Two weeks ago, China announced a slew of countermeasures in retaliation against punitive tariffs by U.S. President Donald Trump, including extra levies of 34% on all U.S. goods as well as export curbs on rare earth minerals. Under the new restrictions, exporters will now be required to apply for a license from China’s Ministry of Economy and also disclose the final use of rare earth elements (REE) and critical metals such as dysprosium, gadolinium, samarium, scandium, terbium, yttrium and lutetium.
This wasn’t the first time Beijing is leveraging its dominance in rare earths in a trade war with its biggest rival. Back in December, China banned exports of antimony, gallium and germanium to the U.S., minerals are used in specialty applications in chipmaking, defense and communications industries. In 2023, China banned the export of technology to extract and separate rare earths in a bid to protect its rare earths industries.
And now, Washington is hitting back, with the Financial Times reporting the Trump administration is drafting an executive order that will enable the stockpiling of deep-sea metals in a bid to counter China's dominance in rare earths and battery minerals supply chains. According to the report, Trump is looking to "create large quantities ready and available on U.S. territory to be used in the future", to insure the country against future conflicts with its biggest rival.
The U.S. remains heavily reliant on China’s rare earths, with the Middle Kingdom supplying nearly three-quarters of its needs. China refines 89% of the world's neodymium and praseodymium, the key metals for EV magnets. To complicate matters, U.S. REE imports from other countries including Estonia (6%), Japan (3%) and France (3%) are themselves heavily dependent on chemical substances and mineral concentrates produced in China. This leaves the United States particularly vulnerable to trade wars with a major rival, something Beijing is not shy to leverage.
The market impact of such bans can be explosive: In January, antimony prices soared 40% in a single day after China banned exports to the United States China enforced the existing limits on antimony, gallium, germanium, critical minerals that have widespread military applications ahead of President-elect Donald Trump taking office.
Antimony prices have continued rising, jumping from $14,000 per ton before the ban to nearly $60,000 currently. Bismuth prices have also surged from $6 to $40 per kilogram since February after the metal was placed in the dual-use export control list. China is the world’s largest producer of antimony, accounting for 48% of global mined output. The country’s output in 2023 clocked in at 40,000 tonnes, nearly double Tajikistan’s 21,000 tonnes while Turkey was the third largest producer with 6,000 tonnes.
Antimony is considered a strategic metal used in military applications such as ammunition, infrared missiles and nuclear weapons as well as lead-acid storage batteries used in cars and brake pads thanks to its heat resistant properties. Antimony is also widely used in the solar sector to improve transparency for the cover glass on solar cells and is also used in the screens of smartphones.
Last year, researchers from The University of Texas at Austin released estimates that U.S. coal ash contains 11 million tons of rare earth elements, nearly eight times the country’s known domestic reserves. Long considered an industrial waste, coal ash is the powdery byproduct left after burning coal for fuel. This is the first national assessment of coal ash as a resource. Unlike traditional mining, coal ash extraction comes with a key advantage since the burning process has already separated the minerals from their original ore, thus reducing the need for energy-intensive refining steps.
“There’s huge volumes of this stuff all over the country,” said Davin Bagdonas, a research scientist at the University of Wyoming. “And the upfront process of extracting the (mineral host) is already taken care of for us.”
However, it’s likely to take years, if not decades, before the U.S. can become an independent producer of rare earths and cut its reliance on China. The previous Congress introduced a bipartisan bill titled Reclaiming American Rare Earths (RARE) Act that offers a framework of tax incentives to encourage more investment into U.S.-based REE mining and production. Currently, a site in Colorado is set to become the first non-China facility for refining rare earth ores while dozens of companies and startups from Alaska to Texas are advancing mining development.
In the meantime, Washington can build new supply chains outside of China just like Japan did when it faced a similar fate more than a decade ago.
By Alex Kimani for Oilprice.com
