China’s Rare Earth Monopoly: A Threat to the Clean Energy Transition?

Wind turbines and hybrid cars are two of the green energies most reliant on a handful of special metals called rare earths. They are the building blocks for magnets that power everything from the neodymium in the rechargeable batteries of your E.V. to the Lanthanum and Praeseodimium in the drive trains that make them go.

However, producing rare earths is hard. Moreover, the world needs help to develop its processing capacity and break Beijing’s export stranglehold.

The global demand for these metals is expected to grow exponentially as we transition away from fossil fuels and toward a more energy-efficient economy. That is why the West is pushing to develop independent supplies of critical minerals like lithium, cobalt, and phosphates that are needed for everything from new battery technology to greener buildings. Moreover, minerals like neodymium, praseodymium, and dysprosium are crucial to clean energy.

China is the biggest producer and refiner of rare earth, with a 97% share of the world market. Moreover, its tight industry control has caused headaches for some Western companies. However, unlike gold, which is comparatively easy to mine and process, these rare earths are surprisingly tricky to find and even more expensive to separate and refine. That is what makes them so precious.

As a result, the only actual window into prices for rare earth such as neodymium and praseodymium comes from pricey, proprietary surveys that mining and processing businesses pay to have performed. Moreover, only some superannuation funds will stump up that kind of equity. So it is little wonder that Beijing has been able to keep the rare earth sector under lock and key.

Its success is down to a combination of relentless state-backed focus plus a ruthless crackdown on smuggling and illegal mining. It has also ensured it controls the supply chain by limiting exports of raw or unprocessed rare earths and restricting quotas on refining them.

However, technical complexities, partnership strains, and pollution concerns are hampering the rest of the industry’s efforts to wrest market share from China, which according to the International Energy Agency, controls 87% of refining capacity. That could undermine global efforts to reduce carbon emissions and limit climate change’s impact by 2050.

The latest struggles by M.P. Materials and Lynas, the world’s two biggest rare earth companies outside China, highlight those challenges. Both are working to develop their processing plants in the United States but have faced delays and cost overruns.

In the case of M.P. Materials, a joint venture with Blue Line Corp of Texas, delays have been mainly due to environmental issues that are being resolved. However, soaring capital costs and a lack of investor interest have also been factors. Moreover, with the Trump administration’s trade spat with China, a push to develop the U.S. rare earths sector has taken on greater urgency. To cut its dependence on China, the U.S. has been looking into establishing an alternative network of producers in places like Namibia and Australia.

Wilson Luna

Luna Wilson is a passionate writer who loves to share knowledge and insights on various topics through their writing. With a background in writing, he brings a unique perspective and expertise to his work. Luna Wilson goal is to provide readers with valuable information and insights that can help them make informed decisions and improve their lives. Whether you are looking for tips on blog topics, or want to learn more about blogging, Luna Wilson has got you covered.

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