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Too little, too late? The West’s response to China’s REE stranglehold

In an effort to challenge China’s near-total supply monopoly and the geopolitical power play that came with it, countries around the world have taken steps to seek alternative sources of supply. With new production coming online in the U.S. and Australia in recent years, along with small-scale production in India, U.S. Geological Survey figures document a drop of China’s market share from 98 percent to 86 percent last year.

However, a recent article in the British daily The Telegraph argues that this response may be too little, too late, and that this new production is not enough reason for manufacturers relying on Rare Earths to breathe easier:

“(…) even if China’s stranglehold on production of the raw elements is challenged, analysts warn that a more significant hold on the market remains unabated.”

The problem, as the article points out, is not that China has a monopoly on the resource itself – although being home to roughly 36 percent of the world’s reserves itself is not insignificant. China’s main advantage here lies in the fact that, having established world-leading processing facilities and the ability to manufacture, it has a monopoly on the process:

“The thing to remember is that China’s goal in offering state support to its home-grown rare earths industry was much broader than just digging and processing ore, says Kieron Hodgson, mining analyst at Charles Stanley.

Beijing, instead, was aiming to build a value chain, where by the rare earths are dug up, processed, and then incorporated into end products.”

According to the piece, the United States’ saving grace may be that “it has enough resources to start an industry.” Whether it will be able to succeed in doing that remains to be seen, but in any case, the developments in the Rare Earths field hold a cautionary tale for policies towards other critical minerals and should be reason enough for policy makers to focus on devising a comprehensive critical minerals strategy.