Caught in a Trade War

A power struggle for rare earth minerals

Laura_Sanchez_Editor

It’s easy to sometimes feel removed from the threat of trade wars when your livelihood isn’t directly dependent upon raw materials. However, the reality is that no industry is protected from the effects. In recent weeks, as discussions between the Trump administration and China have intensified, it has become clear that nearly every industry and every individual is certain to be somehow affected.

In early July, when the Trump administration suggested the imposition of tariffs on an additional $200 billion in goods from China, the Chinese government threatened to match the tariffs dollar for dollar. Analysts indicate that it could do so by refusing to import American products or destabilizing the market by liquidating its portfolio of Treasuries. But more likely, others assert, China will simply cut off critical components of the global supply chain.

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China is a major supplier of several basic materials that are essential for industries around the world. Among these are materials used to power electronics and advanced technologies. These include arsenic metals for semiconductors and cadmium for rechargeable batteries.

Materials called rare earths could also be at risk. These 17 elements, while not truly rare, are essential to many of the electronics omnipresent in our lives today such as smartphones, televisions, components for intelligent infrastructure, and hybrid cars.

Processing the minerals is complicated and expensive. Therefore, most are currently refined at only two plants in China and Malaysia. This creates a potential gap in the supply chain that some experts believe China could use to its advantage.

A recent New York Times article explains that it wouldn’t be the first time China has leveraged its grip on rare earths. “In 2010, it stopped exports to Japan for two months over a territorial dispute. Speculators hoarded rare earth minerals, sending prices soaring.”

What are your thoughts? How will trade tariffs and a potential trade war affect your business? Would a scarcity of rare earth elements impact your industry? DE_bug_web

Comments
  • Robert F.

    Rare earths – Take a look at what happened to Moly Corp. located in California a rare earth mine and processing facility. China manipulated the market drove them into bankrupcy, then acquired the facility and they now completely control the market even though the most advanced mine and processing plant is in the US (California). We need better strategic thinking not a trade war.

    Reply
  • Pranab D.

    First of all – all the political Pundits and heads of our administration need to go thru the education about the facts of global interconnection and collateral damages that are destined to occur. Cool your knee jerk impulses. Best solutions were always achieved thru good faith negotiations. Let us do it for our sake and for the sake of others.

    Reply
  • Dr Edo McGowan.

    That rare earth elements (REE) are strategic materials is beyond question. Africa, a continent which some have quipped, as one that sees 60% of the countries either in or recovering from conflict may hold increasing discoverable deposits of REE. The western portion of Burundi, which is a country on the western flank of the African Rift Valley contains rare earth elements (REE) in the process of being extracted. If one views the various underlying active magma plumes running from the Okavango/Chobe Basin up through the Rift into the Turkana region and under Ethiopia, this area may hold unexplored deposits of REE. Thus, east of the Nile-Congo cret (East Africa) may become of increasingly politically interest and thus its countries pawns in the Great Game. The REE potential of an extension of the African Rift Valley through to Djibouti and then along the Red Sea’s bottom also bears interest. Again these adjacent African nations have historically been pawns in the various proxy wars between players in the Great Game since pre-colonial times.

    Reply
  • Dr Edo McGowan.

    It may be more than a trade war. That rare earth elements (REE) are strategic materials is beyond question. Africa, a continent which some have quipped, as one that sees 60% of the countries either in or recovering from conflict may hold increasing discoverable deposits of REE. The western portion of Burundi, which is a country on the western flank of the African Rift Valley contains rare earth elements (REE) in the process of being extracted. If one views the various underlying active magma plumes running from the Okavango/Chobe Basin up through the Rift into the Turkana region and under Ethiopia, this area may hold unexplored deposits of REE. Thus, east of the Nile-Congo cret (East Africa) may become of increasingly politically interest and thus its countries pawns in the Great Game. The REE potential of an extension of the African Rift Valley through to Djibouti and then along the Red Sea’s bottom also bears interest. Again these adjacent African nations have historically been pawns in the various proxy wars between players in the Great Game since pre-colonial times.

    Reply

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