Tech Companies Depend on China for Rare Earths. Can That Change? | WSJ

For the wheels of a Tesla to spin or for sound to come out of your iPhone, they all require a small piece of metal called neodymium, which helps convert electricity into motion and is one of 17 important minerals called

rare

earths

found in many of the electronic devices we use. Use it every day, but now your

tech

nology could be under threat. The fundamental challenge is the complete and total dominance of China in recent years. 80 percent of U.S.

rare

earth imports come from China and that's a problem because of concerns that Beijing could cut. Access to the United States will require making many more mistakes and on a much more secure basis than the current politically charged Chinese monopoly, so the United States and its allies are building their own supply chain.

We are going to produce at least 50 percent more than what we do today we follow new players in the neodymium supply chain as they seek to break

china

's monopoly to understand how

china

got so big let's go back about 30 years it all started with deng xiaoping the leader of china at the time is said to have said that saudi arabia has oil but china has rare

earths

jeffrey wilson is the research director of the think tank perth us asia center, which is funded in part by the australian government has been watching the china's rare earths policies over the last decade the chinese government began developing the rare earths sector as a strategic national industry in the late 1980s and was based on the recognition that rare goods would be truly critical for several of the

tech

nological sectors that were emerging with that forecast.

Beijing implemented tax rebates and subsidies that helped the industry prosper. By the end of the millennium, the country became dominant and could influence global prices; For example, in 2010 it reduced export quotas, causing the price of some rare earths to increase tenfold, and China's control over the industry was a geopolitical tool during the trade war with the US. has been taking advantage of the United States for many years when the Trump administration threatened to cut off the supply of chips and processors to telecommunications giant Huawei. Beijing said it was a threat to its national sovereignty and warned it could stop the export of rare earth materials to the US.

The Chinese government did not pull the trigger, but as tensions rose, some

companies

decided to take action. Here we have one of the richest known deposits in the world. This is the first stop in an alternative neodymium supply chain assembly welding. in western australia where amanda lacaze's mining company extracts rare earths from the ground, it was once a volcano and rare earths are found everywhere and this shows how little we have extracted at this stage, lacaze runs linus, the earth largest rare A miner who produces outside of China, she says these minerals are actually not that difficult to find, but the difficulty is turning them into something usable.

The rare ones actually come out of the earth and they're all married and then we run them through our concentrator so that by the time it comes out of here, but about 35 percent of the material is rare earths, Lakas has been trying to extract more of these rocks because recently, he says,

companies

have told him they want to buy more to keep up with growing demand, Linus is expanding this. It's the new plant we're going to build Linus raised about $330 million last August to upgrade processing facilities around the same time the company won a contract from the U.S.

Department of Defense to build a new plant in Texas that would process the rare earths needed to produce military weapons and electronics Once these expansions are complete, industry analysts expect Lioness to produce a quarter of the world's concentrated rare earths, but neodymium still has a long way to go after Australia and before it ends up on your phone these rocks usually have five more steps to go where they have to be processed and turned into metals like in this facility in the UK so this is a sample of neodymium metal which is melted together with iron and boron and some other additives to make the alloy.

Ian Higgins is the CEO of Less Common Products. Metals near Liverpool Industry experts say the company is one of the few outside Asia that can turn rocks into pieces of metal, then some of them go directly to technology companies, car manufacturers or end up in cars. of Formula One. Higgins did not start selling neodymium metals right away. When he started his new operation in 2017, he turned to industry leaders for advice, so the type of business model we are creating would essentially involve copying the Chinese. He bought machines from China and before the pandemic he visited Chinese plants until now, three times a year he has perfected the technique and has even automated part of the process, but his medals are still not cheaper than those from China.

Higgins says the price of Western neodymium products is 20 to 25 percent more expensive and a big reason is a challenge that all rare earth producers face pollution. Linus refines his neodymium at a processing plant in Malaysia releasing type of radioactive waste following local community protests Lina said she plans to use some of the $330 million in expansion funds to shift some of the polluting work to Australia Wilson says environmental regulations in China are more flexible and this has helped domestic rare earth companies stay competitive. For example, China produces heavy rare earths using a technique called in situ leaching where the asset is dumped directly into the ground.

This is a mining technique. which is virtually unusable due to its environmental costs in most Western countries over the years, Beijing has said it is taking steps to protect the environment and encourage rare earth companies to use efficient and green technologies. These colors represent different grades of rare earths for the Western supply chain. Lakas says sustainability will be key, the whole ecosystem we are involved in is ending with products that are sold on the basis that they are good for the environment, well that's not good at all if we destroy the environment along the way and there is still a long way to go for this new supply chain, especially as it tries to catch up with China's three decades of investments, for example for the West to produce 2,000 tons of magnets a year, which is enough for 1 million automobiles.

Higgins says one option would be to open a new mine and that would cost up to $1 billion, so he suggests taking a page from Beijing's book. They enjoy large amounts of state support. Subsidies. Tax refunds. Government assistance is absolutely essential to allow this coordination to take place. Support is starting to arrive Last year the Trump administration's pandemic aid package included $800 million to fund rare earths research The Biden administration also said it is reviewing the supply chain to protect U.S. interests Allies are also on the move Last year the European Union launched a $12 billion investment program for rare earth and green energy projects.

Higgins and Lacaze are not alone in their supply chain efforts. We have this incredible mission to restore the rare earth supply chain in the Western Hemisphere. Other companies are opening or expanding their minds. in processing facilities in various locations such as the United States, Australia and Tanzania Meanwhile, some technology companies have raised concerns about how rare earth elements are sourced, Apple said it is transitioning to recycled rare earth elements that are already found in several of their products, for now new players are ready to make

change

s in Europe, the United Kingdom, North America and Australia, we need to collaborate.

We hope to really restart the rare earth supply chain.