American Resources Policy Network
Promoting the development of American mineral resources.
  • Looming Export Controls and Critical Mineral Over-Reliance Prompt Realignment Not Just Between China and West, But Also in Asia – A Look at South Korea

    As the Wall Street Journal reports, a new OECD study has found that export restrictions on Critical Minerals have increased more than fivefold from January 2009 to December 2020, suggesting that “export restrictions may be playing a non-trivial role in international markets for critical raw materials, affecting availability and prices of these materials.”  

    While this significant shift to export controls – according to the WSJ mostly in the form of taxes – has been noticeable and relevant, it may just have been the tip of the iceberg.

    In the wake of a global pandemic, related supply chain shocks and with the Russia-Ukraine war raging on, the trade dimension of geopolitics has become the new frontier in the tech wars between Beijing and Washington, DC – a relationship in which conflict has been smoldering over the past few years, especially over Rare Earth Elements (REEs).

    As we outlined in a recent post, Western nations have made decoupling from China – which has long held a strategic stranglehold over Critical Mineral supply chains – a priority and have pursued a strategy of “friendshoring.”

    Observers were waiting to see if China would retaliate in response to the United States’ recently imposed set of sweeping controls on advanced semiconductors and semiconductor manufacturing equipment aimed at China and a related agreement with Japan and the Netherlands.

    It may not prove to be a long wait.  According to Nikkei reporting earlier this month, China has since announced that it is considering prohibiting exports of certain rare earth magnet technology through updates to a technology export restrictions list last issued in 2020.

    The looming export control ratchet and increasing tensions between China and the West are troubling South Korea – which has in the past walked a fine line between the United States and China – its leading economic partner and increasingly dominant neighbor – and has publicly balked at the U.S. effort to isolate China from semiconductor supply chains.

    Regardless of that fine line, public opinion towards China has been souring in South Korea, and diplomatic relations with the country are also getting tense as Seoul summoned China’s ambassador to protest Beijing’s criticism of remarks made by President Yoon in an interview with Reuters on Taiwan.

    The looming specter of China restricting technology exports has South Korea’s industrial sector worried, prompting the government to announce a “strategy to secure core minerals” to reduce its dependence on Chinese critical mineral imports for from the current 80 percent to 50 percent by 2030.

    In the context of this strategy, the South Korean Ministry of Trade, Industry and Energy designated 33 as critical minerals and named 10 of those as strategically critical minerals, including the “battery criticals” lithium, nickel, cobalt, manganese and graphite and five types of rare earth materials considered crucial in 21st century tech applications including the manufacture of semiconductors.  ARPN followers will note that Korea’s 10 “strategically critical minerals” list  – assuming the five REEs are those used in permanent magnets — squares up with ARPN’s “Super Criticals,” circa April 2022.

    As part of a push to “expand and strengthen bilateral and multinational cooperation with resource-rich countries” a public-private delegation of officials from South Korea’s public and private sectors is currently visiting Chile and Argentina toexplore ways to boost cooperation on supply chains of lithium and other major minerals and the development of natural resources.” 

    The country is also stepping up domestic and global investment.  Last month, South Korean President Yoon Suk Yeol announced that the government and companies including Samsung Electronics Co. would invest $422 billion into chip making and EV manufacturing projects in what Bloomberg calls “the nation’s most aggressive effort yet to win a heated global race for tech supremacy.”

    Seoul is further looking to  provide $5.32 billion on financial support to its domestic battery makers looking to invest in infrastructure in North America, while also looking to upgrade its partnership with India with a focus on trade, investment and strengthening critical mineral supply chains.  To put South Korea’s $5.3 billion in context, at 1/12th the size of the U.S. economy, that’s equivalent to the U.S. Government allocating more than $60 billion to Critical Mineral supply chains.

    Whether or not China escalates export controls for critical minerals remains to be seen – though officials already finished taking expert comments on the planned restrictions reported by Nikkei earlier this month and the changes are expected to go into force this year – it is becoming increasingly clear that a “huge realignment” in the critical minerals space is underway, and its one that not only sees the West looking to reduce Chinese resource dominance, but also sees allegiances shift in Asia itself.

  • A New Chapter in the Tech Wars? Weaponization of Trade Back on the Menu as U.S.-Chinese Tensions Soar

    The world breathed a collective sigh of relief when Chinese drills in the seas and skies surrounding Taiwan wrapped up without further incident this Monday.

    Nevertheless, tension between the U.S. and China over the island, which some analysts consider “the most dangerous standoff between global superpowers, even as the war in Ukraine rages,” remain high, and a recent development in the trade arena may add further fuel to the fire.

    The territorial dispute over Taiwan may make for the flashiest headlines, but, as followers of ARPN well know, the trade dimension of the geopolitics of critical mineral supply chains have emerged as a new frontier in the tech wars between Beijing and Washington, D.C., and conflict has been smoldering over the past few years, particularly over Rare Earth Elements (REEs).

    When reports of Chinese threats to “play the Rare Earths card” – to escalate its trade dispute with the then-Trump administration to include rare earths minerals — surfaced in 2019, ARPN’s Daniel McGroarty argued the move could galvanize support for legislation or further executive actions to reduce U.S. overreliance on foreign supply and processing of critical metals and minerals.  By July 2019, then-President Trump issued a Presidential Determination under the Defense Production Act of 1950 designating all links in the rare earth permanent magnet supply chain as “essential for the national defense,” and eligible for U.S. Government funding and support.

    But the wheels of government grind slowly.  A pandemic, a new war, and several supply chain shocks later, the United States and its allies have indeed taken a number of steps to decouple from China and shore up its own critical mineral supply chains.  As a result, China’s share of global REE production, which stood at roughly 90% a decade ago, has dropped to 70% last year, according to the USGS, though most processing is still under Chinese control.

    Western nations have also secured a number of trade deals to decouple from China marking a “huge realignment in trade – one that goes by names like ‘friendshoring’ and ‘nearshoring’ – and having occurred “so rapidly that they’ve wrongfooted Beijing,” as Mary Hui writes in a three-part series for Quartz.

    Hui cites a two-year old deal between U.S. and European rare earth firms which involves processing monazite sands in Utah to produce rare earth carbonates, then ship them to Estonia for processing, as well as another project in which REE ores from Canada will undergo preliminary processing there to then be shipped to Norway for further processing.  Meanwhile, Japan has strengthened its REE cooperation with Australia.

    Those efforts notwithstanding, China still has substantial leverage, especially in the processing segment, and has in recent months kicked its efforts to consolidate its REE sector into high gear [see our post here] while doubling down on an aggressive investment spree overseas to re-establish an “abundant supply of rare earth, so [as] to have the world’s cheapest feed for China’s downstream industries.”

    As tensions between China and the West, and specifically China and the United States have soured, the specter of export controls began rearing its head again.

    In October 2022, in a move that observers have deemed a paradigm shift in U.S. export control policy toward explicit containment of China’s technological advancement, Washington, D.C. imposed a set of sweeping controls on advanced semiconductors and semiconductor manufacturing equipment to China, and has been able to secure Japanese and Dutch agreement to a deal restricting China’s access to advanced semiconductor manufacturing equipment.

    While China until recently had yet to “substantively respond” to the semiconductor export controls, industry sources suspected “they’re likely going to use rare earths as a bargaining chip since rare earths are a weak point for Japan and the U.S.” – and these experts were proven right when Nikkei reported last week that Beijing was considering prohibiting exports of certain rare earth magnet technology through updates to a technology export restrictions list last updated in 2020.

    According to Nikkei, “[t]he revisions would either ban or restrict exports of technology to process and refine rare-earth elements. There are also proposed provisions that would prohibit or limit exports of alloy tech for making high-performance magnets derived from rare earths. In all, there are 43 amendments or additions in the draft list first announced in December by the commerce and technology ministries. Officials have finished taking public comments from experts, and the changes are expected to go into force this year.”

    As followers of ARPN well know, China is no stranger to playing the Rare Earths card, and they may recall the 2010 standoff between China and Japan in which Beijing blocked REE sales to Japanese users over a heated flare up in the context of the long-standing dispute over control of the Senkaku Islands in the East China Sea.

    It’s not 2010 anymore. Dependencies have shifted, and a new global realignment has begun. It remains to be seen how this new chapter plays out, but it is clear that as the export restrictions ratchet is being tightened, the weaponization of trade in the tech wars is back on the menu.

  • Inflation Reduction Act Spurs Trade Agreement Between USA and Japan, Deal with EU Likely to Follow Soon as Treasury Releases Clarifying Guidance

    The Inflation Reduction Act (IRA), passed and enacted into law last year, is considered one of the landmark pieces of legislation to combat climate change and strengthen U.S. critical mineral supply chains. The package included funding for tax credits and rebates for consumers buying electric vehicles, installing solar panels or making other energy-efficiency upgrades to their homes, [...]
  • ARPN’s McGroarty for The Hill: Strength through Peace – Dropping Sec. 232 Tariffs on Aluminum and Steel Could Strengthen U.S. Position vis-a-vis China

    In a new piece for The Hill, ARPN’s Dan McGroarty zeroes in on the inter-relationship of trade and resource policy, which has been an increasingly recurring theme over the past few months. McGroarty argues that the removal of U.S. tariffs on steel and aluminum coming from Mexico and Canada, which have been a “dead weight on [...]
  • Trade Tensions Underscore Need for Mineral Resource Policy Reform

    While 2018 brought the inter-relationship between trade and resource policy to the forefront, this trend is continuing in 2019.   Last week, the White House announced sanctions on Iranian metals, which represent the Tehran regime’s biggest source of export revenue aside from petroleum.  The sanctions on Iran’s iron, steel, aluminum and copper sectors represent the [...]
  • Aluminum and the Intersection of Trade and Resource Policy: U.S. Senator Discusses Need to Remove Sec. 232 Tariffs

    In an interview with Fox and Friends, U.S. Senator Chuck Grassley (R, Iowa) discusses the path to what he terms a major trade victory for the U.S.  In order for this to happen, he believes removing the Sec. 232 tariffs from the USMCA, the new and yet-to-be-ratified U.S.-Mexico-Canada trade deal to replace NAFTA struck in [...]
  • Section 232 Tariffs on Aluminum and Steel on the Way Out?

    News headlines these days are full of doom and gloom. As the Guardian writes, “whether or not the world really is getting worse, the nature of news will interact with the nature of cognition to make us think that it is.” Against this backdrop, it’s nice to see a little – albeit cautious – optimism [...]
  • Metals in the Spotlight – Aluminum and the Intersection between Resource Policy and Trade

    While specialty and tech metals like the Rare Earths and Lithium continue to dominate the news cycles, there is a mainstay metal that has – for good reason – been making headlines as well: Aluminum.  Bloomberg recently even argued that “Aluminum Is the Market to Watch Closely in 2019.”  Included in the 2018 list of 35 [...]
  • Washington’s Mining and Resource Policy Agenda – What’s in Store for 2019?

    As we get back into the swing of things, a new piece for E&E News previews the anticipated 2019 mining and mineral resource policy agenda in Washington, DC. Here are some of the highlights: With a shift of power in the House of Representatives, hard rock leasing and reclamation issues are expected to come up [...]
  • 2019 New Year’s Resolutions for Mineral Resource Policy Reform

    Out with the old, in with the new, they say. It‘s new year‘s resolutions time.  With the end of 2017 having set the stage for potentially meaningful reform in mineral resource policy, we outlined a set of suggested resolutions for stakeholders for 2018 in January of last year.  And while several important steps  were taken [...]