Rare Earth Elements are a group of seventeen minerals that are vital for many industries, including renewable energies, high-tech, as well as defence industries. Thus, they are essential for modern economies and their armed forces. They are difficult to acquire, considering the expensive mining and refining practices necessary to exploit them. These minerals gained attention in 2010, when China, with a near-monopoly on the market, imposed a short-lived embargo on rare earth exports to Japan. More than a mere trade dispute, this incident raised concerns and questions over China’s possible use of economic statecraft. Concerned by the situation, both the United States and the European Union have engaged in taking actions that aim to strengthen their positions in the global supply chain and diminish the risks of future disruptions.
Rare Earth Elements (REEs), also known as rare earth metals or rare earths,[1] are defined by the United States Geological Survey (USGS), as a group of seventeen elements; these are scandium, yttrium and the lanthanides.[2] They are divided into light and heavy categories.[3] The light REEs have atomic numbers between 57, 60, and 62, and are more abundant than the heavy ones. As a result, heavy REEs with atomic numbers 63 to 71 are scarcer and therefore, more expensive.
Contrary to what the name might suggest, REEs are not actually scarce.[4] Cerium (Ce) for example, the most common rare earth, with an abundance of 60 parts per million, is more common than lead (pb).[5] The least abundant, lutetium, has a crustal abundance of 0.5 parts per million. This makes it 200 times more abundant than gold.[6] They are called rare due to the fact that in the 19th century only one exploitable deposit was known: a quarry in the town of Ytterby, located in Sweden.[7]`
Nonetheless, it is important to highlight that their exploitation remains difficult to this day.[8] They are not found individually, but rather in low concentrations as part of bigger rock formations, most abundantly in the minerals bastnaesite and monazite. As a result, mining and sorting processes are very expensive.
Both the European Union (EU) and the United States (US) consider these materials to be critical.[9] This means that they are essential for the well-being of their economies, while their supply may be challenged by scarcity, geopolitical disputes, trade policies or otherwise.[10] Their importance comes from their many uses. REEs are employed in almost every electronic device, in hybrid and electric vehicles, energy efficient lighting, renewable energy generation, and even fossil fuel processing.[11] In terms of military applications, rare earths are needed in the production of precision guided ammunition, lasers, defence radar systems, and even night-vision goggles.[12] They are employed in strong and permanent magnets that can resist extreme temperatures without losing their magnetic strength. As a result, they are the best option for applications such as missile control systems and fighter jets or satellite communication systems. For example, a F35 Lightning Two aircraft requires more than 400 kilograms of rare earth elements.[13] This means that every country with a modern military is to a certain extent dependent on the REE supply chain, as most of these technologies would be infeasible without them.[14] In addition, it is worth noting that today’s technology has a limited ability to recycle REEs, and there are very few other minerals that have the potential to substitute them.[15] Therefore, uninterrupted access to these elements is a worry shared by governments and defense industries alike.
With regard to the production and development of rare earths, the EU highlights that as of 2020, 98% of heavy Rare Earth production, as well as 99% of Light Rare Earth production, takes place on Chinese soil.[16] With control over approximately one third of the global proven reserves of rare earths, the country has held nearly monopolistic control of the international rare earth market ever since the 1990s. Until the late 1980s, the US was a net exporter of REEs, mainly thanks to the Mountain Pass mine in the Mojave Desert, California.[17] At that time China lowered its production prices to strengthen its own position, driving competition out of business.[18] Before joining the World Trade Organization, the PRC had introduced quotas, a list of eligible exporters, as well as prohibiting exports for processing purposes, which remained after it joined the organization.[19] Such a situation led to a decrease in funding for research and education in the US.
REEs returned to the spotlight internationally, in September 2010, after the infamous Senkaku/Diaoyu Islands incident which led to the Chinese embargo on REE exports to Japan.[20] Tensions started with a collision between the Japanese coast guard and a Chinese trawler in the East Chinese Sea, where the the disputed Senkaku/Diaoyu islands are situated. Japan detained the captain of the Chinese vessel but was released shortly after.[21] It is reported that in response, Chinese authorities stopped all rare earth exports to Japan.[22]
It must be acknowledged that this was a one-time event. But considering the relevance of these materials, and China’s control over the market, the fear of future restrictions and supply chain bottlenecks remains ever-present.[23] Moreover, this event also highlighted the possibility that China could leverage its control over the REE markets to pursue its foreign policy and security goals, such as influencing its territorial disputes with neighbouring countries.[24] International actors have taken measures aimed at avoiding any similar situations in the future.
In the US, the Obama administration supported research and development specifically focusing on the downstream businesses of energy and defence.[25] Resource diplomacy focused on trade policy coordination and information sharing with allied countries. However, it did not clearly support upstream production, and there was limited engagement with the private sector and trade policy.[26] This is evidenced by the fact that Mountain Pass mine started operating once again in 2012. By 2015, however, the company declared bankruptcy due to an oversupply of products in the international market. At the beginning of the Trump administration, there seemed to be a mission to reverse decades long dependence on foreign imports,[27] highlighting the risks and threats for American national security originating from this dependence. Similarly, this administration showed interest in increasing funds and support for domestic upstream production. However, it can be argued that the implementation was lacklustre as budget and programme cuts have, for example, harmed interagency cooperation.[28]
In the European case, there was already a raw materials initiative in place in 2008. It was created with the aim of achieving a fair and sustainable supply of raw materials from global markets, a sustainable supply of raw materials within the EU, and resource efficiency and supply of ‘secondary raw materials’ through recycling.[29] Moreover, since 2011, the EU has addressed the markets for critical raw materials (CRM) and released a list of these materials every three years, highlighting the rate of import and substitutability.[30] As of 2020 it lists thirty CRMs.
The European Rare Earth Competency Network report in 2015 highlighted issues the EU might face and made valuable recommendations.[31] For instance, the potential of REE mining in Sweden and Greenland, which could secure European supply for decades. However, the report also highlighted that in order to make this a viable option there would need to be viable downstream processing capabilities.[32] It would be challenging to keep the process environmentally sound and to provide access to the necessary capital.
More recently, in September 2020, the European Commission presented an Action Plan on Critical Raw Materials, the 2020 List of Critical Raw Materials, and a foresight study considering the 2030 and 2050 perspectives.[33] The action plan addresses the challenges in achieving the goals set by the EU Green Deal; the Union will become more reliant on Critical Raw Materials and therefore REEs as well.[34] In the latter case, the demand of those REEs used in permanent magnets could increase tenfold by 2050. Ten actions that must be implemented are highlighted in the document. The creation of the European Raw Materials Alliance is the first one. It was created with the aim of bolstering the creation of environmentally sustainable and socially equitable innovations and infrastructure. It focuses on implementing a circular economy of complex products, supporting Europe’s raw material industry capability to extract, design, manufacture, and recycle raw materials.[35]
China remains as the sole power in the rare earths industry, but these initiatives indicate that there is a reinforced interest in securing access to rare earths, both in the United States and European Union. However, considering the capital-intensive nature of some of the actions,[36] they will prove useful in the mid- to long-term, and therefore their effectiveness remains to be seen. Moreover, in times when international trade is a source of tension, a EU seeking to achieve more sovereignty over critical raw materials could bring a broader trade skirmish in return.[37]
SOURCES
[1] Voncken J.H.L. (2016) ‘The Rare Earth Elements—A Special Group of Metals’. In: The Rare Earth Elements. SpringerBriefs in Earth Sciences. Springer, Cham. Available from https://doi-org.ezproxy.lib.gla.ac.uk/10.1007/978-3-319-26809-5_1, Accessed on 3rd December 2020.
[2] U.S. Geological Survey (n.d.) ‘Rare Earths Statistics and Information’, [online] available from https://www.usgs.gov/centers/nmic/rare-earths-statistics-and-information, accessed on 3th December 2020.
[3] Kalantzakos, Sophia (2018) ‘What are Rare Earths?’ In China and the Geopolitics of Rare Earths. New York: Oxford University Press.
[4] Ibid.
[5] Voncken J.H.L. (2016) ‘The Rare Earth Elements—A Special Group of Metals’. In: The Rare Earth Elements. SpringerBriefs in Earth Sciences. Springer, Cham. [online] Available from https://doi-org.ezproxy.lib.gla.ac.uk/10.1007/978-3-319-26809-5_1, Accessed on 3rd December 2020.
[6] Ibid.
[7] Ibid.
[8] Wilson, J.D. (2017). ‘Securitising rare earth minerals’. In International Resource Politics in the Asia-Pacific. Pp: 167-188. Cheltenham: Edward Edgar Publishing.
[9] He, Yujia. (2018). ‘The trade-security nexus and U.S. policy making in critical minerals’. Resources Policy 59: 238-249.
European Commission. (n.d.) ‘Critical Raw Materials. International Market, Industry, Entrepreneurship and SMEs’. [Online] Available from: https://ec.europa.eu/growth/sectors/raw-materials/specific-interest/critical_en . Accessed on 4th December 2020.
National Science and Technology Council (NSTC) (2016) Assessment of Critical Minerals: Screening Methodology and Initial Application. [Online] Available from: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/CSMSC%20Assessment%20of%20Critical%20Minerals%20Report%202016-03-16%20FINAL.pdf
[10] Geoscience Australia. (n. d.). ‘Critical Minerals: Introduction’. [Online] Available from https://www.ga.gov.au/about/projects/resources/critical-minerals. Accessed on December 21st 2020.
[11] Hensel, N.D. (2011) ‘Economic Challenges in the Clean Energy Supply Chain: The Market for Rare Earth Minerals and Other Critical Inputs’. Business Economics 46, No. 3: 171-184.
[12] Hurst, Cindy A. (2010) ‘China’s Ace in the hole: Rare Earth Elements’. Joint Force Quarterly 59: 121-126. [Online] Available from: https://ndupress.ndu.edu/Portals/68/Documents/jfq/jfq-59/jfq-59_121-126_Hurst.pdf.
[13] GRasso, V. B. (2013. ‘Rare Earth Elements in National Defense: Background, Oversight Issues, and Options for Congress’. Congressional Research Service Report.
[14] Voncken J.H.L. (2016)
[15] He, Yujia. (2018).
[16] European Commission. (n.d.) ‘Critical Raw Materials. International Market, Industry, Entrepreneurship and SMEs’. [Online] Available from: https://ec.europa.eu/growth/sectors/raw-materials/specific-interest/critical_en . Accessed on 4th December 2020.
[17] Kalantzakos, Sophia (2018).
[18] Wilson, J.D. (2017).
[19] PRC State Economic and Trade Commission (2002) Announcement of Year 2003 Export Quota, Total Volume Distribution Criteria and Application Procedure for Export of Important Industrial Products.
PRC State Planning Commission. (2000). 10th Five Year Plan for China’s Rare Earth Industry.
[20] Wilson, J.D. (2017).
[21]McCurry, Justin (2010) ‘Japan-China row Scalates over fishing boat collision’, The Guardian. Available from: https://www.theguardian.com/world/2010/sep/09/japan-china-fishing-boat-collision. Accessed on 4th December 2020.
[22] King, Amy; Armstrong, Shiro (2013) ‘Did China really ban rare earth exports to Japan?’. East Asia Forum. [Online] Available from: https://crawford.anu.edu.au/news-events/news/2432/digging-rare-earth-embargo Accessed on 4th December 2020.
Bradsher, Keith (2010) ‘Amid Tension, China Blocks Vital Exports to Japan’, The New York Times. [Online] Available from: https://www.nytimes.com/2010/09/23/business/global/23rare.html. Accessed on 4th January 2020.
[23] Kalantzakos, Sophia (2018).
[24] Ibid.
[25] He, Yujia (2018).
[26] Ibid.
[27] Ibid.
[28] Ibid.
[29] European Commission (n.d.)
[30] European Commission (2011) Communication for the Commission to the European Parliament, the Council, The European Economic and Social Committee and the Committee of the Regions Tackling the Challenges in Commodity Markets and on Raw Materials. [Online] Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011DC0025&locale=en
European Commission (2014) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions On the review of the list of critical raw materials for the EU and the implementation of the Raw Materials Initiative. Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52014DC0297
European Commission (2014) COMMISSION STAFF WORKING DOCUMENT On the implementation of the Raw Materials Initiative. [Online] Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014SC0171&from=EN
European Commission (2014) Communication from the Commission to the European Parliament, The Council, the European Economic and Social Committee and the Committee of the Regions On the review of the list of critical raw materials for the EU and the implementation of the Raw Materials Initiative. Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0297&from=EN
[31] The European Rare Earths Competency Network (EROCON) (2015) Strengthening the European Rare Earths Supply Chain. Challenges and Policy Options. Ref. Ares(2015)2544417 - 17/06/2015
[32] Ibid.
[33] European Commission (2020) ‘Commission announces actions to make Europe’s raw materials supply more secure and sustainable’. [Online] Available from: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1542. Accessed 7th December 2020.
[34] European Commission (2020) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability. [Online] Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0474&from=EN
[35] European Raw Materials Alliance (n.d.) ‘European Raw Materials Alliance’. [Online] Available from: https://erma.eu. Accessed 7th December 2020.
[36] Paron, Francesco (2018) ‘Europe’s Dependence on Critical Raw Materials: Implications for the Competitiveness and Independence of Strategic Industries’. IAI Commentaries 18 , 45.
[37] White and Case (2020) ‘EU unveils action plan to secure access to critical raw materials’. [Online] Available from: https://www.whitecase.com/publications/alert/eu-unveils-action-plan-secure-access-critical-raw-materials. Accessed 7th December 2020.