Rare Earth Rivalry*
Published in Izvestia
(Russia) on 25 September 2024
by Yekaterina Zaklyazminskaya (link to
original)
*Editor’s note: On March 4, 2022, Russia enacted a law that criminalizes public opposition to, or independent news reporting about, the war in Ukraine. The law makes it a crime to call the war a “war” rather than a “special military operation” on social media or in a news article or broadcast. The law is understood to penalize any language that “discredits” Russia’s use of its military in Ukraine, calls for sanctions or protests Russia’s invasion of Ukraine. It punishes anyone found to spread “false information” about the invasion with up to 15 years in prison.
An expert from the Institute of China and Contemporary Asia of the Russian Academy of Sciences, Yekaterina Zaklyazminskaya, on how the U.S. is trying to apply more pressure to China amid the struggle for critical metals
The U.S. is assembling a coalition to weaken China’s dominance in rare earth element extraction. Western countries under the leadership of the U.S. are now joining forces to support the extraction projects of the crucial minerals necessary for the development of high-tech sectors.
This battle swirls around 17 rare metallic elements without which modern high-tech production would be inconceivable. They are used in the production of consumer electronics (TV screens, computers, mobile phones); in military production (nuclear submarines, aircraft carriers); and even in agriculture. Nuclear reactors can’t be constructed without samarium and europium, while fiber-optic guided torpedoes won’t work without holmium, erbium, and praseodymium.
Many countries in the world see rare earth elements as no less important than oil, so the battle for this field is a new struggle in the race for global leadership.
China remains the largest country extracting rare earth elements, as well as the country with the largest supply of these elements. China also has another advantage: all 17 rare earth elements exist on its land. Sometimes people in the country jokingly note that where the Middle East has oil, China has rare earth elements.
However, Washington strives to check the development of “undesirable” and “unruly” countries. The first successes in the telecommunications industry and China’s triumph in developing 5G networks gave birth to an aggressive deterrence policy aimed at undermining the economic stability and prosperity of China. Then, a chain of sanction packages followed, imposed on the most successful companies one after another.
Having seen the futility of its efforts, Washington decided to “play big” and undermine the very foundation of China — its position as the world's factory. Chinese supplies account for more than 60% of electrical products. The use of cutting-edge microelectronic components is essential for the manufacturing of every such product.
After years of reform, China, alas, couldn’t achieve full import substitution. Microelectronics became the last field that was still seriously dependent on imports. That’s where the U.S. struck, taking control of semiconductor and microchip supplies to China, promising its partners (Japan, South Korea, the Netherlands, as well as Taiwan, which China considers an inalienable part of its territory) a set of preferences in exchange for their withdrawal from the Chinese market.
However, the “semiconductor alliance” didn’t lead to the expected economic damage. The Chinese managed to develop acceptable local substitutes. The rise of national pride led the population to refuse to buy foreign smartphones in favor of the local producer with Chinese microchips.
In August 2023, in its first meaningful answer to Washington’s sanctions, Beijing restricted its supply of rare elements gallium and germanium. Gallium is used in semiconductor production; germanium is used in producing optical fiber and solar batteries. The country simply couldn’t sit and watch as an increasing number of restrictions piled up on it.
Recent years have also seen increasing attempts to steal commercial information about the Chinese rare earth element market and push China out of other countries’ markets, for example, Australia and Canada. But the main battle has unfolded around Mongolia, which, having discovered its new deposits, could well get ahead of China in its rare earth element supply and extraction volumes.
Not just Australia and Canada, but also India and the U.S. are concerned about the excessive dependence on China in this market. Mongolia appears to them as a safe alternative. China doesn’t have any warm feelings about its neighbor getting closer with anti-China-oriented forces, but it is consoled by the inevitability of Mongolia coordinating any trade and economic cooperation either with Russia or with China, since logistic routes from Mongolia will inevitably go through the territory of one or another of these states.
Washington is trying to pull all the countries interested in reducing their dependency on China into a new “rare earth element alliance,” which is being formed before our very eyes. Back in 2021, the U.S. planned to invest $5 billion in developing independent (independent from China, of course, because this country accounted for almost 80% of the American rare earth element import) supply chains of these strategic elements. Realizing the danger of the Chinese rare earth threat, the U.S. decided to revive extraction of these metals on its territory in the 2010s. The drive to reduce dependency was reflected in the drop of the Chinese share in this market from a critical 97% to 88%.
The goals of this alliance are similar to those the U.S. is pursuing when restricting the supplies of microelectronic components: to reformat the global economy, deploy value chains bypassing China, and isolate the country. Washington’s long-term plans, it would seem, feature its desire to weaken China economically, and then deliver a decisive blow to turn Beijing into a compliant puppet in Washington’s hands.
However, such a scenario is already impossible. China restricts its control over the rare earth elements market to bolster its national security against Washington’s attacks. Beijing is resolute. Not just rare earth elements but also other strategic raw materials from China fall under export controls — for example, antimony, which is also essential in semiconductor production.
Washington should learn fair competition rather than trying to stab its opponents in the back. Such alliances only expose the fact that other opportunities have been exhausted. The attempts to isolate China will only lead to the "undesirable-to-the-U.S." countries banding together. With each year, an increasing number of countries are disgruntled by U.S. policy; the philosophy promoted by the BRICS countries seems increasingly attractive compared to America's aggressive policy.
An expert from the Institute of China and Contemporary Asia of the Russian Academy of Sciences, Yekaterina Zaklyazminskaya, on how the U.S. is trying to apply more pressure to China amid the struggle for critical metals
The U.S. is assembling a coalition to weaken China’s dominance in rare earth element extraction. Western countries under the leadership of the U.S. are now joining forces to support the extraction projects of the crucial minerals necessary for the development of high-tech sectors.
This battle swirls around 17 rare metallic elements without which modern high-tech production would be inconceivable. They are used in the production of consumer electronics (TV screens, computers, mobile phones); in military production (nuclear submarines, aircraft carriers); and even in agriculture. Nuclear reactors can’t be constructed without samarium and europium, while fiber-optic guided torpedoes won’t work without holmium, erbium, and praseodymium.
Many countries in the world see rare earth elements as no less important than oil, so the battle for this field is a new struggle in the race for global leadership.
China remains the largest country extracting rare earth elements, as well as the country with the largest supply of these elements. China also has another advantage: all 17 rare earth elements exist on its land. Sometimes people in the country jokingly note that where the Middle East has oil, China has rare earth elements.
However, Washington strives to check the development of “undesirable” and “unruly” countries. The first successes in the telecommunications industry and China’s triumph in developing 5G networks gave birth to an aggressive deterrence policy aimed at undermining the economic stability and prosperity of China. Then, a chain of sanction packages followed, imposed on the most successful companies one after another.
Having seen the futility of its efforts, Washington decided to “play big” and undermine the very foundation of China — its position as the world's factory. Chinese supplies account for more than 60% of electrical products. The use of cutting-edge microelectronic components is essential for the manufacturing of every such product.
After years of reform, China, alas, couldn’t achieve full import substitution. Microelectronics became the last field that was still seriously dependent on imports. That’s where the U.S. struck, taking control of semiconductor and microchip supplies to China, promising its partners (Japan, South Korea, the Netherlands, as well as Taiwan, which China considers an inalienable part of its territory) a set of preferences in exchange for their withdrawal from the Chinese market.
However, the “semiconductor alliance” didn’t lead to the expected economic damage. The Chinese managed to develop acceptable local substitutes. The rise of national pride led the population to refuse to buy foreign smartphones in favor of the local producer with Chinese microchips.
In August 2023, in its first meaningful answer to Washington’s sanctions, Beijing restricted its supply of rare elements gallium and germanium. Gallium is used in semiconductor production; germanium is used in producing optical fiber and solar batteries. The country simply couldn’t sit and watch as an increasing number of restrictions piled up on it.
Recent years have also seen increasing attempts to steal commercial information about the Chinese rare earth element market and push China out of other countries’ markets, for example, Australia and Canada. But the main battle has unfolded around Mongolia, which, having discovered its new deposits, could well get ahead of China in its rare earth element supply and extraction volumes.
Not just Australia and Canada, but also India and the U.S. are concerned about the excessive dependence on China in this market. Mongolia appears to them as a safe alternative. China doesn’t have any warm feelings about its neighbor getting closer with anti-China-oriented forces, but it is consoled by the inevitability of Mongolia coordinating any trade and economic cooperation either with Russia or with China, since logistic routes from Mongolia will inevitably go through the territory of one or another of these states.
Washington is trying to pull all the countries interested in reducing their dependency on China into a new “rare earth element alliance,” which is being formed before our very eyes. Back in 2021, the U.S. planned to invest $5 billion in developing independent (independent from China, of course, because this country accounted for almost 80% of the American rare earth element import) supply chains of these strategic elements. Realizing the danger of the Chinese rare earth threat, the U.S. decided to revive extraction of these metals on its territory in the 2010s. The drive to reduce dependency was reflected in the drop of the Chinese share in this market from a critical 97% to 88%.
The goals of this alliance are similar to those the U.S. is pursuing when restricting the supplies of microelectronic components: to reformat the global economy, deploy value chains bypassing China, and isolate the country. Washington’s long-term plans, it would seem, feature its desire to weaken China economically, and then deliver a decisive blow to turn Beijing into a compliant puppet in Washington’s hands.
However, such a scenario is already impossible. China restricts its control over the rare earth elements market to bolster its national security against Washington’s attacks. Beijing is resolute. Not just rare earth elements but also other strategic raw materials from China fall under export controls — for example, antimony, which is also essential in semiconductor production.
Washington should learn fair competition rather than trying to stab its opponents in the back. Such alliances only expose the fact that other opportunities have been exhausted. The attempts to isolate China will only lead to the "undesirable-to-the-U.S." countries banding together. With each year, an increasing number of countries are disgruntled by U.S. policy; the philosophy promoted by the BRICS countries seems increasingly attractive compared to America's aggressive policy.
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