Beyond China: The Global Race to Secure Rare Earths

Global efforts are intensifying to diversify rare earth supply chains, traditionally dominated by China. This push is driven by geopolitical tensions and the critical role rare earths play in green energy and defense technologies. Countries like Brazil and Australia are emerging as key players in developing alternative sources and processing capabilities.

The Global Rare Earths Landscape

China has long held a commanding position in the global rare earths market, with its output jumping significantly in recent years. This dominance has led to concerns about supply security, particularly as rare earths are vital for numerous high-tech applications, including electric vehicles, wind turbines, and military equipment.

Diversification Efforts Gain Momentum

In response to China's near-monopoly, several nations and companies are actively pursuing strategies to establish independent rare earth supply chains:

• Brazil's Emergence: Brazil is making significant strides, with companies like Meteoric Resources collaborating to build rare earth magnet factories. The country aims to become a major player in the rare earths industry, with the first permanent magnet facility in Latin America set to begin operations soon.
• Australian Contributions: Australian firms are crucial to global diversification. Meteoric Resources is developing its Caldeira rare earths deposit in Brazil, while Peak Rare Earths, developing the high-grade Ngualla project in Tanzania, is being acquired by China's Shenghe Resources, highlighting China's continued strategic investments.
• European Union's Priority: Access to rare earths is a top priority for the European Union, underscoring the global urgency to secure these critical materials.

Geopolitical Tensions and Export Controls

China has increasingly used its rare earth dominance as a geopolitical tool. Recent actions include:

• Export Restrictions: China has imposed export restrictions on rare earth elements, impacting global supply. These curbs have particularly affected Europe's auto industry.
• Requests to Allies: Beijing has reportedly asked South Korean companies not to export products containing Chinese rare earth minerals to U.S. defense firms, signaling a strategic use of its supply leverage.

Key Takeaways

• Global efforts are accelerating to reduce reliance on China for rare earths.
• Brazil and Australia are becoming significant alternative sources and processing hubs.
• China continues to exert influence through strategic investments and export controls.
• The demand for rare earths in green energy and defense sectors is driving diversification.

Despite these challenges, Chinese rare earth processors like Shenghe Resources claim minimal impact from halted U.S. feedstock imports due to diversified supply channels. Meanwhile, stricter environmental standards in China are contributing to higher rare earth prices, further incentivizing global diversification efforts.

Sources

• Australia’s Meteoric to supply Brazil rare earths magnet factory, KITCO.
• China’s Shenghe Resources to buy Australia’s Peak Rare Earths for $97M, KITCO.
• China asks Korea not to export products using rare earths to US defense firms – reports, KITCO.
• Chinese rare earth processor Shenghe sees little impact from halt to US feedstock imports, KITCO.
• Global rare earths production up 3.4% in 2022 as output in China jumps 25%, KITCO.