Western Media Criticizes China for Restricting Rare Earth Exports

Western Media issued a document on February 22, saying that there was a time when China made other countries nervous by warning to restrict its rare earth exports. However, this situation has now been reversed. Bloomberg said in an article that we don’t have to worry too much about the news that the Chinese government plans to ban the exports of rare earth elements (REEs). If China takes such a move, it may be counterproductive.

The article cited, for example, that the Japan Oil, Gas and Metals National Corporation (Jogmec) had funded the Australian Lynas at a price far below the market price to encourage the establishment of a non-Chinese supply chain. This investment allows Lynas to produce nearly 20,000 tons of rare-earth oxides annually from the Mount Weld mine in Australia and processing plants in Malaysia, which is enough to meet the needs of the United States, including the approximately 500 tons needed for national defense.

The United States is extremely lacking in rare earth resources. The outbreak of the Sino-US trade war has brought attention to REEs, an important strategic resource. In addition to the lack of resources in the United States, production capacity is also lagging. In the context of the Sino-US trade war, the United States is doing everything possible to expand the source of REEs to prevent being stuck.

According to data from the US Geological Survey, China accounts for 81% of global rare-earth production. Greenland contains natural resources such as oil, natural gas and REEs. The US President Trump once made a proposal to purchase Greenland.

In January this year, Lynas signed a contract with the U.S. Department of Defense to build a new facility to process 5,000 tons of REEs annually in Texas. The Pentagon will also fund a series of other projects in 2020 to ensure more REEs processing in the United States.

At the same time, the Pentagon has also established a government reserve of REEs similar to the US Strategic Petroleum Reserve. In 2020, it also announced a plan to purchase about 5,000 tons of REEs. In addition, a major importer in the United States filed a lawsuit against China at WTO against REEs, as well as tungsten and molybdenum. According to the article, these measures have reduced the Chinese global rare earth supply market share from 98% in 2010 to 58% in 2020.

In the past year, the market valuation of non-Chinese rare earth producers has increased, which has made it easier for them to fund the expansion of mining and processing capabilities. For example, Lynas raised 425 million Australian dollars through the issuance of new shares in August 2020 to pay for a processing plant in Australia and the upgrade of its Malaysian plant. China is trying to show its strength in the technological semiconductor market, political restrictions on exports will only cause major importers to reconfigure their supply chains.

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