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Metal Miner

Metal Miner

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Rare Earth Supply Chains Are In Chaos

  • Rare earth supply chains are grappling with the fallout from China’s controversial zero-Covid policy.
  • As the world becomes increasingly dependent on rare earth materials, some countries are moving to block Chinese investment in the resources.
  • The west continues to find alternatives to Chinese rare earth magnets, however, the process is slow.

Via AG Metal Miner

The December Rare Earths MMI (Monthly MetalMiner Index) traded sideways for the second month in a row. The index dropped 1.55% and MetalMiner anticipates it will continue sideways, most definitely for the short term and possibly in the long term. This is mostly thanks to the supply of global rare earth magnets being interrupted by the current events within China, the world’s #1 supplier of rare earth elements.

Contrary to its name, rare earths are not rare. However, they are rare in concentrated amounts. This makes mining and extraction difficult. So with China being in an uncertain geopolitical place, along with trade being disrupted from zero-COVID, rare earth supply chains felt the effects in the past couple of months. It’s entirely possible that prices could switch upward.

Other Countries Blocking Chinese Rare Earth Investments

As the world pushes towards green energy, so does its reliance on rare earth materials. This makes having a single source for rare earths a vulnerability for any country. The need for more sources outside of China for rare earths is vital.

However, a real issue exists. China holds the most rare earth reserves for a single country, almost double its next-highest contender, Vietnam. The next two largest reserves lay within Brazil and Russia. With the current geopolitical stance of Russia, this doesn’t make Russia a viable option for NATO nations.

Even with these current circumstances, some countries are taking the initiative to block rare earth investments of China. Canada, another country who holds numerous rare earth reserves of its own, took the liberty of blocking China from some of its own rare earth junior mining companies. The Canadian government did this in an attempt to hold onto its own rare earth reserves.

Germany also began pushing harsher policies on China. In recent month’s, Germany’s foreign ministry began requiring companies to take a more harsh stance on Chinese human rights violations, listing the rare earth magnets sector as one of these areas of concern.

Slowly Finding Chinese Rare Earth Magnets Alternatives

The west continues to find alternatives to Chinese rare earth magnets, however, the process is slow. Since China has supplied rare earth supplies to the world predominantly for decades, breaking dependence is proving difficult. However, new sources are arising. Recently, a Norwegian rare earths firm announced new investments in it’s endeavors across Canada, Norway and Sweden.

India could also prove a likely contender in the future. Similar to the west, India also finds itself in a sticky situation due to the nation’s reliance on Chinese rare earths. Recently, domestic industries put fourth their voices to the Indian government to encourage rare earth initiatives outside of China. This all came backed by the Confederation of Indian Industry, who set up a series of suggested steps towards private sectors which would help break Chinese rare earth dependency.

This would do well for India domestically, as India contains large reserves of rare earths itself. However, the rest of the world can’t hope to benefit from this at the moment, as this does not include domestic trade.

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By AG Metal Miner

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