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Mar 7, 2021
There was a time when China could cause the world to tremble by threatening its supply of rare earths. It’s long in the past.
That’s reason not to worry too much about news that Beijing is planning to ban exports of technology for refining the suite of minor metals. Such a move, if taken, is likely to backfire even more spectacularly than its previous attempts to weaponize the trade in rare earths itself.
In 2010, a dispute between China and Japan over which country owns a group of islands off the northeast coast of Taiwan caused Beijing to impose export restrictions on all 17 rare earths. That was a problem for Japan, which depends on elements like neodymium, dysprosium and terbium as essential components of equipment such as motors, LEDs, lasers and fuel cells. At the time, China had a near monopoly of the world’s production of the metals. Without alternative sources of supply, Japan’s hi-tech industry would be crippled.
Rare earth, uranium miners benefit from EV mania and dash of ESG
Image: MP Materials Corp.
Rare earth miners and uranium producers are reaping rewards from the flood of money pouring into electrification and ESG investing themes.
Lithium producers have been more traditional beneficiaries of EV and the green energy push. But more recently, rare earth producers have also started to garner investors attention amid enthusiasm about electric vehicles.
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Shares of MP Materials Corp., the largest U.S. based miner of rare earths, is up more than fourfold since Biden won the election four months ago, compared with an 86% gain in VanEck Vectors Rare Earth/Strategic Metals ETF.
The U.S. is Being Forced to Secure Rare Earth Outside of China
The world is in desperate need for rare earth supply outside of China. Not only is the U.S. trying to new supply, Europe is in desperate need, too. In fact, according to the South China Morning Post, “In a speech touting the bloc’s ‘industry strategy’ this week, European Commission President Ursula von der Leyen pointed to the scarcity of raw materials needed to power the switch to electric vehicles and green energy sources, much of which are buried in China.”
“We import lithium for electric cars, platinum to produce clean hydrogen, silicon metal for solar panels,” she added. “Ninety-eight per cent of the rare earth elements we need come from a single supplier: China. This is not sustainable. So we must diversify our supply chains.”
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