China attempts to establish a monopoly on rare earths and the technologies related to their extraction and processing.
Over 60% of the global production of batteries for electric vehicles is somehow under China’s control. The Asian powerhouse holds a share ranging from 50 to 60% of the mining market, and, more significantly, it controls 80% of the processing of these minerals (source: Financial Times).
This hegemony significantly restricts the expansion of the U.S. and European electric vehicle industries, both still dependent on the Asian country, the undisputed leader in EVs, despite recent attempts at autonomy.
Rare Earths: New Restrictions from China
In December 2023, the Chinese government implemented stringent limitations on rare earth exports. Since the beginning of the month, there has been a ban on exporting anything related to the technology used for rare earth extraction and separation from the minerals containing them.
At the end of the month, the export of technology essential for producing certain magnets used in rare earth processing is also prohibited. Without these magnets, the production of electric vehicles and wind turbines is currently impossible.
Also, since the summer of 2023, there have been restrictions on the foreign sale of gallium and germanium, metals necessary for semiconductor production, which, in turn, is crucial for making the famous microchips at the heart of any technology-containing product, including automobiles. Not great news considering the not entirely overcome chip crisis.
These limitations are part of the broader Chinese government plan to monopolize minerals and technologies essential for technological production and energy transition. Authorities claim to be driven by national security and public interest, but the result is a trade war primarily targeting the United States, but inevitably affecting the Old Continent as well.
The West’s Response
In response to Chinese actions, the United States is investing in new rare earth processing technologies. At the same time, the European Union aims to produce magnets from rare earths using recycled materials – environmental awareness and the Fit for 55 plan pose a kind of disadvantage compared to the more ‘free’ China.
For the West, achieving independence from China involves a challenging and lengthy process. According to the International Energy Agency, it would take about 15 years for the development of mining projects useful for discovering new deposits. Not to mention that, with the most advanced technologies confined to China, the technological advancement of the sector is even more restrained
