Rare Earth Metals Supply Chain Caught Up in Global Politics

Article By : Cabe Atwell

The demand for rare earth elements used in smartphones and laptops has exploded within the last 20 years, but the supply chain is caught up in global politics.

Rare earth metals and their alloys populate many of our everyday devices: rechargeable batteries, cell phones, magnets, fluorescent lighting, and the list goes on. But, as with any rare or sought-after resource, the supply chain is caught up in global politics. The demand has exploded within the last 20 years as personal cellphones have become commonplace and their use in computer components has grown.

Complicating matters further, they play a large role in national defense industries, making up precision-guided weapons, GPS equipment, and more — and the bulk of the world’s supply is controlled by China. Though interest in alternatives has been growing over the past few years, it is compounded by China’s recent push for tighter control. So what does the future of our electronic devices look like?

While not exactly as rarely found in the earth’s crust as the name implies, elements categorized as rare earth metals are difficult to find in extractable concentrations. While major reserves do exist in other countries like the US, Australia, and Brazil, China accounts for over 60% of rare earth element production in the world and controls around thirty percent of the world’s reserves, estimated at 99 million tons.

In 2020, their exports sank to a 5-year low, and as of late January 2021, the Chinese government has released a draft bill requiring companies to follow control laws and regulations for the import and export of rare earth, an extension of policies aimed to prohibit the export of Chinese technologies that could be diverted for military use.

Many speculate that this is the continuation of ongoing tensions with the US and a response to US efforts to build a network of partners and seize greater control of the tech front.

rare earths. praseodymium, cerium, lanthanum, neodymium, samarium, gadolinium
Clockwise from top center: praseodymium, cerium, lanthanum, neodymium, samarium, and gadolinium (Credit: Peggy Greb, U.S. Department of Agriculture. Agricultural Research Service.

It’s not new for China, or other nations, to exercise control of supply chains in response to political tensions. China restricted exports of REEs to Japan in 2010 over a territorial dispute. The new export regulations look likely to pass into law by December. There is the possibility that these restrictions do not go as planned; the 2010 restrictions imposed on Japan resulted in a Japanese partnership with Australia that dropped the Chinese share of global mined production from 98% to its current share of around 60%.

In fact, a history of exercising supply-chain control as a form of political sanctions has driven up the valuations of non-Chinese producers, enabling them to fund expanded mining and processing capabilities.

The long-standing need to ensure supplies has also already led the US and Australia to work together towards creating an alternative supply chain. The outgoing administration began making attempts to increase supply chain resiliency in 2018, and given the Biden administration’s environmental policy, it is likely to maintain a strong interest. The Pentagon has also set up a government stockpile of rare earth elements, as they did with petroleum to create the US Strategic Petroleum Reserve. The US itself has an estimated 2.7 million tons of ore readily available, and a mine in California able to produce 38,000 tons of bastnaesite mineral and monazite concentrate per year, though it has historically been sent to China for processing.

Still, setting up a self-sufficient supply chain within the US remains complicated. The extraction step involves either acid leaching, baking, or solvent use that creates toxic waste, which needs to be dealt with. Historic export to China for processing has also meant exporting a lot of the pollution. A number of China’s reserves are also absorbed into the surface of clay minerals, meaning easier extraction and cost advantage for Chinese producers. While the US does have control of known deposits in California, Alaska, Nebraska, Wyoming, and elsewhere, processing and cost still play a role in their viability.

REE supply chain for neodymium iron boron magnets, with domestic gaps shown in red.

Though very limited recycling of REEs currently takes place, it is possible to recycle them from sources such as magnets, fluorescent lamps, and batteries, as well as to seek non-traditional sources. For instance, the Oak Ridge National Laboratory has demonstrated the possibility of extracting neodymium from the magnets in old hard drives.

It is also possible to extract the elements from coal or as a byproduct from power-plant coal ash and coal-mining waste. While recycling and alternative sourcing could someday help ensure the security of supply, the amount being done right now is not enough to have a large impact.

Political tensions have consistently led the US to begin seeking alternative partnerships, sources, and processing options as China threatens to weaponize its control, but this cycle has often resulted in a return to the usual supply chain as the threat passes and prices from China drop. The economic realities of extraction and processing have made them the most immediately reliable option, if not as a source of REEs then as the most attractive way to process them for US consumers.

If domestic sources can be made economically sustainable over time, it is still likely 10-15 years down the road, and it is hard to say if the US will push for a self-sustained domestic supply unless China truly forces its hand. Similarly, while the US has begun to aid in developing supply chains in partnership with nations like Australia and Malaysia, that is also a process of work to drop the cost of production and ensuring that they remain stable sources. Expert opinion seems set that tensions with China are not a large source of concern relating to our ability to secure REEs, though what happens exactly will depend on both the future of Chinese exports and on American determination to source alternatives.

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