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Rare earths are the new oil. This group of 17 metals has become indispensable for the transition to clean energy and for modern manufacturing in general. These elements have unique characteristics that make them essential ingredients for the future of technology, writes Oilprice.
“[Rare earths] change everything about cars; about green technology; about the accuracy of weapons systems. And so they have become vital,” points out Jim Kennedy, president of ThREE Consulting, a consulting firm focused on rare earths. “Do you want a Prius? You need rare earths. Do you want a Tesla with a long range? You need rare earths. Do you want a cruise missile with an accuracy of 1 meter? You need rare earths,” he emphasizes.
The particular utility of rare earths comes primarily from their use as catalysts and magnets in traditional and low-carbon technologies. Other important applications for rare earths are in the production of special metal alloys, glass and high-performance electronics.
Rare earth elements “have remarkable physical and chemical properties that make them perhaps the superheroes of the periodic table,” Ryan Castilleux, managing director of minerals consultancy Adamas Intelligence, told Foreign Policy.
Rare earth elements are not actually as “rare” as their name suggests. These minerals occur naturally all over the world—but the key is finding them in large enough concentrations to make extracting them worth the time and money.
All of this is making rare earths the new axis of geopolitical power on a global scale. Countries with deposits of these elements, the capacity, and the resources to extract and refine them will find themselves with enormous financial and political leverage in the years ahead.
China is the largest producer of rare earth elements. After the Asian country, which supplies about 38 percent of the world’s unrefined rare earth minerals, Vietnam ranks second in terms of reserves, accounting for about 19 percent. Next is Brazil with 18.1 percent, followed by Russia with 10.4 percent, India with 6 percent, and Australia with 3.5 percent. Last are the United States and Greenland, which each account for 1.3 percent. No other country in the world can boast more than one percent of rare earth element reserves.
However, of all these countries, only one has real geopolitical control over the rare earth element supply chains and all the secondary markets that rely on these materials, and that country is China.
China supplies about 85-95 percent of the world’s refined rare earth minerals and has dominated the global market since the late 1990s. This is because Beijing has a near-monopoly on rare earth refining capacity. As we know, a handful of other countries also have significant reserves of the strategically important rare earths, but they lack the established infrastructure needed to process them cost-effectively.
China alone accounts for 85-90 percent of the world’s rare earth refining. Moreover, Chinese refineries supply 68 percent of the world’s cobalt, 65 percent of the nickel, and 60 percent of the lithium for electric vehicle batteries. As a result, a full 75 percent of all these batteries are produced in China.
There is considerable concern that unless other rare earth-rich countries find a way to compete more effectively with China, it will give Beijing enormous leverage and create a market that is anything but free. For now, however, some experts argue that such concerns are overblown. But it is no secret that rare earths are the new oil, and Western powers are fighting to regain control of this resource.
Global tensions over rare earths are certain to dominate the coming years, and mitigating such uneven control over the market will be crucial to maintaining balanced trade mechanisms.
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