This year may prove to be an even more volatile year for the rare earth element (REE) supply chain after China announced a ban in late 2023 on the export of technology used to develop rare earth magnets. Although China noted that the REE technology export ban is due to “national security concerns,” this may be the latest sign that Beijing is hitting back against U.S.-led bans on the sale of advanced chips to Chinese companies by leveraging its dominance in the global rare earth element sector.
The ban will undoubtedly impact the creation of rare earth magnets in foreign markets such as the United States and may result in supply chain issues for sectors such as consumer electronics and even national security that use rare earth element magnets.
This recent ban coupled with a prior ban on the export of technologies designed to extract, segregate and manufacture rare earth substances points a spotlight on China’s monopoly in the critical REE industry and the leverage this dominance grants Beijing in international policy.
China is the top rare earth element processor on the globe and was responsible for 70% of the world’s total REE mining in 2022.
Rare earth elements such as yttrium, scandium and lanthanides are considered critical because of the role they play in tech consumer products, including cell phones, computer hard drives and electric hybrid vehicles. They are also used in national defense applications such as guidance system lasers, electronic displays, and sonar and radar systems. Given the pivotal role those minerals have in the economy, the U.S. and other Western nations are scrambling to find alternate rare earth element sources, either domestically or in allied countries.
Nathan Picarsic, cofounder of Houston-based geopolitical consulting company Horizon Advisory, says the recent ban “should be a clarion call” that depending on China in critical supply chains such as rare earth elements simply isn’t sustainable.
The new bans run the risk of escalating tensions between China and the U.S. and its allies as many in the West could say that Beijing’s actions underline its dominance over large sections of some of the world’s most important resources.
Now that the world is scrambling to adopt renewable energy and cleaner technologies such as electric cars, rare earth elements with applications in these sectors are even more important. Investment in the development of new rare earth mines in the U.S. and its ally countries could allow these countries to wean themselves off of China. However, western countries may contend with supply issues in the short-term if they cannot find alternative suppliers.
With North American-based companies such as Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) stepping up to provide locally sourced supplies of the needed rare earth elements, the grip China has on this industry could gradually loosen.
NOTE TO INVESTORS: The latest news and updates relating to Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) are available in the company’s newsroom at http://ibn.fm/UURAF
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