Daily Management Review

Concerns About National Security Prompts China To Ban Export Of Technology For Processing Rare Earth Elements


Concerns About National Security Prompts China To Ban Export Of Technology For Processing Rare Earth Elements
In an effort to maintain its hegemony over a number of important metals, China, the leading processor of rare earths in the world, prohibited the export of technology on Thursday that would allow for the extraction and separation of the vital components.
A class of seventeen metals known as rare earths is employed in the production of magnets—which convert energy into motion—for use in electronics, wind turbines, and electric cars.
The embargo is anticipated to have the greatest effect on so-called "heavy rare earths," which are used in EV motors, medical devices, and weapons and for which China has a near monopoly on refining, even if Western nations are attempting to start their own rare earth processing businesses.
"This should be a clarion call that dependence on China in any part of the value chain is not sustainable," said Nathan Picarsic, co-founder of the geopolitical consulting firm Horizon Advisory.
In December of last year, China's Ministry of Commerce asked the public what they thought about the possibility of adding the technology to its "Catalogue of Technologies Prohibited and Restricted from Export."
Additionally, it outlawed the export of technologies used in the preparation of some rare earth magnets as well as in the fabrication of rare earth metals and alloy materials.
The public interest and national security are among the objectives of the catalogue that are declared.
In an increasingly intense struggle with the West for control of vital minerals, China has dramatically tightened regulations governing the export of many metals this year.
In August, it instituted export licences for germanium and gallium, two elements used in chip manufacturing. A few kinds of graphite have been subject to the same regulations since December 1.
"China is driven to maintain its market dominance," said Don Swartz, CEO of American Rare Earths, which is developing a rare earths mine and processing facility in Wyoming. "This is now a race."
As the United States and Europe struggle to wean themselves off of rare earths from China, which supplies roughly 90% of the world's refined output, the country is taking steps to safeguard its rare earth expertise.
Due to technological difficulties and environmental concerns, MP Materials and other Western rare earth corporations have found it difficult to implement China's expertise in the solvent extraction method for refining crucial minerals.
Following China's action, MP's stock, which has gradually started to process more rare earths in California, increased by more than 10% on Thursday. Requests for comments were not immediately answered by the corporation.
Ucore Rare Metals, which receives funding from the US Department of Defence, announced on Thursday that it has completed commissioning a facility to test its proprietary rare earths processing technique.
"New technologies will be needed to outmaneuver the Chinese grip on these important areas," said Ucore CEO Pat Ryan. Ucore's stock rose more than 16%.
The extent of China's real exports of rare earth technology is unclear. According to Constantine Karayannopoulos, the former CEO of Neo Performance Materials, an Estonian company that separates rare earths, Beijing has been discouraging their export for years.
"This announcement just formalises what everyone knew to be the case," Karayannopoulos said.
Benchmark Mineral Intelligence, a consultancy, reports that 99.9% of the world's heavy rare earths are separated in China (BMI). Processing capacity for "light" rare earths, such as neodymium and praseodymium (NdPr), is the majority of what is being installed in Western countries.
"Most likely, the impact of this ban will be in greater difficulty in getting heavy rare earth separation capacity online outside of China," said Daan De Jonge at BMI.
"You can have all the NdPr separated in Europe or the U.S. as you want, but if you're still relying on dysprosium from China, you're still very exposed to geopolitical shocks."