HomeUncategorizedChina's Mineral Dominance, a Real Threat - Can We Reverse It?

China’s Mineral Dominance, a Real Threat – Can We Reverse It?

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In today’s high-tech world, rare earth minerals are the lifeblood of modern technology. These elements, essential for producing everything from smartphones and electric vehicles to wind turbines and advanced defense systems, are overwhelmingly controlled by China. This dominance presents a significant geopolitical challenge to the United States and its Western allies, with profound implications for global resource management and security.

China’s Stranglehold on Rare Earth Minerals

China’s grip on the rare earth minerals market is formidable. The country accounts for about 70% of global rare earth ore extraction and an astounding 90% of the processing. This isn’t merely about controlling supply; it’s a strategic maneuver that allows China to exert significant influence over global markets and geopolitics.

Heather Exner-Pirot, Director of Energy, Natural Resources, and the Environment at the Macdonald-Laurier Institute, explains, “China has had a particular monopoly on rare earths and has used its monopoly as leverage in the past with export controls.” She highlights a stark reality: “The Chinese, in my opinion, had a very explicit manipulation of the market strategy to undermine Western miners, making the rare earth commodity unviable.” This manipulation was evident in 2010 when China imposed export limits, causing global prices to skyrocket. Although prices stabilized when other countries increased production, China’s dominance remained unshaken.

The Risks of Dependency

The Western world’s dependency on Chinese rare earth minerals is not just an economic concern; it’s a strategic vulnerability. Rare earth elements are critical for numerous high-tech applications, including military technologies. This dependency means that any disruption in the supply of these materials could have severe consequences for national security and economic stability.

“Critical minerals are the building blocks of everything from basic consumer goods to advanced military technology,” said Representative John Moolenaar, chair of the House Select Committee on China. He warns that America’s reliance on China’s control of these minerals could become an “existential vulnerability in the event of a conflict.”

Canada’s Strategic Response

Recognizing the dangers of this dependency, Western nations are beginning to take action. In 2024, Canada intervened to block a deal where Australia’s Vital Metals planned to sell rare earth stockpiles to China’s Shenghe Resources Holding Co. Instead, the Saskatchewan Research Council (SRC) purchased the materials, aiming to secure Canada’s supply chains and reduce reliance on Chinese-controlled resources.

Despite these efforts, the challenges remain significant. “We’re at least 10 years, probably 20 years behind China on processing critical minerals,” notes Exner-Pirot. The regulatory environment in Canada poses additional barriers, with an average of 18 years from discovery to production, making it difficult to quickly ramp up domestic production.

U.S. Legislative Efforts

In the United States, lawmakers are also moving to address this critical issue. The House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party has formed a bipartisan working group to tackle this problem head-on. Led by Representatives Rob Wittman and Kathy Castor, the group aims to propose policies to reduce U.S. reliance on China for critical minerals.

“Dominance over global supply chain for critical mineral and rare earth elements is the next stage of great power competition,” Wittman said. “We must secure American access to these minerals that are integral to the technology we rely on in our daily lives and for our national defense.” The working group plans to develop a package of investments, regulatory reforms, and tax incentives to reduce U.S. dependency on Chinese minerals.

Global Cooperation and Strategic Alliances

U.S. Energy Secretary Jennifer Granholm emphasized the need for international cooperation to diversify the supply of critical minerals. “We do not want to be over-reliant on countries whose values we may not share,” she said. The U.S. is working with allies like Australia and Canada to ensure a stable supply of these materials.

Granholm also highlighted the necessity of updating U.S. regulations, including a 150-year-old mining law, to ensure sustainable and efficient extraction of critical minerals. This regulatory overhaul, combined with international partnerships, is crucial for securing a steady supply of rare earth elements essential for the energy transition.

The Path Forward

The road to reducing dependency on Chinese-controlled minerals is fraught with challenges but is essential for maintaining economic stability and national security. Western nations must invest in domestic mining and processing capabilities, streamline regulatory processes, and forge strategic alliances. Research institutions and universities will play a crucial role in developing new technologies and processes for more efficient mineral extraction and processing.

As the global demand for rare earth minerals continues to grow, ensuring a secure and independent supply chain is vital. “While the United States has faced critical mineral supply chain vulnerabilities for many decades, the scale and scope of the challenges before us today are unique,” Wittman stated. “We must elevate domestic competencies for critical mineral and rare earth elements access and processing while focusing on technology and workforce development in the short-term.”

Granholm stressed that cooperation with international partners and boosting domestic production are critical. “Cooperation can be addressed quickly. Production in the United States will take a little bit longer,” she said. The U.S. aims to identify and secure the raw materials needed for transitioning to a clean energy economy, reducing the risks posed by over-reliance on Chinese supplies.

China’s dominance in the rare earth minerals market is a looming threat that the West can no longer afford to ignore. But if the West begins a battle in this respect will we win? As mentioned, China has been planning this domination for a long time, and they intend to win – do we have the balls to compete on their playground?

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