If flexed, China’s “rare” muscle can cripple global industry

As China takes an aggressive posture with India in Ladakh and with its neighbours in the South China Sea amidst a raging diplomatic war with the United States, Beijing’s monopoly over a rare lifeline to the modern industry may become a cause of international concern.

CHINA’S RARE MUSCLE

The Asian giant, under Washington’s fire for its handling of the coronavirus outbreak, is the largest producer of rare-earth minerals — a group of 17 elements vital to consumer goods, aviation, clean-tech, healthcare, defence and a host of other sectors.

Prized for their magnetic and electrochemical properties these metals are common in the earth’s crust. But China, according to industry data, controls 90 percent of their global output because of its lower labour costs and less stringent environmental regulations.

The metals are used in cellphones, laptops, smart TV, smart speakers, surgical equipments, pacemakers, aircraft engines, telescope lenses, lasers, radar, sonar, night-vision systems, missile guidance, armoured vehicles and so forth across industrial sectors.

CHINA’S RARE-EARTH CURBS

Just last year, Beijing threatened the United States that it would block exports of rare-earth minerals after trade tensions rose between the two economies.

“If anyone wants to use the products made from rare earths exported by China to contain and suppress the development of China, I think… the people of China will not be happy,” China’s National Development and Reform Commission said in a 2019 statement.

In 2010, China restricted rare-earth exports to Japan over an island dispute.

AHEAD ON STRATEGIC, TECH CURVE

Strategic analysts, even in the United States, realise the impact Chinese curbs on the metal exports can have not only on consumer, healthcare and aviation industry but also on national defence.

“A lot of us would just shrug this off because a lot of us get our technology from China anyways. But if they reduce their output of stockpiles (of rare earths) to us, we cannot develop our technology. Our defence system suffers,” cautioned Sean Dudley, a US forensics engineer back in 2016.

According to Prof. Dudley Kingsnorth, seen as a world authority on rare-earths market, China has been way ahead on the curve in producing the metals.

“China,” he noted in a 2014 talk, “takes a very long term view of these.”

The Chinese, Prof. Kingsnorth said, started on their rare-earth journey back in 1970. They went further downstream, adding value and creating jobs, he added.

The Chinese foresaw rare-earth becoming the basis of the high-tech manufacturing industry.

INDIA VS CHINA ON RARE EARTHS

“In 2019, China produced 132,000 metric tons of rare earths whereas India produced as low as 3,000 metric tons,” said Dr Devendra Pant, a chief economist at India Ratings and Research.

India, experts say, faces a momentous challenge in order to achieve self-dependence in this crucial sector.

“China has wealth, which is helping it in finding and buying sources of these rare materials,” said Dr. Pant. “India needs to grow at 9-10 percent for the next decade to be able to garner that kind of wealth.”

For now, India is working with Japan on a rare-earth joint venture in Visakhapatnam. The government is also rolling out a new national mineral policy.

Experts say there’s a still long way to go.

“The need of the hour is to grow our economy, which in turn can help India in giving China competition and also in breaking the supply chain dominated by China, currently,” Dr Pant said.

Get real-time alerts and all the news on your phone with the all-new India Today app. Download from

• 
•