China exported so few rare earths in September as it has not done for more than two years. Australia, on the other hand, intends to significantly expand its exports of rare earths in the near future, with sales in the United States in particular set to increase. The USA is currently working on a cooperation agreement with Australia to promote the production of rare earths. This is intended to make the worldwide, but above all the US demand for the important metals more independent of the Chinese supply supremacy. For there is great concern that Beijing could impose an embargo on the export of raw materials against the USA, thus using its dominant position as a „weapon“ in the trade dispute – even if the two sides have recently come a little closer to settling the conflict.
Rare earths are indispensable for today’s technologies, although metals are only needed in small quantities. Their areas of application range from the automotive industry to optics and medicine to mass-produced high-tech products such as smartphones. They are also indispensable for „green“ technologies – powerful magnets made of rare earths are found in electric motors and wind turbines. It is therefore all the more worrying that China’s share of global production of raw materials is a dominant 70 percent. The USA sources 80 percent of its imports of rare earths directly from China. This means that the Chinese have a deposit in their hands. The fact that they are fundamentally prepared to use this has been demonstrated about ten years ago when they cut Japan off from the supply of rare earths.
There is still no confirmed information that China has already cut rare earth exports, only warnings from Beijing. It will only be two or three months before it can be said with greater certainty whether the current drop in deliveries is actually more than the usual sharp fluctuations in these trade flows. The Chinese also seem to be hesitant to impose an export ban, otherwise they would probably have done so long ago. It is possible that they fear that the supply shortage could lead to a price explosion for metals, as it did ten years ago, and strengthen China’s competitors.
At the very least, the Americans are now working at full speed to find alternatives – the agreement with Australia is one of them, but they are also sounding out their own subsidy options. But it won’t be so easy to replace supplies from China overnight. Australia and the USA currently account for roughly 10 percent of world production of rare earths, far behind China. In addition, this primarily involves the mining of ores. The labour-intensive and environmentally harmful processing still takes place mainly in China. Here, capacities have yet to be created elsewhere. At the same time, the estimated reserves of raw materials in Australia and the USA are negligibly low compared with those in China. It will therefore be difficult not only to become independent quickly but also permanently from China’s supplies of rare earths. But it is definitely a step in the right direction.