CHINA JUST STOPPED exporting its rare earths to the US—in a bizarre reflection of the US halt on stopping exports of high-end chips to China.
On April 4, the Chinese leadership placed export restrictions on two categories of rare earth products. One listed six specific heavy rare earth metals, and the other dealt with the general category of rare earth magnets. Once openly on sale to any buyers, these commodities now need special export licences, which are not currently available.
It’s impossible to miss the echo of what happened in 2022, when the US ordered companies around the world, and particularly in Japan, the Netherlands, and Taiwan, from selling high end chips and chip-making machines to China.
But there are key differences.
NO BULLYING
First, the Chinese don’t have to bully or coerce anyone else. Almost all (90 per cent) of rare earth magnets are made in China. And an even larger proportion of the six heavy rare earth metals (100 per cent) are refined in China. The Chinese already dominate this entire category of goods.
Second, the chips-for-China ban came with the standard lies—that they were for military use. But analyst Jon Bateman at an MIT conference showed that 99.9 per cent of the chips banned from China were actually for civilian use, in medical scanners and so on.
The US chip ban on China, as Bateman said, was really designed to halt the further development of the nation. As a developing country which still had 200 million poor people, the ban was an astonishingly cynical and heartless act by the US – a country that constantly weaponizes “human rights” as a tool against China, along with a complicit western mainstream media.
Third, the chip ban was instituted by the US on technology that it had not developed, as the high end semiconductor machinery was created by technologists in the Netherlands and Taiwan (which of course is legally Chinese soil).
EXTRAORDINARY TENACITY
In contrast, China became the world leader in rare earths entirely through its own efforts. This is an extraordinary story of tenacity and determination by a poor nation.
Rare earths tend to be found within other rocks. This makes extraction extremely difficult and expensive. The US pioneered a solvent-based extraction process, but made little use of it. The Chinese, on the other hand, kept working on the problem and found a way to make the system work.
“From 1950 to October 2018, China filed over 25,000 rare earth patents, surpassing the US’s 10,000,” said Nayan Seth, a specialist in environmental implications of security developments. Most the recent growth in China stems from the early 1980s.
Realizing what the Chinese were achieving, the US Department of Defence belatedly pumped millions of dollars into US “mine to magnet” factories to catch up. But they failed to catch up. Whether this was down to work ethic or scientific ability can be speculated on elsewhere.
THEY ARE USED IN MANY GOODS
What are these elements needed for?
Rare earth minerals are mainly used to produce extra-powerful magnets that are crucial to make present-day electric motors work—and that means all items that need powerful motors, including electric cars, missiles, drones, spacecraft, industrial robots, and so on. But individual elements are also used in products ranging from headphones to LED lights to nuclear reactors. And, significantly, the F-35 fighter-bomber aircraft.
They are also integrated into older machines, too. For example, your old-fashioned petrol car uses rare earth magnets to enable its power steering function to work.
“Does the export control or ban potentially have severe effects in the U.S.? Yes,” Daniel Pickard, the chairman of the critical minerals advisory committee for the US government told the New York Times.
What happens next?
The new rules don’t totally ban the sale of the product, but simply call for buyers to apply for an export licence. Whether the licences will be given out to applicants, or reserved for applicants NOT from the United States, is unknown.
One US would-be buyer was told that he would get a response in 45 days, the New York Times reported.
So the present situation is one of uncertainty—with the US having to hold its breath for at least a month and half. (There is no doubt that the Pentagon will be screaming at the R and D departments of mining companies to get a move on and catch up with the Chinese.)
If the 45 days passes, and the US and its allies are excluded, then manufacturing problems will soon cause delays and shortages of a wide range of goods. Germany and Japan, which also make electric and gas-powered cars, will also be in trouble.
If the Chinese DO give the US the right to buy rare earth minerals or magnets, then buyers from that country will have to fork out enormous tariffs on top of the asking prices from Chinese factories. Either way, the budgeting efforts of these US companies will be damaged.
THE WORST OUTCOME
The best outcome would be for the US to return to a stance of straightforward trade with the international community, including China. Trade is by definition a win-win transaction.
The worst outcome is for the US to decide that a desire to have a grip on rare earth minerals is a good reason to go to war. This is a significant worry, given that the US has expressed a willingness to play military hardball over mineral resources in Greenland and Ukraine.
As we have already shown in an earlier report, the US has taken at least 28 practical steps towards launching a war on China.
If the Chinese banned the US from buying its rare earth, that would give the hawks in Washington another reason to go ahead and launch the war.
The military implications will be top-of-mind in Washington right now. The New York Times reported earlier this week that “rare earth supplies for military contractors were of particular concern”.
The paper quoted James Litinsky, chairman of a US mining operation. “Drones and robotics are widely considered the future of warfare, and based on everything we are seeing, the critical inputs for our future supply chain are shut down,” he said.
The logical thing would thus be to focus on getting a stranglehold on these elements, anyway they can. And, to use the old saying, when you are a hammer, everything looks like a nail.
WATCH FOR
What should we watch for? Human rights, semiconductors, exports and politics have long been weaponized against China—but that word is rarely used in western mainstream media.
But now that China has announced export licences for rare earth elements, the word “weaponized” will be used repeatedly—we are already seeing this.
Image at the top by fridayeveryday.