China’s grip on the rare earths market is coming under heightened criticism. The United States, Japan, and other like-minded countries are already doing a lot to push back against its pernicious influence. China’s recent moves, including the imposition of export curbs on rare earths, have raised alarm bells. Global markets are understandably spooked by these developments. These changes come at an important moment. Rare earth elements are critical components of the green and high-tech economy, including new technologies such as EVs and electronics.
China dominates the entire rare earths supply chain. This dominance has implications for its place in the global supply chain, as we’ll discuss below. The magnitude of China’s recent export restrictions shocked the market. In turn, the U.S. is partnering with Japan to re-open American mines. This effort aims to reduce dependence on Chinese suppliers and to strengthen U.S. rare earth production.
As great as it sounds, analysts are cautioning that the effort to “de-risk” from China will be difficult and expensive. As the ARPA-E actors are at pains to point out, creating alternative rare earth sources will involve considerable expense and long-term commitment. Cleveland-Cliffs is currently seeking other chances to mine rare earths within America. This anticipated move is part of the Biden administration’s broader push to develop a more flexible and resilient supply chain.
Chinese rare earth magnet exports to the U.S. are already down by 30% in recent months. This sharp drop highlights just how critical it is to identify other funding streams. Australia and the U.S. recently signed a critical minerals agreement. Experts don’t expect it to rapidly make up the gap China currently enjoys in this fledgling sector.
In Europe, though, plans are being made to work together in developing Greenland’s rare earths. A senior EU official recently suggested that Japan and the European Union should jointly pursue opportunities in this region, further emphasizing the international nature of the rare earths challenge.
Germany’s importers of rare earths and magnets are closely monitoring China’s next moves amid these shifting dynamics. China’s erratic domestic policies have created maximized anxiety among Chinese and foreign stakeholders. They are hungry at the same time to be able to pivot really fast if there’s a supply chain interruption.
Turkey surprised many when it recently declared that it has large deposits of rare earth elements in its Beylikova mine. Countries are currently in a mad scramble to establish their place within the global rare earths supply chain. Turkey’s discovery besides the significant revenue stream collaboration and investment provides promising opportunities.
The U.S. has raised market hopes for a potential deal with China, yet Beijing has maintained a cautious stance, leaving many to speculate about future relations. Japanese corporations—including Japan Steel—are intently watching the surging Chinese market for magnesium die casting machines. This development shines a light on the shifting global forces at play with rare earth elements.