Already the dominant producer of rare minerals, Beijing is using export restrictions and its power over state-owned companies to further control access.

China’s Rare Earth Monopoly Expands

China has recently strengthened its control over the rare earth elements vital to advanced technology by introducing new export restrictions and consolidating state ownership in mining and refining operations. This shift makes it harder for foreign semiconductor companies to acquire these materials, which are crucial for products like electric car motors, wind turbines, and the AI-enabled semiconductors used in American-made F-35 stealth fighters. As of October 1, exporters must now detail how rare earth shipments are used in global supply chains, allowing China greater influence over which foreign companies receive these limited resources. This move reflects China’s intensified focus on rare earths as a national security issue, with regulations for chemical elements like antimony, gallium, and germanium, all essential to semiconductor production.

Impact on the Global Supply Chain

With China producing the vast majority of rare earth metals, nations like the U.S., Australia, and European countries are now rushing to diversify supply chains, though facing significant challenges in both mining and refining. New facilities are being developed in Malaysia, Estonia, and the U.S. However, obstacles remain due to high costs, regulatory hurdles, and technological complexities in rare earth processing. Experts warn that China’s refining expertise and lower production costs give it a significant advantage, placing competitors at a disadvantage. As the demand for rare earths grows, this supply chain vulnerability could have far-reaching consequences for economic stability and national security worldwide.

My Take

Rare earth elements in chip manufacturing are essential for creating powerful magnets, heat-resistant components, and precise electricity management in semiconductors. China’s strategic grip on rare earths reflects a broader trend in global power dynamics, where control over critical resources increasingly dictates influence. Diversification efforts are essential yet challenging, as achieving the technical sophistication China has mastered will take years, underscoring the need for strategic partnerships and investment in domestic capabilities. With global demand for rare earths expected to surge, now is the time for the U.S. and its allies to innovate and scale up alternative sources and refining processes. Building a secure supply chain for rare earths and semiconductors won’t just serve economic interests. It will also fortify defense, telecommunications, automotive, aerospace, and healthcare technology resilience.

#RareEarths #TechSupplyChain #China #Semiconductors #NationalSecurity #CleanEnergy #GlobalEconomy

Link to article:

https://www.nytimes.com/2024/10/26/business/china-critical-minerals-semiconductors.html?smid=nytcore-ios-share&referringSource=articleShare

Credit: New York Times