In a significant development amidst rising geopolitical tensions, China announced on September 16, 2024, the discovery of approximately 4.96 million tonnes of rare earth elements in Sichuan province. This discovery enhances China's already substantial resource advantage, as the country is the world's leading producer of rare earths, boasting a total of 44 million tonnes of deposits. Rare earth elements are crucial for various technological advancements, including electric vehicles and military weaponry, making this discovery particularly relevant in the context of U.S.-China competition for technological supremacy. By 2023, China accounted for about 70% of global rare earth production, a decrease from 80-90% in the early 2010s, indicating a slight diversification in the global supply chain but still reflecting China's dominance in this sector. [1bff10ec]
The China Rare Earth Group has emphasized its commitment to safeguarding resource security and expanding production capabilities, setting a mining output limit of 135,000 tonnes for 2024. Despite a 6.4% increase in exports during the first eight months of 2024, the value of these exports has dropped significantly by 40.2%, highlighting challenges in the global market. Pan Helin, an industry expert, has underscored the necessity for efficiency and technological advancement within China's rare earth sector to maintain its competitive edge. [3a69b068]
This announcement comes on the heels of China's earlier decision to restrict exports of antimony, another critical mineral essential for military applications, effective September 15, 2024. The U.S. currently relies heavily on China for antimony, importing approximately 63% of its needs, which poses a significant risk to national security and military readiness. Rich Nolan has pointed out that the U.S. has not mined any marketable antimony in 2023, emphasizing the urgency for domestic production to mitigate reliance on foreign sources. [e81fc8ad]
Bipartisan efforts in the U.S. are underway to reform the lengthy permitting process for domestic mining operations, which has been criticized for its inefficiency. The U.S. faces a daunting timeline of 29 years from mineral discovery to production, making it the second slowest globally. As China continues to assert its dominance over critical minerals, the need for a coherent U.S. minerals policy becomes increasingly pressing. [b015834f]
China's grip on rare earth elements is further underscored by its control of over 90% of the refining capacity, which severely undercuts projects from the U.S., Japan, and Australia, despite billions in subsidies aimed at breaking this dominance. Lynas Rare Earths Ltd. is planning a Texas plant with over $300 million in Pentagon contracts, aiming to produce 25% of global rare earth element oxides by 2027. However, market conditions have led to a slump in prices since 2022, affecting the viability of such projects. Arafura Rare Earths Ltd. is seeking an A$840 million (US$560 million) loan to commence construction, while Iluka Resources Ltd. faces rising costs for its A$1.25 billion project. Japan has managed to reduce its dependence on China from 80-90% to around 60% after investing in Lynas in 2011, demonstrating that patience and long-term investment are crucial for developing a sustainable supply chain. [73e9be43]