Rare Earth Issues Again in News

A Guancha article.

Guancha editor Yang Rong has written an article based quite a lot on CNBC reports he’s entitled, “The U.S. media was "wronged": car companies can still complain a few times when they are affected, and defense giants can only be silent and under pressure.” The problem is rooted in longstanding Outlaw US Empire Anti-China policy that makes a mockery of its One China Policy it’s abused since it was declared. When China was declared the Empire’s #1 threatening nation during George W Bush’s second term, its status sat until Obama signaled the shift in focus to the “Indo-Pacific” that set the stage for Trump’s first term Trade War escalation, which was amplified by Team Biden and further expanded at the start of Trump’s current term. Recently, China realized it was providing a nation whose political apparatus openly declared and has reiterated it will soon go to war with China the strategic materials it required to make the weapons and ammunition needed to prosecute that war. So, late in Team Biden’s term, China began placing export controls on selected rare earths, processed and bulk using the Empire’s rationale—national security—as the grounds for regulation. The proper laws were passed, and when Trump upped the Trade War, a complete embargo was placed on their export except in rather rare instances. Some will have read Warwick Powell’s excellent article on the subject and thus have a working knowledge of the situation, which this article updates:

Other periodic tables show one or two of the classes while here all three are depicted.

After China recently issued new regulations in accordance with the law to impose export controls on some rare earth-related items with dual-use properties, some foreign car companies reported that production was affected. Some people with good intentions have seized the opportunity to hype up and distort China's efforts to safeguard its own security and fulfill its international non-proliferation obligations as "weaponization of rare earths". On [June] 10th, some US media actually "complained" that Western military giants are actually the "first to bear" the target of export controls, but for various reasons can only remain silent and bear the pressure.

"China's rare earth restrictions hit defense giants", the U.S. Consumer News and Business Channel (CNBC) reported on the 10th with this title, in recent weeks, the automotive and robotics industry has been "significantly affected" by rare earth export control measures, but analysts pointed out that Western defense giants "are also feeling the pressure."

China's review of export applications for rare earth-related items in accordance with laws and regulations and the strengthening of strategic resource management come at a time when the U.S. government has introduced a series of unilateral tariffs and unjustified blockades on China in key technology areas, leading to deepening friction between the two countries, which has caused associations in some countries.

According to CNBC, in early trading on the 10th, the stock prices of some European defense giants fell. German tank gearbox maker Renk's shares plunged nearly 8%, leading the pan-European Stoxx 600 index lower; Shares of Sweden's Saab and Germany's Rheinmetall also fell more than 3.5%.

William Bain, head of trade policy at the British Chamber of Commerce, said in an interview with CNBC on the 10th that it is "absolutely crucial" for the United States to strive for a breakthrough in rare earth export controls. He noted that over the weekend, some companies related to electric vehicles and robotics had already obtained export permits, "but if you look at the important minerals in magnets like samarium, it is indispensable for the manufacture of American F-35 fighter jets."

"Without samarium, they could not make an F-35 fighter. The lack of access to rare earths not only seriously affects the U.S. construction in the field, but if this continues, it may also endanger national security. Bain said.

CNBC notes that rare earth elements play an integral role in modern defense technology. The report quoted the British company Oxford Stochastic Frontier Analysis (SFA-Oxford) as saying that rare earths are used in sonar transducers, radar systems, enhanced gamma-ray radiation detection devices and multi-purpose integrated chemical sirens to amplify signals and improve resolution, so that they can achieve better performance.

Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS), a US think tank, believes that it is only a matter of time before the Western defense industry sounds the alarm about the shortage of rare earths. In fact, she said, many Western defense companies have already expressed concerns in private.

"Given that we need thousands of pounds (1 pound or 0.45 kilograms) of rare earths for each of our submarines and every fighter jet, defense companies are bearing the brunt of the attack." Bhascalan told CNBC that if the price of praseodymium-neodymium oxide (a key ingredient for rare earth permanent magnets) remains below $60 per kilogram by 2030, "then it is expected that nearly half of non-Chinese rare earth supplies will become economically unviable."

This means that the governments of the United States, Australia and the European Union must coordinate interventions on both the supply and demand sides to promote the construction of rare earth capacity, Baskaran said. This includes providing production tax credits and subsidies on the supply side to support the survival of rare earth companies, as well as implementing incentives similar to those in the US Inflation Reduction Act on the demand side to encourage the purchase of rare earths from allies.

Following the progress made in the high-level economic and trade talks between China and the United States in Geneva, China's Ministry of Commerce announced on May 14 that it would suspend the inclusion of 28 U.S. entities on the export control control list for 90 days. But CNBC noted that some of these U.S. companies are still subject to other sanctions or export controls announced by China because of their "activities in the defense sector."

Henry Sanderson, an associate research fellow at the Royal United Services Institute (RUSI), said bluntly that the defense industry is far less open about the shortage of rare earths than the auto industry. "The defense industry is difficult because it is less transparent. But they do need rare earths and rare earth magnets, especially the so-called samarium cobalt magnets.”

Sanderson pointed out that in terms of total demand for rare earth magnets, defense companies are indeed much lower than industries such as electric vehicles and robotics, but even so, the manufacturing capacity of rare earth magnets in Western countries is still a potential risk. "I'm not so sure if the defense industry is as anxious as the civilian industry...... But judging from the production of (rare earth magnets) in Western countries, it is indeed very low. ”

In response to recent concerns about China's rare earth export control measures, China has repeatedly responded. The China Nonferrous Metals Industry Association previously stated in a statement that from the past practice of enterprises, as long as they do not engage in activities that damage China's national sovereignty, security and development interests, export control will not affect the normal operation and trade activities of enterprises, let alone the stability and security of international industrial and supply chains.

The spokesman of the Ministry of Commerce reiterated on the 7th that rare earth-related items have dual-use properties, and the implementation of export controls on them is in line with international practice. China's implementation of export controls on rare earth-related items in accordance with the law is aimed at better safeguarding national security and interests, fulfilling international obligations such as non-proliferation, and reflecting its consistent position of upholding world peace and regional stability.

The spokesperson added that China has also noted that with the development of robots, new energy vehicles and other industries, the demand for medium and heavy rare earths in the civilian field is continuing to grow. According to reports, recently, during the talks between Wang Wentao, Minister of Commerce, and the European Commission's Trade and Economic Security Commissioner Shevčović in Paris, France, expressed his willingness to establish a green channel for eligible applications, speed up the examination and approval, and instructed the working level to maintain timely communication on this.

"As a responsible major country, China has fully considered the reasonable needs and concerns of various countries in the civilian sector, reviewed the export license applications for rare earth-related items in accordance with laws and regulations, approved a certain number of compliance applications in accordance with the law, and will continue to strengthen the approval of compliance applications. In this regard, China is ready to further strengthen communication and dialogue with relevant countries on export control and promote trade facilitation and compliance. The spokesman said.

It is worth noting that last year alone, China took nine countermeasures against the United States over arms sales to Taiwan. According to media statistics, in the announced countermeasure list, there are not only specific enterprises, but also key figures, involving current and former government officials and corporate executives, gradually forming a three-dimensional sanctions network. In March this year, China once again activated the "Unreliable Entity List" to impose sanctions on 10 U.S. companies involved in Taiwan-related arms sales, including Tarkham and Rocker Helm. A spokesman for the Ministry of Commerce said that the 10 companies, in disregard of China's strong opposition, either participated in arms sales to Taiwan or carried out so-called military-technical cooperation with Taiwan, seriously harming China's national sovereignty, security and development interests. [My Emphasis]

The “thousands of pounds” claim must relate to bulk rare earths not finished product as those amounts are not required. As many reports note, the processing/refining of rare earths is a dirty, pollution generating process that makes production very expensive because of mandated pollution controls, which is why when looking at production charts the Outlaw US Empire ceases to be represented after 2002. China not only has massive reserves of the basic resources but also a well-established group of refining facilities. Building a proper refinery in Neoliberal nations goes against neoliberal policy. Note that China doesn’t tell nations what they need to do to alter the situation. Apparently, China feels it’s told the Collective West what it must do enough times that it had no need of repeating itself. The two main points are to butt-out of China’s dealings with Taiwan as that’s an internal matter no other nation is supposed to meddle in, and to cease provocations in the South China Sea. Another point would be to cease the belligerent rhetoric and to remove China as an opponent from both military planning and doctrine. Europe because it’s being attacked by Trump’s Trade War needs to alter its China policy but is having a very hard time. The Outlaw US Empire is on another planet in this instance and under Trump and the current Congress, their very negative attitude towards China is unlikely to change. And if the 500% secondary sanctions bill becomes law, the Empire isn’t going to get any strategic materials from China while its retailers and those dependent on the many parts made in China will scream as the ports shut down.

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