The EVs, chips, and other green products on the shelf may not be green but ‘red’ inside
By Maj Gen Sudhakar Ji
If you are averse to buying the ‘blood diamonds,’ then you should also look at the source of environmentally friendly products you may be buying to help your bit against climate change.
There is a ‘New Gold Rush’ taking place in the less developed countries on the globe. The modern-day ‘gold rush’ is for rare earth metals and is being played by non-democratic countries like China, and warlords in many African nations, consequently breeding potential conflicts the world over.
What is the Rush for?
Rare earth metals are used to manufacture everything from electric vehicles (EVs), wind turbines, consumer electronics, and other clean energy technologies. Though rare earth elements are not as rare, they are precious because they only occur in tiny quantities often fused together. The extraction process makes mining extremely expensive and hence the name Rare Earth Elements (REE).
Twenty percent of RREs are used as permanent magnets, an essential component of weapons systems and high-performance aircraft. Then, there are 30-35 Technology-Critical Elements (TCEs) that are essential to computers, consumer electronics, solar cells, wind turbines, and electric cars, plus their military and medical applications. TCEs include the platinum family of precious metals, REEs such as neodymium and scandium, and other metals such as cobalt, lithium, and tungsten.
Major reserves in the world exist in China, California (USA), India, Brazil, Australia, South Africa, and Malaysia. It is estimated the world has 99 million tons of rare earth reserve deposits. China’s reserves are estimated to be 36 million tons or roughly 30 percent of the world’s total reserve. China today accounts for 97 percent of the global production of rare earth elements given its lower labor costs, less concern for environmental impacts, and generous state subsidies.
REEs as Economic Weapon
The covid-19 pandemic has exposed the lacuna and overdependence on China in the supply chain of various products. Moreover, Europe is feeling the heat of Russian oil and gas supply disturbance in wake of the Ukraine war, which has also pushed many less-developed countries to the brink of starvation as wheat is stuck in Black Sea ports. Imagine if all the chips consumed in the US come from China instead of Taiwan being the major supplier.
Today, China is a near-global monopoly on rare earth extraction and refining. It also controls the major supply chains and infrastructure by co-opting regional markets. After the Senkaku boat collision incident in 2010, a diplomatic row erupted between China and Japan resulting in a threat to retaliate with actions that had the potential to cripple Japan’s automobile industry.
Chinese threat was taken seriously enough that the United States, the European Union, Japan, and several other nations filed suit in the World Trade Organization, which ruled that China could not put limits on REE exports. Chinese contended that an embargo was placed as it needed more REEs for its own developing industries. Since 2005, China’s restricted exports are causing concerns in the Pentagon regarding the shortages of four REEs—lanthanum, cerium, europium, and gadolinium—that are causing delays in producing certain weapons.
Modern ‘Zheng He’ Expeditions
Chinese quest for REEs has not been limited to its own territory. China has been investing in South America and Africa and employing a multi-pronged approach with varied aims including the securing of critical minerals, particularly REEs.
Beijing has invested over $180 million into Venezuelan nickel mining, and an additional $580 million into more general mining services. Similar deals are underway in Chile and Peru, which account for 55 percent of China’s copper. Chinese state-owned company Chinalco has a controlling interest in the Peruvian Toromocho and La Bambas copper mines, with another Chinese-backed mine in Ecuador.
China’s Xinjiang TBEA has acquired a 49 percent stake in Bolivia’s lithium industry. Though lithium is not a rare earth element it is a key component of many electric vehicle batteries.
Beijing has significant investments in cobalt mining in the Democratic Republic of Congo (DRC) which sits on 60 percent of the global cobalt reserves. While cobalt is not designated as REE, it belongs to the ‘critical mineral’ family and remains a primary ingredient of the ubiquitous lithium-ion battery. South Africa, Zambia, and Zimbabwe are other destinations where Chinese companies have invested significantly in REEs.
In Asia, China has made significant investments in Afghanistan, Australia, Mongolia, Papua New Guinea, the Philippines, and Vietnam. However, over half of unrefined heavy REEs imported to China come from Myanmar under the military junta.
Global Impact of the Silk Noose
China’s restriction of rare-earth exports has significantly affected the downstream sectors of other countries, especially France, Italy, and Japan which do not have rare-earth resources. In the United States, the re-opening of the Mountain Pass Mine in California in late 2011 is expected to reduce U.S. demand for processed REE from China in the coming years.
Mountain Pass and Mount Weld Mine in Western Australia also have the potential to supply a total of about 30,000 tons of RRE which can reduce the global demand for Chinese-produced REEs.
The catch is that Mountain Pass and Mount Weld contain mainly light REEs such as lanthanum, cerium, praseodymium, neodymium, samarium, and europium. Many electronic products require heavy REEs such as gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium to perform more efficiently. Currently, China is the only country that can supply significant amounts of both light and heavy rare earth products. At least for the next several years, China will continue to be the major supplier of heavy REEs.
REEs and Border Conflicts
China illegally occupied 38,000 square kilometers area of Aksai Chin and is making forays into eastern Ladakh because the area is rich in minerals and natural resources such as thorium and uranium. China is reportedly conducting extensive mining of huge deposits of gold, silver, and other precious minerals in the area under its control beyond the line of actual control between India and China. There is also the possibility of mercury, iron, nickel, and coal reserves in Ladakh though India has never undertaken any mining in these areas. Zanskar region has rich deposits of Sapphire.
China’s massive mining activity in Lhunze County in North East India was preceded by years of building roads and other infrastructure. Lhunze, situated southeast of the Tibet Autonomous Region, is part of Arunachal Pradesh under illegal occupation of China with PLA presence. A Beijing-funded northern Himalayan minerals survey estimates the mineral worth in Lhunze at $58 billion. No wonder that China expanded its illegal claim of the Tawang Plateau to the entire Arunachal Pradesh in 2005 and started calling it “Southern Tibet”.
The other Himalayan country Nepal is also considered the warehouse of rare and precious minerals – gold, Uranium, Thorium, Beryllium, Borax, Lithium, etc. which the dragon is coveting now. China has already commenced operations for mining gold in Nepal and work is on to explore Uranium deposits in Tibet, which may extend to adjoining Nepal.
India needs to fast-track geological surveys, identify areas with RREs in the Himalayan region, and speed up the infrastructure development to counter Chinese moves.
Moreover, the RREs being the building blocks of 21st-century technology, India must calibrate its efforts to develop indigenous mining, and processing technology as a long-term measure to achieve self-reliance. Given her diplomatic capabilities, a global foray for India in exploring RREs cannot be ruled out in the future.
(Maj Gen Sudhakar Jee, VSM, is a former colonel of the Mahar Regiment who superannuated in 2020 after more than 37 years of active service. He has commanded troops in varied terrain, climate, and conflict zones. Currently, he is pursuing a doctoral thesis on the India-China border dispute.)
Disclaimer: The views expressed are not necessarily those of The South Asian Times