China Mulls Export Rules for Rare Earth Elements

Neodymium, a rare earth element, is the world’s strongest magnetic ore. | Getty Images

The Biden administration, meanwhile, orders a review of critical domestic manufacturing industries.

The Chinese government is considering new rules on the production and export of rare earth elements (REE) – the kind of materials required to build me a smartphone, you an electric vehicle, and the American military an F-35.

That’s a big deal, as China is controls the majority of global supply for REEs – and that control can be used as a lever in international trade and diplomatic negotiations. China is clearly studying how to best use it. A recent government consultation, the Financial Times reports, asked Chinese mining industry executives “how badly companies in the US and Europe, including defence contractors, would be affected if China restricted rare earth exports during a bilateral dispute.”

This is all coming in the context of the big, ongoing trade fight the Trump administration initiated with Beijing that continues today. But the REE issue is a problem that has its roots all the way back in the aughts, when China used overproduction to secure a near monopoly over the REE mining sector, and then used quotas to keep prices high. The Alliance for American Manufacturing even commissioned a report on supply chain vulnerabilities, which devoted an entire chapter to the study of the REE bottleneck that China maintained.

This problem, though, has persisted for years – China today accounts for between 80 and 90 percent of REE supplies – but it’s getting more and more attention as domestic manufacturing capacity for critical items has been revealed as threadbare by recent events. Here’s what a Pentagon official said to a Senate committee in October 2020, in the wake of a Trump administration executive order meant to boost domestic REE production:

“The silver lining of COVID has been that, I think, most Americans now understand the importance of having domestic supplies.”

Hey, man: Sometimes you gotta focus on the silver linings, I guess.

Anyway: President Biden is expected to sign an executive order of his own in the coming days that will order the government to “produce unclassified assessments of key industries and their supply chains,” reports Yahoo News. REEs, along with semiconductor manufacturing and medical supplies, are among the industries that will be put under the lens.

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Author: Matthew McMullan


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