China dominates global production of rare earth elements (REEs), a group of 17 minerals critical to manufacturing a range of high-tech applications.
Despite American and European efforts to diversify REE imports, China continues to play a pivotal role in the global supply of the strategic resources.
According to the International Energy Agency, China accounted for 61 percent of global REE production last year, with Myanmar and the U.S. trailing at 15 percent and 9 percent, respectively. China sourced 72 percent of the U.S.’s rare earth imports in 2022 according to the U.S. Geological Survey, followed by Malaysia with 11 percent, Japan with 6 percent, and Estonia with 5 percent.
European Union data shows the 27-member bloc was dependent on China for 40.3 percent of its REEs needs that year, in terms of weight, versus 30.6 percent from Malaysia and 24.5 percent from Russia.
Yttrium, neodymium, and other rare earth elements are not geologically rare but are difficult to extract and refine.
Washington increasingly views reliance on Chinese REEs as a critical national security issue. On Tuesday, the House Select Committee on the Chinese Communist Party announced it was launching a working group focused on countering China’s dominance in critical mineral supply chains.
“Critical minerals are the foundation of everything from consumer electronics to advanced military technology. America’s dependence on China for these materials could become a significant vulnerability in a conflict,” committee chairman John Moolenaar (R-MI) stated in the news release.
European Commission President Ursula von der Leyen in her 2022 State of the Union address emphasized the growing importance of rare earths, predicting “lithium and rare earths will soon be more important than oil and gas.” She projected a fivefold increase in demand for these metals over the next decade.
The Critical Raw Materials Act, which went into effect last month, mandates that the EU source 10 percent of its critical raw materials and process 40 percent domestically.
The European Union and U.S. State Department didn’t immediately respond to written requests for comment.
China has recently demonstrated its willingness to leverage its hold over the strategic metals.
Last year, Beijing tightened reporting controls on exports of strategic rare earth elements in an apparent response to U.S. restrictions on semiconductors and chipmaking equipment, which the Biden administration says is intended to limit Chinese advancements in military technology.
China’s Ministry of Commerce also announced restrictions on equipment used to process rare earth elements and magnets.
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Another example of China’s economic coercion occurred in 2010 when it temporarily halted REE exports to Japan following a territorial dispute after an incident in the Japan-controlled Senkaku Islands, over which China asserts sovereignty.
The Japanese coast guard had arrested the captain of a Chinese fishing boat after it collided with a pair of coast guard vessels. This spurred Japan to cut its sourcing of REEs from China from over 90 percent to just 58 percent between 2008 and 2018.
Recently, Norwegian mining company Rare Earths Norway announced it had discovered the largest REE deposit in continental Europe.
The company projected that pending investment and development, it could meet 10 percent of Europe’s demand for magnet-related REEs in the initial phase of operations and about 30 percent by 2045.
