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Universidade Autónoma de Lisboa
e-ISSN: 1647-7251
Vol. 15, Nº. 1 (May 2024 October 2024)
249
RARE EARTH GEOPOLITICS: GLOBAL DYNAMICS
AND STRATEGIC BALANCE OF POWER
TIAGO TECELÃO MARTINS
ttecelao24@gmail.com
Graduate in Sociology and Master in International Studies, ISCTE-IUL (Portugal). Interested in
Sino-Russian relations in the Arctic and the dynamics of this geopolitical region.
Abstract
This article examines the multifaceted landscape of Rare Earth Elements (REEs), crucial
components in traditional industries like glass and metallurgy, as well as pivotal in the growing
green and digital economies. The transition toward a greener economy heavily relies on REEs
for batteries, wind turbines, and solar panels. The global REE supply chain, dominated by
China with nearly 95% of the world's reserves, introduces complexities and geopolitical
considerations, and prompting nations like the United States and countries in the European
Union to seek alternatives and reduce dependence on China's dominant control. The United
States, once a key player in rare earth mining, now heavily relies on Chinese imports, posing
national security concerns. This article examines the challenges and opportunities in the global
rare earth elements market, addressing environmental controversies, geopolitical tensions,
and the race for a secure supply chain. As nations handle the complexities of this critical
industry, the pursuit of sustainable and geopolitically secure rare earth supplies emerges as
a vital global concern.
Keywords
Rare Earth Elements (REEs); Geopolitics; Environmental Sustainability; Global Supply
Chain; US-China Trade War.
Resumo
Este artigo analisa a paisagem multifacetada dos Elementos Terras Raras (ETRs),
componentes cruciais em indústrias tradicionais como vidro e metalurgia, bem como
essenciais na crescente economia verde e digital. A transição para uma economia mais verde
depende fortemente dos ETRs para baterias, turbinas eólicas e painéis solares. A cadeia de
abastecimento global de ETRs, dominada pela China com quase 95% das reservas mundiais,
introduz complexidades e considerações geopolíticas, levando nações como os Estados Unidos
e países da União Europeia a buscar alternativas e reduzir a dependência do domínio da China
sobre este mercado. Os Estados Unidos, outrora uma potência chave na mineração de terras
raras, agora dependem fortemente de importações chinesas, levantando preocupações com
a segurança nacional. Este artigo examina os desafios e oportunidades no mercado global de
elementos terras raras, abordando controvérsias ambientais, tensões geopolíticas e a corrida
por uma cadeia de abastecimento segura. À medida que as nações lidam com as
complexidades desta indústria crítica, a busca por materiais de terras raras sustentáveis e
geopoliticamente seguros emerge como uma preocupação global vital.
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 15, Nº. 1 (May 2024 October 2024), pp. 249-265
Rare Earth Geopolitics: Global Dynamics and Strategic Balance of Power
Tiago Tecelão Martins
250
Palavras-chave
Elementos de Terras Raras (ETR); Geopolítica; Sustentabilidade Ambiental; Cadeias de
Logística Globais; Guerras Comerciais EUA-China.
How to cite this article
Martins, Tiago Tecelão (2024). Rare Earth Geopolitics: Global Dynamics and Strategic Balance of
Power. Janus.net, e-journal of international relations. VOL 15, Nº.1, May-October, pp. 249-265.
DOI https://doi.org/10.26619/1647-7251.15.1.14
Article received on December 3, 2023, and accepted for publication on March 13, 2024.
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 15, Nº. 1 (May 2024 October 2024), pp. 249-265
Rare Earth Geopolitics: Global Dynamics and Strategic Balance of Power
Tiago Tecelão Martins
251
RARE EARTH GEOPOLITICS: GLOBAL DYNAMICS
AND STRATEGIC BALANCE OF POWER
TIAGO TECELÃO MARTINS
Introduction
Rare Earth Elements (REEs) are a group of 17 (15 with commercial properties) soft
heavy-metals, that include such important elements like Thulium and Cerium. Those are
vital components in a wide range of modern technologies, and are found in everyday
items like cell phones, computer processors, medical tools, industrial products such as
MRI contrast agents and even high-powered magnets used in windmill generators (Van
Gosen et al, 2014). They also play a significant role in the glass industry, where they are
used for polishing and “providing color and special optical properties” (Chapman, 2017,
p. 52). Lanthanum, one specific REE, makes up nearly 50% of digital camera lenses,
including those in cell phones (Chapman, 2017). CD-ROM and DVD drives are other
crucial applications for these metals. While the label "rare" suggests scarcity, these
elements and the minerals housing them are plentiful in the Earth's crust, but the
discovery of deposits sizable enough for economic exploitation remains an uncommon
geological event.
Extraction and purification of rare earth metals play a pivotal role in achieving a Zero
Carbon transition by facilitating the advancement of battery technology, windmill
efficiency, and solar panel production (Serpell, Chu and Paren, 2021). It's no coincidence
that Bill Gates, a major player in the green transition, is investing around $1 billion in AI
mining of rare earth metals, made through KoBold Metals, a mining company based in
Berkeley (Sheikh, 2023).
Also, the transition from traditional vehicles to electric ones seem to be dependent on
the future of mining of rare earth metals. In reality, the President of Defense Metals
Corporation, actually told the press that: “Our way of life depends on advanced materials
from the car we drive to the buildings that house us” (Silverstein, 2022). General
Motors is rapidly moving from sourcing their rare earth materials, especially neodymium,
from China, to an increase in mining their own rare earth metals domestically .
Nevertheless, this process poses environmental struggles, like in In Inner Mongolia, a
key Chinese hub for rare earth ore extraction, that has been accused of detrimental
practices such as injecting acid into the ground and using various chemicals having
occasioned significant environmental repercussions. This has resulted in the release of
toxic gases, the creation of acidic wastewater, and the generation of radioactive waste,
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with the impact on surrounding farms and villages being devastating, prompting
thousands of people to relocate (Penke, 2021 and Bontron, 2012).
Rare Earths were not widely recognized by scholars or policymakers until China
established a virtual monopoly across all stages of the Rare Earth Elements value chains.
This shift from simple industrial components to materials with strategic and economic
significance, acquired worldwide attention, leading to a reevaluation of their importance
in discussions about economic direction and resource competition. The increasing
demand for REE raw materials outside China, has raised concerns about the near-
monopolistic supply situation (Andersson, Zeuthen and Kalvig, 2018), and as a result
both the European Union and the United States have designated REEs as Critical Raw
Materials, highlighting their strategic importance (Andersson, Zeuthen and Kalvig, 2018,
p. 5). Despite efforts in the EU and other Western countries to develop alternative REE
supplies, these political strategies have faced challenges and proven (in general)
unsuccessful, and this is changing the western strategy. In fact, U.S. Department of
Interior, even identifies “35 critical minerals essential for national and economic security”
(Cohen and Grant, 2021).
From Commerce to Conflict: REE’s and the China-US Power Play Initial
Landscape: from United States Monopoly to Beijing’s Ascent
Situated in a remote part of the California desert, approximately 85 kilometers southwest
of Las Vegas, Mountain Pass operates as an open pit mine crucial for the extraction and
production of Rare Earth Elements, and was discovered in 1949, coming under the
ownership of the Molybdenum Corporation of America, initiating small-scale production
in 1952 (Burron, 2023). Recognized as a historic source, Mountain Pass once held the
distinction of being the predominant global supplier of REEs and it was one more evidence
of American power on a global scale at the time. It reached its peak period of production
“between the mid-1960s through the 1980s” (Chapman, 2017, p. 74). Even though the
United States was the undefeated dominant position as the world's primary rare earths
producer until the 1980s (Seaman, 2019, p. 13), the 1970’s were already giving hints of
a gradual decline with the rise of environmental protection movements and regulations,
especially in the United States, resulting in a significant increase in “regulatory and
pricing pressure on producers” (Seaman, 2019, p. 13), especially in western countries.
This situation led some companies operating in this “environmentally hazardous
industries to seek alternative resource supplies” (Seaman, 2019, p. 13) or contemplating
the relocation of production.
Contrastingly, while the United States experienced a rapid growth in the production of
rare earth elements during the 1950s and 60s, establishing control over most of the
supply chain through the discovery of Mountain Pass, the state of China underwent a
comparatively slower process. The first developments of processing Rare Earth minerals
in China were done during the late 1950’s, but “it was not until the mid-1970s that China
became able to make quality RE products and emerged as a very important producer,
consumer, and exporter” (Shen, Moomy and Eggert, 2020, p. 130). This was actually
coincidental with the emergence of environmental movements in the United States,
which, in turn, resulted in the relocation of production, as stated above. Also, in 1975,
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the Chinese central government-initiated regulation of the rare earth industry by
establishing the National Rare Earth Development and Application Leading Group (Shen,
Moomy and Eggert, 2020, p. 130).
The “liberalization of global trade and investment”, along with China's own economic
openness, allowed international companies to set up operations in China, and gave
Chinese firms some technological know-how in the rare earth sector from overseas
(Seaman, 2019, p. 13). Furthermore, under the guidance of the Ministry of Land
Resources and Planning, China expanded its mining operations between 1978 and 1989
(Pelaudeix, 2015, p. 135). The liberalization and the resource-based strategy of the
Chinese government was bearing fruits during the 1980’s, with Japan and the USA
increasing the import of Rare Earth products from China. Japan alone doubled its import
of primary RE chlorides and oxides from 1000 to 2000 tons, and by the year of 1985, it
is reported that China’s “capacity for producing mixed RE chlorides and oxides was
approximately 10,000 tons” (Shen, Moomy and Eggert, 2020, p. 130).
This economic move is seen by some analysts and experts in the field as a failed strategy
from the USA, and Ryan Castilloux, founder of Adamas Intelligence’s, an organization for
the research of strategic metals and minerals, acknowledged that “China (…) in the ’80s,
flooded the market with low-priced rare earths elements and led to the going out of
business of all the other mines globally” (Seligman, 2022). Castilloux continued saying
that Beijing’s low costs were driven by “government subsidies, low worker wages and
poor environmental standards” (Seligman, 2022) that outsmarted the US Rare Earth
industry. Thus, it is possible to see how the 1980s ignited the start of the competition
between both superpowers that continue until today in this field.
Deng Xiaoping's Vision and China's Rise to Rare Earth Supremacy in the
1990s
In the 1980s, competition intensified due to liberalization and China's strategic moves.
However, the 1990s marked China's strong emergence as a major player in rare earth
production, making the Yellow Dragon a leading force during that decade and “producing
around 85-95% of the world’s supply” (Lavengood, 2022, p. 95). During the last three
decades, China employed its abundant rare earth resources to drive “technological
innovation and economic development, in a wide range of sectors, from space, defense,
and energy” (Seaman, 2019, p. 13). The leadership of Deng Xiaoping and his economic
and political plan outlined in 1992 came to be crucial for the REE industry of China, when
he stated that his government goal would be to achieve world leadership in the REE
industry, and affirmed in 1992 that the “Middle East has oil, China has rare earth”
(Pelaudeix, 2015, p. 135). After this direction of policy was stated by the Chinese
government, the late 90’s confirmed and illustrated this new guideline, when for example,
General Motors' magnet-producing subsidiary, Magnequench, was acquired by Chinese
State-Owned Enterprises (Mancheri and Marukawa, 201, p. 93), causing some attention
from the United States, with Chinese companies securing around 62 percent majority
stake at the company (Mancheri and Marukawa, 2018, p. 93). Mr. Zhang Hong, the son-
in-law of Deng Xiaoping assumed leadership roles in Magnequench (Mancheri and
Marukawa, 2018, p. 95) and the relocation of Magnequench to China in the early 2000s,
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following the acquisition, marked a pivotal moment in Sino-U.S. economic relations on
REEs issues.
Simultaneously, Japan closed numerous rare-earth processing facilities, transferring both
plants and technology to China, and making it more dependent on “Chinese rare earth
processors for mischmetal or RE oxides to use as metal hydrides in energy storage” over
the years (Mancheri and Marukawa, 2018, p. 113). Therefore, it is possible to understand
that China’s dominance of the rare-earths market is a relatively new phenomenon, and
its dominance over the supply chains allied with environmental issues (a toxic waste spill)
led to the cessation of production in the USA’s Mountain Pass in 2002 (Chapman, 2017,
p. 74), and to the subsequent downfall of the US rare earth production. It is true that
under new ownership in 2008, Molycorp resumed production, but these owners have
experienced repeated financial problems since then.
Rare Earths Diplomacy: China's Export Restrictions and Global Response
Before 2010, scholars paid little attention to the concentration of China's rare earth
production. However, in that mentioned year, China's dominance, accounting for “95%
of the world's rare earth oxides” (Seaman, 2019, p. 7), led Beijing to enforce strict
measures that included the imposition of export quotas, taxes (ranging from 10% to
25%), and price controls, causing significant repercussions across global industries like
information and communication technology, energy, and defense (Seaman, 2019, p. 7-
14). In July 2010, China's Ministry of Commerce announced a dramatic “725% reduction
in Rare Earth Oxide (REE) exports for the second half of the year” (Chapman, 2017, p.
61) and in December 2010, Beijing declared an additional cut, setting REE export quotas
for the first half of 2011 at 14,508 tons, reflecting an 11% reduction (Chapman, 2017,
p. 61).
In September 2010, a notable incident unfolded, marked by a clash between a Chinese
fisherman and the Japanese Coast Guard (Seaman, 2019, p. 23). Reports emerged of
China halting rare earth shipments to Japan, creating an effective embargo, and
increasing concerns about China potentially leveraging its rare earth supply as a
diplomatic tool. Faced with this uncertainty, “consumers of rare earths frantically sought
solutions and (…) began exploring some of the most far-flung corners of the globe - from
the depths of the Pacific Ocean to the jungles of the Amazon, to war-torn Afghanistan”
(Seaman, 2019: 7), in order to explore alternatives to the Chinese supply chain.
Nevertheless, upon closer examination, these disruptions emerged, not influenced by
Beijing’s central authorities, but by the hands of local government officials, and port
workers, responsible for halting rare earth shipments to Japan, in order to sell for a
higher price due to the tendencies in prices. Seaman (2019, p. 23-24) even highlights
the potential influence of the black market in this incident, emphasizing its significant
power within China's Rare Earth Industry. In reality, officials at different levels of the
Chinese central government, including the Ministry of Commerce and the Prime Minister,
firmly refuted any suggestion of implementing an embargo on Japan.
Following this rare earths crisis between China and Japan, there was a significant surge
in the prices of these elements in 2011 and 2012. Primarily driven by speculative
activities, prices rose by up to 500 percent (Seaman, 2019, p. 3), marking the beginning
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of heightened awareness in the West regarding Chinese dominance in this field, leading
to the initiation of over 200 new projects outside of China in the subsequent years. The
surge in prices served as a catalyst for a new moment in the “collaboration between the
EU, the US, and Japan to find ways in which to innovate” (Kalantzakos, 2020, p. 4),
addressing their substantial dependence on these elements, and resulting in the most
significant increase in non-Chinese rare earth minerals, rising from 16.5 million in 2010
to 87.3 million in 2015 (Seaman, 2019, p. 16). Production started in mines (sometimes
re-started) in Australia, Vietnam, Brazil and even the United States, and the focus was
to diversify, innovate and recycle in order to end dependence on Chinese rare earth
minerals. In fact, during 2012, the United States reactivated Mountain Pass after a few
years of dormancy, even though initially, this reactivation was gradual and slow.
Currently, this mine in California accounts for 15 percent of the world's production of rare
earths and is used to supply magnets for "America's most advanced commercial and
military technology, from electric vehicles to Virginia-class attack submarines”
(Seligman, 2022). The new company that owns Mountain Pass, MP Materials, despite
some ups and downs in terms of stock closures, has recently been on Zacks.com's list of
the most searched stocks (Zacks Equity Research, 2023) and has been instrumental in
the efforts of the public and private sectors to increase the production of Rare Earth
Elements from its mine. In November 2022, MP Materials announced the second phase
of its production with the construction of a new facility in Fort Worth, Texas. The goal of
this new facility is to "convert the refined minerals from Mountain Pass into metals, alloys,
and magnets" (Seligman, 2022). The company's Chairman, James Litinsky, himself
mentions that "there has to be an American champion in this space" (Seligman, 2022),
sending a message to China that the competition cannot come to a halt.
In 2009, China tried to acquire a majority stake (51 percent) in Lynas, Australia's primary
rare earth mining corporation (Kalantzakos, 2020, p. 4). However, the Australian
government rejected the proposal, stressing the importance of keeping non-Chinese-
controlled rare earth resources accessible, and in 2011, this strategy was taken further,
when Japan stepped in to support Lynas, providing “a total of USD 250 million in loans
and equity in order to receive 8,500 tons of rare earth products over a period of ten
years” (Kalantzakos, 2020, p. 5). In 2012, “EU, Japan, and the US collectively filed
complaints with the World Trade Organisation (WTO)” (Kalantzakos, 2020, p. 4),
regarding Chinese export restrictions on rare earths and other elements like tungsten,
and in June of that year, the “U.S. formally requested the establishment of a Dispute
Settlement Board (DSB) process” (Chapman, 2017, p. 62). This meant that WTO was
called to solve this trade dispute between the Chinese export quotas and restrictions,
and the other several countries (lead by the US) complaining that this was China’s way
of leveraging and weaponizing international negotiations in its own favor. For America,
this was detrimental to “American workers and manufacturers across established and
emerging industrial sectors” (Chapman, 2017, p. 62), and something had to be done.
After two years of negotiations and processes, the final decision was that Chinese
practices “were inconsistent with its WTO accession commitments”, and that they
violated article 11 “of the General Agreement on Tariffs and Trade (GATT), which
prohibits trade restrictions besides duties, taxes, and other charges” (Chapman, 2017,
p. 62). The rare earths dispute between China and Japan underscored the potential
weaponization of these resources, intensifying global competition for them. Since then,
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scholars, international organizations and policymakers have shown a growing interest in
these disputes. A Google Scholar search for "Rare Earth Geopolitics" reveals a notable
increase in results over specific time periods: from 2010-2012, there are 9,230 results;
during the dispute from 2012-2014, this number rises to 11,600 results. Subsequently,
in the aftermath of the crisis from 2014-2016, the number further increases to 13,800
results, indicating the escalating relevance and attention to this critical geopolitical issue.
As a consequence of this decision by the WTO, China took the measure in 2015 of
abolishing export duties on Rare Earth Elements, and the China's Ministry of Finance and
State Administration of Taxation introduced a resources tax in their place. Nonetheless,
the disputes between various "Western" countries and China, concerning the embargo
and export duties, marked the emergence of another industry where Sino-American
relations were being forged amid a foundation of mutual mistrust. In fact, this
competition is giving way to new pathways and geographies involved in this conflict. The
rise of China’s investment in the Arctic is not confined to oil, gas and shipping, but also
encompasses the production of rare earths, and in January 2018 the publication of
China’s Arctic Strategy (State Council Information Office of the People’s Republic of
China, 2018) paved the way for China’s increasing importance in the region.
With Greenland trying to maneuver their way into a more independent position towards
Denmark’s control, their strategy has been one of flirting with both China and the West
in terms of deals for the prospection and export of their resources. China has directed
substantial investment towards Greenland, and has ambitious plans to construct or
expand airports in the region, like Nuuk, Ilulissat, and Qaqortoq (Kuo, 2019). This has
been very important for Greenland’s strategy of replacing Danish subsidies and diversify
its economy. Another two projects where collaboration between China and Greenland is
prospering, is at the Citronen Fjord zinc project in Northern Greenland and the Kvanefjeld
Rare Earth Elements (REE) and uranium project. Greenland Minerals Ltd. (GML) owns the
Kvanefjeld project, with a significant shareholder base from Western countries and an
11% investment from China's Shenghe Resources Holding (Andersson, Zeuthen, and
Kalvig, 2018).
Beyond Party Politics: The 'Rare' Harmony of Rare Earths Policy during
Trump and Biden Administrations
Recognizing the potential pitfalls of excessive dependence on Chinese REEs, former
President Donald Trump took action by issuing Executive Orders 13817 and 13953
(Executive Office of the President, 2020). These directives emphasized the need to
prioritize domestic extraction of minerals, refining processes, and the assurance of secure
supply chains. Donald Trump stated:
Our dependence on one country, the People's Republic of China (China), for
multiple critical minerals is particularly concerning. The United States now
imports 80 percent of its rare earth elements directly from China, with
portions of the remainder indirectly sourced from China through other
countries. In the 1980s, the United States produced more of these elements
than any other country in the world, but China used aggressive economic
practices to strategically flood the global market for rare earth elements and
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displace its competitors. Since gaining this advantage, China has exploited its
position in the rare earth elements market by coercing industries that rely on
these elements to locate their facilities, intellectual property, and technology
in China. For instance, multiple companies were forced to add factory capacity
in China after it suspended exports of processed rare earth elements to Japan
in 2010, threatening that country's industrial and defense sectors and
disrupting rare earth elements prices worldwide - Executive Office of the
President, 2020.
Donald Trump's statements resonate with the rhetoric put forth by prominent industry
analysts, as well as by members of the Pentagon and other American security agencies
who increasingly raise concerns about the need to act regarding the Chinese monopoly
in the production and acquisition of rare earths. The fact that the “United States had not
mined any rare earths domestically in 2017” (Kalantzakos, 2020, p. 4), relying instead
on importing 80 percent of REEs from China was a big cause of concern during the Trump
Administration. In reality, from 2017 to 2018, the estimated value of rare-earth
compounds and metals imported by the United States increased from 137 million dollars
to 160 million dollars (Kalantzakos, 2020, p. 5).
With this in mind, as part of the increasingly higher trade war between China and USA,
especially during Trump’s years, his administration listed REEs in the "summer 2018 list
of products" from China that might face tariffs. However, this decision was rapidly
overturned. First and foremost, the American dependence on Chinese rare earths could
lead to an economic and diplomatic catastrophe from which the U.S. would have difficulty
recovering, and the significance of these elements in the everyday economic aspects of
the U.S. prevented this trade war from progressing much beyond the initial threats.
Secondly, having already observed that Donald Trump was aware of the incident between
China and Japan in 2010, it would be expected that he also would not want to face the
same consequences from the WTO if China retaliated with similar complaints to the
organization in the event of the U.S. proceeding with restrictions on Chinese rare earths.
However, the year 2019 brought to light the same disputes as those in 2018, when
“Donald Trump announced he was increasing tariffs on $200bn of Chinese goods from
10% to 25%” (Makortoff, 2019). Chinese retaliation was fast, with tariffs imposed on
about $60 billion worth of a wide range of products imported from the U.S. One of the
editors of the state-owned newspaper "Global Times," Hu Xijin, tweeted: “Based on what
I know, China is seriously considering restricting rare-earth exports to the US. China may
also take other countermeasures in the future” (Makortoff, 2019). Near the end of 2019,
the United States signed a formal agreement with Australia on critical minerals production
as a way of delivering “opportunity and security to both nations” (U.S. Department of
the Interior, 2019), in an obvious move to counter Chinese rare earth monopoly, and
reinforce the diplomatic network known as QUAD in another critical industry.
The U.S. Department of Defense allocated $30 million to Lynas, the above mentioned
Australian rare earth company, in July 2020, supporting the establishment of rare earth
refinement facilities in Texas in collaboration with Blue Line Corp. aiming to process
imported rare earths domestically (Cohen and Grant, 2021). Also, Canada plays a crucial
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role in supplying 13 critical minerals to the U.S., with joint efforts to enhance production
discussed in confidential meetings in March 2021, already with the Biden Administration.
Both countries, as members of the Energy Resource Governance Initiative (ERGI), are
likely to continue collaborating on critical mineral sourcing. And the U.S. is also expanding
its critical mineral sources in Mexico, in mining projects led by companies like Southern
Copper and Asarco (Cohen and Grant, 2021).
The Biden administration is actively pursuing efforts to strengthen the U.S. rare-earth
sector, evident in their commitment to invest in rare-earth separation processes, and in
16 billion dollars awarded for “putting hundreds of thousands [of people] to work in union
jobs plugging oil and gas wells and restoring and reclaiming abandoned mines” (Swasey,
2021) under the newly approved $2 trillion infrastructure plan. President Biden's
Executive Order 14017 kickstarted a 100-day review of critical mineral supply chains,
and in order to combat the climate crisis, “announced an investment in the expansion of
the largest rare earth element mining and processing company outside of China” (White
House, 2021). The US Government strategy to counter Chinese power and domination
over the REEs market is based on deregulation and investment in public and private
partnership in order to achieve a stable domestic supply.
Additionally, it is also necessary to look at projects not directly related to Washington but
that demonstrate a willingness from its allies to create an alternative to Beijing. For
American allies, being a source of production and export of critical materials is a priority,
and for Americans, it is necessary to diversify, that is, import their sources of rare earths
from allies, reducing dependence on Beijing. As such, the UK launched a mega-project
in Angola in 2021, in collaboration with the company Pensana, in order to "build the
world's first sustainable rare earth separation facility" (Mining Technology, 2021) with an
investment of around 125 million dollars. The goal is to produce approximately 12,500
annualized tons of rare earth oxides and to represent about 5% of the world demand for
rare earths in the future.
In September 2022, another episode highlighted significant American concerns about
Chinese dominance in this industrial field. The delivery of an F-35 jet was halted for a
month following orders from the Pentagon due to issues related to the lack of notification
that its rare materials were sourced from China. Some military contracts now include
clauses requiring materials from China to undergo thorough inspection and scrutiny
(Hudson, 2022). In fact, the majority of F-35s contain materials from China, but the goal
is to reduce that number. Ms. Halimah Najieb-Locke, the Deputy Assistant Secretary of
Defense for Industrial Base Resilience at the U.S. Department of Defense, stated that
"there are choke points that we can’t control. If we don’t prioritize onshoring this, then
we are going to have weak points that don’t enable us to really defend ourselves”
(Hudson, 2022). Ms. Halimah Najieb-Locke's statement, emphasizing the need to
prioritize onshoring, reinforces the broader objective of strengthening domestic
capabilities. This commitment aligns with the broader narrative of Washington's efforts
to foster self-reliance and minimize vulnerabilities associated with relying on China for
crucial resources. General Motors, for example, trying to lead the Electric Vehicle’s
market have made a deal with Mountain Pass, in order to “to produce enough magnets
for up to 500,000 electric motors annually” (Eisenstein, 2021).
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e-ISSN: 1647-7251
Vol. 15, Nº. 1 (May 2024 October 2024), pp. 249-265
Rare Earth Geopolitics: Global Dynamics and Strategic Balance of Power
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And if in 2018 China made their way into Greenland and Arctic Rare Earth Elements, the
US approved during this year (2023), a resolution to begin a preliminary process for a
potential investment of US$3 million to US$5 million in Ucore Rare Metals Inc.'s rare
earths separation facility in Alaska (O'Rourke, 2021). The Alaska Strategic Metals
Complex is designed to process mixed rare earth concentrates from U.S.-allied suppliers
into high-purity REE oxides, in order to get to the full potential of the Arctic in terms of
mineral resources, since it is still underexplored (O'Rourke, 2021).
Indeed, both the Trump and Biden administrations have pursued a strikingly similar
course of action in revitalizing the American rare earths industry, driven by shared
motivations. While the Trump administration opted for more drastic measures, including
tariff hikes on Chinese products, the Biden administration has been cautious to avoid
potential economic and diplomatic repercussions with China, a significant economic
power in this domain. Nevertheless, the bipartisan political determination to reduce
dependence on the Chinese market transcends party lines and is a consistent theme
across two seemingly ideologically divergent administrations. It is possible to affirm it as
a “rare” bipartisan harmony in a “rare” earth environment.
Challenges and Opportunities: Balancing Environmental Responsibility
and Industrial Demand in a Divided World
Although the rare and critical materials industry represents a small portion of the
economy when evaluated individually (valued at roughly 9 billion dollars), it fuels various
industries, and its importance is crucial for the global economy (Seaman, 2019, p. 9).
Currently, China completely dominates the production of these materials, especially in
the case of heavy rare earths like dysprosium. These materials contribute to essentially
two categories: firstly, they are essential for traditional heavy industries such as glass,
metallurgy, and catalysts. On the other hand, about 40 percent of their contribution goes
directly to the emerging industries of the digital revolution and the green energy
transition. Currently, 23 percent of today's wind turbines utilize rare earth magnets, but
this figure is expected to increase to 72 percent by 2030 (Wind Europe, 2018).
Despite this, there are already pressures to replace rare earths with other components,
as expressed by billionaire Elon Musk, who is pushing for a total substitution of rare earth
dependence for the green economy and is actively seeking alternatives (Orf, 2023).
However, caution is necessary, as the European Commission, in its "Substitution Index"
of critical raw materials in 2017, revealed the extreme difficulty of replacing these rare
earths with other components. In fact, “heavy rare earths scored 0.96 on a scale of 0 to
1, with 1 being the least substitutable” (Seaman, 2019, p. 21).
It is important, however, to understand the challenges of the Rare Earth Elements
industry and not fall into the trap of oversimplifying the phenomenon. Even after several
regulatory measures, unlike major industries like oil and gas, China's rare earth industry
historically lacked centralization (Seaman, 2019, p. 25-26). Despite the strategic
importance of this industry for China, the latest image acquired from this scenario in
China shows that an estimated 25,000-50,000 tons of rare earth oxides were illegally
produced, with 60 percent involving "heavy" rare earths (Seaman, 2019, p. 25-26). This
challenges the notion of a highly bureaucratized state where crime would be difficult to
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 15, Nº. 1 (May 2024 October 2024), pp. 249-265
Rare Earth Geopolitics: Global Dynamics and Strategic Balance of Power
Tiago Tecelão Martins
260
take place. Additionally, there are practical obstacles to the exploitation of these
resources due to their high prices, which hinder the financing of these industries.
With this scenario in mind, China is making increasing efforts to centralize and enhance
the planning of rare earth production. In this regard, China developed the China’s
National Plan for Mineral Resources (2016-2020) with the goal of "protecting national
economic security, defense security, and strategic emerging industries" (State Council,
2016, p. 14, as cited in Andersson, Zeuthen, and Kalvig, 2018). This plan includes five-
year plans for