New Delhi: As the leaders of four Quad countries — US, India, Japan and Australia — held their first historic first virtual summit Friday, ThePrint’s Editor-in-Chief Shekhar Gupta talked about rare earths, why they are geostrategically critical and how China’s monopoly of them matters, in episode 702 of ‘Cut The Clutter’.
Rare earths are 17 minerals that are difficult to find and obtain in most parts of the world. They are important because without them, almost all our lives will come to a standstill as they are used in a plethora of things — mobile phones, cars, airplanes, missiles, radars etc, Gupta explained.
China has over time acquired global domination of rare earths. At one point, China produced 90 per cent of the rare earths the world needs. Today, however, it has come down to 60 per cent. The remaining is produced by other countries, including the Quad.
Of the 17 rare earths, neodymium is arguably the most needed in the world right now. Electric vehicles cannot function without this and lithium, which is mostly found in Bolivia.
Gupta explained that without neodymium, an iPhone cannot vibrate, airpods would not work and neither would wind turbines. This is because for all of them to work, they need to be powered byRare Earth Permanent Magnets (REPM), which are the most powerful permanent magnets. Other elements like terbium, tritium and europium are crucial to targeting mechanisms in all weapons systems.
As of 2018, China had 44 million tonnes or 36.7 per cent of the world’s rare earth deposits, Brazil has 22 per cent, Vietnam 18 per cent, Russia 10 per cent and India has 5.8 per cent. The rest of the world, including the US and Japan, have 10.9 per cent of rare earths.
“India has more rare earth deposits than Australia and the US combined,” Gupta said.
The process to obtain rare earths is environmentally destructive and produces radioactive waste. “Increasingly, countries around the world have gone away from refining metals like these. China has lax environmental laws and has endless expanses of deserts and areas where nobody lives. So deliberately, China has made its environmental laws such that it could pollute as no one else could, and other countries who mine these minerals could send it to China to process,” Gupta said.
China leveraged its lax environmental laws by way of an indirect ecological subsidy in the rare metal industry. However, the turning point came in 2010 when the world realised that China had a crippling monopoly where it could punish any country by controlling the supply of the rare earth metals.
That year, China stopped its supply of rare earths to Japan after a Chinese fishing boat was arrested near the disputed Senkaku Islands. To fulfil Japan’s needs, two Japanese companies, Sojitz & JOGMEC, invested $250 million in an Australian mining corporation called Lynas. Now, one-third of Japan’s needs are fulfilled by these companies, reducing dependence on China.
However, China imposed restrictions on exports of rare metals that same year, pushing the price of these metals up nine times. This is how much China controls these materials, explained Gupta.
Strategic asset & liability
While Japan managed to cut down its dependence on Chinese rare earths to 60 per cent from 91.3 per cent, the US relies on China for 80 per cent of its rare earth needs.
“One has to see their natural wealth as a strategic asset or the lack of it as a strategic liability. India has not been able to use its natural wealth as a strategic asset, which needs to be corrected,” noted Gupta.
Despite more ore than the US, India only mined 3,000 tonnes of rare earths in 2020 while the western nation mined 38,000 tonnes. The Indian Ocean Region, including India’s coastline, is rich in mineral sands.
Meanwhile, Australia mined 17,000 tonnes and China mined 1,40,000 tonnes. The same year, the US had 16 per cent of the production of the world’s rare earths, Australia had 7 per cent while India was at 1 per cent.
Watch the full CTC episode here:
(Edited by Manasa Mohan)