However, in 2022, the market share of China reduced to 70%, yet it did not lead to a decline in production. Instead, other countries such as Australia, Vietnam, and Myanmar experienced an increase in their production of rare earths. Rare earth elements are a unique group of chemical elements, including tantalum, neodymium, promethium, gadolinium, yttrium, scandium, and others. Some of these elements are relatively scarce and not readily found in nature in their pure form, making them valuable due to their unique physical and chemical properties.
The Significance of Rare Earth Elements
Rare earth elements have unique properties that make them indispensable in numerous industries, particularly in electronics and renewable energy. They are used in the manufacturing of hybrid electric car motors, batteries, catalytic converters, lasers, fiber optics, LCD panels, and even wind turbines.
China's Dominance and Control of the Rare Earth Industry
China is the leading producer of rare earth elements, accounting for more than 70% of the global production. The country also controls 90% of the global processing industry for rare earths. Canada, Brazil, Tanzania, and the United States are some of the other major producers of rare earths, but China has the most extensive reserves of these elements.
China's dominance in the processing industry is evident, with the global processing industry amounting to 90%. In December 2022, the Chinese administration decided to restrict the export of some technologies used in processing rare earths. This move is likely to keep China's production of rare earths at the same level as 2022, giving the country a stronghold in the industry.
The Impact of China's Dominance on the Global Market
China's dominance in the rare earth industry has significant implications for the global market. The country's control of 90% of the processing industry and 70% of the global production means that it has a significant influence on the market. The restriction of export of some processing technologies is a clear indication of China's strategic interests in the industry.
The United States, Europe, Japan, and Australia are currently heavily dependent on China for their supply of rare earths. However, some strategies are being considered to reduce this dependence. One such strategy is to reduce the use of rare earths by replacing them with other materials. This is not an easy task and requires significant investment in research and development.
Another strategy is to form alliances that exclude China from the supply chain. For instance, the Swedish mining company, LKAB, has identified a rare earth deposit in the north of the country, which, according to their estimates, contains over a million tonnes of rare earths. The United States and its allies are taking similar steps to reduce their dependence on China for rare earths.
China's dominance in the rare earth industry is undisputed, and the country's control of the processing industry gives it a significant advantage. While the restriction of export of some processing technologies is a clear indication of China's strategic interests, the global market is exploring ways to reduce its dependence on China for rare earths. The success of these strategies remains to be seen, but it is clear that the rare earth industry will continue to be a significant factor in the global market.
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