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The War Over Critical Mineral Supply

The US government is stepping up efforts to break China’s dominance over supplies of critical minerals for a range of modern life’s aspects, including electric vehicles (EVs), green technologies and military applications by launching a plan to boost lithium, cobalt and rare earths mining across the globe.

The Energy Resource Governance Initiative (ERGI) initiative, announced in June, so far involves Australia, Botswana, Peru, Argentina, Brazil, Democratic Republic of the Congo, Namibia, the Philippines and Zambia.

The scheme seeks to promote responsible mining of 15 minerals expected to be in high demand as the adoption of technologies such as EVs, battery storage and wind turbines continue to rise.

“We want to ensure that these important mineral commodities remain free from international coercion and control,” US secretary of state, Mike Pompeo, said in a meeting held on Thursday at the United Nations General Assembly.

“The work that we’re doing here is absolutely essential – it’s essential to ensuring secure and reliable energy supplies for every nation,” he noted.

Pompeo said the Trump administration will also work on bilateral agreements, such as the one it recently signed with Canada, aimed at strengthening cooperation on critical minerals.

Washington has also gained the support of Australia, which has committed to facilitate potential joint ventures to improve rare earth processing capacity and reduce reliance on Chinese rare earths.

In early September, Canberra identified 15 rare earth and critical mineral projects it aims to champion as part of the joint effort with the US to challenge China’s dominance in the market.

The announcement followed a move by Australia’s Lynas Corp., (ASX: LYC), the world’s largest rare earths miner outside China. In July, the company signed a deal with its partner, Texas-based Blue Line, to build a heavy rare earths separation facility in the US. The facility should begin operations by 2021.

The US has also signed a memorandum of understanding to assist Greenland in the exploration and development of the island’s resources — in particular, its rare earth minerals.

Washington has grown more concerned recently about its dependence on mineral imports after Beijing suggested using them as leverage in the trade war between the world’s two largest economies.

Growing supremacy

China accounts for almost 80% of the global mined supply of rare earths, a group of 17 chemical elements used in everything from hi-tech consumer electronics to military equipment.

The nation has used its rare earths dominance to make a political point in the past. It blocked exports to Japan after a maritime dispute in 2010, though the consequent spike in prices triggered a race to secure supplies elsewhere.

Beijing has also been securing supplies of other critical minerals and battery metals such as lithium, cobalt and nickel, buying up stakes in mining projects in countries from Australia to South America and Greenland.

By Cecilia Jamasmie via Mining.com

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  • Mamdouh Salameh on September 29 2019 said:
    China won the trade war with the United States by abiding by the most important mantra that Deng Xiaoping its inspirational leader and a towering figure in the twentieth century left for successive leaders of his country to follow, namely “hide your strength, sharpen your claws and bide your time”.

    How apt his mantra has been during the trade war with the United States. China won the war by keeping calm when confronted by US provocations, speaking softly even when retaliating against US tariffs blow for blow and never threatening to use what has been dubbed as nuclear options in its arsenal, namely dumping $1.3 trillion of US Treasury bills and declining to supply the United States with its rare earth metals. Moreover, China is refusing to overreact when it is fully aware that the United States was involved in stirring up the recent troubles in Hong Kong. Instead, China, efficiently and calmly, published a photo of a US diplomat talking to the opposition in Hong Kong just to let the Americans know that it is aware of their dirty work in Hong Kong.

    If, however, President Trump continues to escalate the trade war and tries to push China into a corner, he will find that China may decide to use its nuclear options.

    One of these options is to impose an embargo on the supply of rare earth metals to the United States. That could potentially cripple large swathes of US industry from smartphones, turbines, lasers, missiles, advanced weapon sensors, stealth technology and jamming technology to name but a few. By the time the United States has found alternative supplies, the damage would have been done.

    China accounts for more than 80% of the global mined supply of rare earths. It also has the most advanced technology to convert them into usable minerals in all aspects of industry. The United States imports 85% of its needs from China.

    The fear that China might wield that weapon if the trade war escalates further enticed the US government to step up efforts to break China’s dominance over supplies of these critical minerals.

    China had used its rare earths dominance to make a political point in the past when it blocked exports to Japan after a maritime dispute in 2010.

    Still, the United States needs at least 10 years to develop alternative sources of rare earth metals so as to reduce its dependence on Chinese supplies.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Godfree Roberts on September 29 2019 said:
    It's not the minerals themselves that pose a problem, its the process of extracting and refining them cost-effectively.

    Right now, China is the only country with the know-how, equipment and IP to do that. It will take billions of dollars and a ten year, concerted effort for the West to catch up.

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