I'm not sure the goal of the West is to have resilient strategic supply lines. Over the course of the last fifteen years we've basically handed China the keys to the cupboard and it was deliberate.
Regarding this piece, I wish the researchers hadn't led off with rare earths but that story does make for a smoother narrative and the conclusions they draw are indeed applicable to the whole range of resources that China has been allowed to corner.
From the RAND Corporation, March 20:
Rare earth elements are—despite their name—everywhere. They're in your cellphone, your car, maybe even in a crown in your mouth. They're in satellites, wind turbines, night-vision goggles, and laser-guided missiles. By one estimate, every F-35 Lightning II fighter jet has around 920 pounds of rare earth elements built into its engines and electronics.
All of which makes China's near-total domination of the rare earth market a matter of economic and national security concern.
A recent RAND study looked at what the United States can do to break its reliance on China for critical but hard-to-source materials, using rare earths as a case study. It found that existing plans to diversify the market likely don't go far enough, fast enough—and the clock is running.
“Things are moving in the right direction,” said Richard Silberglitt, a senior physical scientist at RAND who coauthored the study. “But they need to keep moving, and they probably need to accelerate.”
Rare earths and other critical materials like lithium have been called the building blocks of future innovation. Some can be used to make tiny but powerful magnets, the kind needed to power the next generation of electric cars. Others can withstand extreme temperatures, strengthen metals, polish glass, or serve as chemical catalysts; lithium is a key component of rechargeable batteries. Rare earths are not rare—in fact, some are more common than lead or copper—but they're hard to mine and hard to separate.
The United States was once the only real player in the rare earth market. China started taking over in the 1980s, using cheaper extraction methods and a greater tolerance for environmental destruction. A Los Angeles Times reporter once described a “crusty lake of radioactive black sludge” near one Chinese mine.
Then, in 2010, the captain of a Chinese trawler, possibly drunk, rammed a Japanese Coast Guard ship in disputed waters. Japan arrested the captain and detained his crew, setting off a diplomatic standoff with China. Amid the tensions, reports surfaced that China was planning to cut off its rare earth exports to Japan. China has always disputed those reports—but when its exports dipped, rare earth prices shot skyward.
“Things got serious real quick,” said Fabian Villalobos, an engineer at RAND who led the recent study. “That's when everybody started paying attention to this.”
The U.S. has since moved to loosen its dependence on China. The Pentagon recently increased its stockpiles of rare earths, lithium, and other critical materials. The federal government announced last year that it would invest billions of dollars in bolstering the U.S. battery industry and tens of millions more in building up capacity to separate and process rare earths.
But, for now, nearly all of the rare earth ore that comes out of the ground in the United States still ends up in China for processing into usable powders and metals. China also processes a majority of the world's lithium-ion battery materials. It builds and sells 92 percent of the rare earth magnets that are needed for electric vehicles, wind turbines, and fighter jets.
RAND's research team mapped out two paths the U.S. can take to blunt the leverage that kind of market dominance gives China.
It can try to break China's grip on the market outright. That would mean investing in finding, mining, and refining new deposits of rare earths and other critical materials, at home and abroad. Around 120 million tons of rare earth reserves are thought to exist around the world—and most of them are not in China. Just this year, Sweden announced that it had found a deposit of potentially 1 million tons in its far north. It described the discovery as the beginning of the end of China's market dominance, illustrating how important it will be to rely on allies, partners, and other countries.
At the same time, though, the U.S. should also brace for the possibility of a supply disruption—from a diplomatic break with China, perhaps, but also from an unexpected shock like COVID-19. That would mean increasing how long companies can survive without Chinese inputs—through stockpiles, for example—and reducing how long it takes them to get back up and running afterward....
....MUCH MORE
Speaking of bracing for supply disruptions, there's this guy named Elon Musk who is doing practical things to reduce dependence on potential enemies and nature, human and otherwise, red in tooth and claw.
Starting with cobalt in 2018 Mr. Musk has been working to reduce the impact of potential bottlenecks by diminishing the need for the stuff in the bottle.
And here's the latest from Bloomberg via Mining.com, March 20:
Tesla’s vision of EVs without rare earths will spur magnet race
Tesla’s ambition to remove rare earths from future models has producers in the sector reeling, but it also should spur global efforts to deliver alternatives for electric car motors that currently rely on the materials.
Model 3 and Model Y powertrains have already reduced consumption of heavy rare earths by a quarter, and Tesla’s next drive unit includes a permanent magnet motor that doesn’t use any of the materials, Colin Campbell, vice president of powertrain engineering, said during the company’s investor day early this month.
The automaker is looking to keep driving down costs, avoid processes with environmental and health risks and reduce reliance on commodities that can be most susceptible to wild price swings.
Rare earths — which are used in magnets in everything from phones to wind turbines and fighter aircraft — have long been a pain point for automakers and the clean-energy sector, because of unpredictable prices and China’s tight grip on the supply chain. China accounts for around two-thirds of mining and 85% of refining of the materials.
The risks of reliance on Beijing were highlighted in 2010, when prices spiked on China’s decision to slash exports, and in 2019 and 2020 amid speculation that shipments could be limited again amid trade tensions with the US....
....MUCH MORE
The next step in Mr. Musk's master plan for world domination will be to create batteries that don't use lithium, while still maintaining the attributes that make Li-ion the go-to material. That's a way's off though.
