China Mulls Cutting Rare Earth Elements as US Trade War Rages

While the trade war between the US and China has done considerable harm to both economies, the worst could easily be yet to come, as China considers restricting the export of rare earth elements (REEs) to the US as a major curb for which the US would have no easy response.

There are 17 REEs, elements which are comparatively difficult to come by. These include all 15 lanthanides as well as scandium and yttrium. These elements are necessary for certain industrial processes, and are virtually essential for making certain aerospace components, electric motors, and high capacity batteries.

The crux of the matter is, REEs are everywhere in products, from commercial to industrial to military, but the United States produces very few, having only a single mine in the entire country. China, by contrast, is the world’s largest such producer, and has over a third of the world’s known REE reserves. China is such a market leader that even the lone US mine, in California, sends the extract to China to be processed efficiently.

So if China starts limiting exports to the US, as threatened in recent Chinese state media reports, it would hurt the US, badly, and China is such a market leader that the US would struggle to replace any more than a tiny fraction of them elsewhere.

The Pentagon is taking this very seriously, with a new request for the federal government to boost domestic production of REEs to reduce dependence on China. Their argument is that this is primarily for national security reasons, though the same case could be made for economic reasons.

Either way though, the ability to start massive REE production within the US is not something that happens overnight with a few federal grants. The prices of REEs were already on the rise, and companies were already looking to expand to the extent they could, and even then nothing is expected online until 2022 at the earliest. The rarity of the elements means it isn’t readily apparently how many the US can produce at all, and even then, doing so is many years down the road, while the trade war is a right-now sort of problem.