China’s reserves, technology provide absolute advantage: experts
As the global trade system has been shattered by both the US-led anti-globalization drive and the COVID-19 pandemic, major rare-earth importers including the US are anxious to decrease their high reliance on China’s supply. But setting up an effective and independent supply chain is wishful thinking for the US, experts said.
Two US Congressmen have introduced a bipartisan bill aimed at reducing dependence on China for rare earths by offering tax incentives for involved companies, Bloomberg reported on Saturday.
It is not the first time that the US has sought to encourage its rare-earth firms to speed up development. For years, Washington has been calling for shoring up of its own rare-earth industry chain, which has made no substantial progress, Fu Liyao, a Chinese rare-earth analyst, told the Global Times on Sunday.
“Against the background of deteriorating ties between China and the US, Washington’s move is more like a ‘war cry’ instead of a substantial step, since building a rare-earth industry chain requires a huge amount of work, which cannot be completed in just a few years,” Fu said.
According to Fu, developing a rare-earth industry chain requires many steps – technologies for mine exploitation, raw material refining, environmental assessments, employee training and others, all of which can take decades.
Moreover, high costs mean the US’ efforts would be fruitless, a veteran industry insider told the Global Times on condition of anonymity.
The US has sufficient rare-earth reserves and basic production lines, but high costs are strangling the growth of its industry chain, the insider stressed.
According to the US Geological Survey (USGS), the US has 1.4 million tons of rare-earth reserves, accounting for 1.2 percent of the total in the world. However, it has been highly dependent on China’s supplies. About 80 percent of the US’ rare-earth supplies, which are critical raw materials for the high-tech and military industries, are imported from China, according to USGS data.
“The volume of rare-earth reserves doesn’t directly mean the same amount of rare earths can be exploited, due to issues including environmental concerns and its incomplete industry chain,” Fu said.
China, on the other hand, maintains absolute advantages in the rare-earth industry chains, from the volume of reserves to refining technologies. With the largest amount of reserves, China has developed a sound industry chain with a strong cost advantage, providing more than 95 percent of world supplies, according to media reports.
In addition to the US, Japan and the EU have been major importers of Chinese rare earths for years, although these resources are widely spread in Brazil, Vietnam and Russia.
A worker unloads rare earths along the Yangtze River’s banks in Southwest China’s Chongqing Municipality on May 9. Photo: IC
