Rare Earth Elements are necessary for a host of strategic and consumer requirements globally. So far, the Chinese have been the lead producers and have also usurped the production of other major producers. It’s a strategic weapon in Chinese hands that can cause dysfunction in multiple fields. However, though termed as rare, their availability is not so scant globally. There is also the almost improbable possibility of harvesting these from another planet.
US President Donald Trump, in April 2019, surprised the whole world by offering to buy Greenland, an autonomous region of Denmark and a key NATO ally. The intention of the US offering to buy Greenland was to gain access to the world’s largest unexploited Rare Earth minerals deposits, a resource the US needs to build everything, from space crafts, missiles, cars, mobile phones and a lot more. Presently, it’s wholly dependent on China for this critical resource, as is the rest of the world.
Rare Earth Minerals
Rare Earth minerals are a group of 17 metallic elements found in the periodic table of elements. Out of which 15 of these are a member of a group called Lanthanides. Scandium and Yttrium are different but share similar chemical properties.
Due to their exceptional characteristics, Rare Earth Elements (REE) are critical elements of modern and futuristic technology. Their physical and chemical properties are unique, making them elites of the periodic table and therefore much sought after. For example, Lanthanum used to convert crude oil into petrol and diesel. On the other end, Neodymium has magnetic properties and used in manufacturing powerful magnets which enable miniaturisation.
REEs are not rare but are found abundantly in nature. However, in very few locations on the earth are they found in sizable concentrations enabling profitable mining.
China today has the world’s largest reserves of REE and accounts for 37 per cent of the global reserves. In 2017, China produced 80 per cent of the world’s REE. It largely controls every step, from mining, processing ores to refining.
Today, China’s dominance over REE supply chains presents one of the most strategic vulnerabilities of the world, akin to the global energy crisis of the 1970s.
China is aware of its position as the leading supplier of REE and is not averse to using it to leverage it. In 2010, after Japan impounded Chinese patrol boats on the Senkaku Islands, China stopped REE supplies to Japan. China is exploring new sources of REE overseas, mainly in nations that are part of its Belt and Road Initiative.
In South America and Africa, China is a major player in the mining industry and has large mining rights. These regions are rich in REE. With China, a major partner in their development and most South American and African nations being a part of the Chinese Belt Road Initiative (BRI), it’s not surprising that the Chinese granted the mining rights of the REE in the South American and African nations.
In South-East Asia, Myanmar supplied over 50 per cent of the Chinese REE requirements. The 1 February 2021 coup has not led to disruption in these supplies and the new military junta has ensured the security of Chinese mining companies involved in REE extraction, despite widespread violent anti-Chinese demonstrations. It explains China’s indifference to the coup and its support of the new military regime.
China, by providing easy loans, building infrastructure, health and education facilities and providing ample opportunities to students to study in Chinese universities, has made a favourable niche in the minds of the developing nations around the world which helps the Chinese to gain mining rights of their REE.
In Central Asia and Mongolia, after the fall of the Soviet Union, the erstwhile Soviet Union territories like Kazakhstan, Tajikistan and Kyrgyzstan exported solely to China and Russia. Since 2013, when China unveiled its Belt Road Initiative, China has reportedly invested approximately $1.3 trillion in this region.
Since the collapse of Communism, Mongolia has seen a mining boom. Mongolia is home to 16.8 per cent of the world’s critical mineral reserves. Its exports have yielded over $3 billion and China and Russia are its export destinations.
In the context of China’s geopolitical expansion, Central Asia and Mongolia are key in providing REE. The geographical location of this region between Russia and China and their influence makes it extremely difficult for the US and West to tap into the REE potential of this region, a fact which enables China’s dominance.
Response of the World to break Chinese Dominance
China’s domination of the supply of REE overshadows the capacities of the US and the other developed nations of the world. It produces 62 per cent of the world’s REE raw materials and exports 85 per cent of the REE needs of the world. Hence, in the event of an international crisis, it is bound to use its leverage to further its geostrategic aims by imposing export embargoes of REE. Considering that the developed world receives over 85 per cent of its REE needs from China, any disruption in supplies will be catastrophic for their computers, electronics, medical equipment, aerospace and their military-industrial economy.
Like all nations have buffer stocks of vital items such as food grains, medicines, fuel and so on, a similar strategic reserve is the need of the hour felt by each developed nation presently facing the ill effects of disruption in supplies. The pandemic has adversely affected the production and supply chain of semiconductors throwing them out of gear, with their deliveries being delayed by over six months. A viable suggestion could be, one-third of the yearly consumption of REE be held as reserve stock.
Developing the domestic capacity to mine REE from one’s own country or allies and friendly nations is being undertaken at a war footing. Private companies are being Government funded and encouraged to gain mining access in Africa, Asia and South America. The domestic capacity to refine the mined REE too is being enhanced.
Lastly, the developed nations are decreasing their reliance on Chinese REEs and critical minerals. Governments are targeting goals that are not reliant on China for any supplies. In this, they are establishing supply chains in friendly nations to build a secure, self-reliant future.
India and REE
US and China rivalry has become a permanent feature in geopolitics. India cannot take the continuance of REE supplies from China for granted anymore. REE contributes to a total yearly value of $200 billion in the Indian economy. India has the fifth-largest reserves of REE, double that of Australia but as of date imports over 90 per cent of REE in finished form from its arch-rival China.
The public sector undertaking Indian Rare Earth Limited (IREL) has a monopoly in the extraction and supply of REE. It extracts Monazite beach sand found in many coastal states. IREL’s main objective is to provide Thorium which it extracts from Monazite to the Department of Atomic Energy. In 2016, IREL produced 2265 tonnes of rare earth oxides which are minuscule compared to the world’s production and Indian reserves. This has left nearly 99 per cent of Indian consumers of REE with no choice but to import.
As per a 2016 report, India has the potential of a 1.21 lakh crore REE industry including foreign exchange earnings of Rs 50,000 crore. With the world seeking to delink from China for supplies of REE, India will do well to take this opportunity to join their efforts.
Mining and refinement of REE produce radioactive and other wastes which are environmental hazards and needs high-end technology which US, Australia, Canada, the pioneers can offer.
With its vast reserves, India must seek strategic partnership with advanced nations, namely its strategic partners in QUAD that is US, Japan and Australia and seek modern technology to mine its vast rare earth resources. This will enable India to emerge as a major supplier of RRE in the world and to also wean away from supplies of this vital item from its arch-enemy, China.
As an interim, learning from the shortages caused by disruptions in supplies which had a cascading effect mainly on the supply of semiconductors and therefore has adversely affected the production in automobile, mobile, medical equipment industries, India must create a buffer stock to guard against supply disruption. Rare Earth minerals are the lifeline of the 21st century, fuelling high tech manufacturing and transition to renewable energy. These resources are the key to the progress of a nation. The emergent need of the hour is to diversify the supply chains of these vital minerals and to break the hegemony of China in this strategic sector. Any government which does not give due importance to this need is steering its nation into an insecure future.
Developed nations have embarked on a journey seeking to harvest Rare Earth materials from Asteroids, Moon and experimental space voyages. The return of Japan’s space ship Hayabusa 2 on 6 December 2020 with space rock samples from asteroid Ryugu is an example of such a quest.
Col RN Ghosh Dastidar (Retd)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of BharatShakti.in)