Rare earth elements are a class of metals that will play a major role in the world’s transition from fossil fuels to clean renewable energy. They are used in the development of computers, solar panels, wind turbines, electric cars, lasers, magnets for vehicles and other devices, precision-guided weapons, and other critical technologies in the defense departments. Demand for these metals is poised to increase exponentially in the coming years as countries ramp up investment in renewable energy.
However, the rare earth elements industry is plagued by one major problem: China has monopolized most of the world’s supply of critical metals. China is now responsible for a whopping 85% of the world’s rare earth processing market. The country also mines 58% of all global rare earth elements, refines 89% of all raw ore and manufactures 92% of the world’s rare-earth magnets.
This gives China a lot of leverage in an industry that plays a crucial role in green energy and national defense for most countries. China’s monopoly has worried many international policy experts who fear Beijing could use its control over the market to accomplish its own foreign policy goals. Beijing has threatened to use its rare metals dominance against the United States in the ongoing trade war between the two countries and has even used this monopoly in disagreements with Japan.
The United States is now scrambling to ramp up local production of rare earth elements and reduce its reliance on China for rare element imports. An executive order from former President Donald Trump ordered cabinet secretaries to study the ways through which the country could increase local production while reducing Chinese imports, stating that America’s reliance on critical mineral imports constituted an “unusual and extraordinary threat” to the country’s foreign policy, economy and national security.
The Biden administration also acknowledged that China’s critical earth metal dominance posed a major risk to the nation and the West at large, especially in the consumer and manufacturing sectors. The administration recently provided a $10 million grant to MP Minerals Inc., a rare earth miner in the U.S. President Biden also signed an executive order to ensure the country stockpiles enough rare earths to meet its national security risks.
However, it will take quite a while for these investments to kick in and even come close to challenging China’s dominance. One study found that it takes more than 16 years for rare earth mines to go from initial discovery to production. This means that opening new mines won’t help the U.S. meet its demand for rare earth metals, especially in the short-term.
The United States could instead invest in businesses that can reduce their rare earth metal dependence as well as rare earth recycling and the development of technologies that don’t require rare earth elements.
Concerns about countries’ security of supply for strategically pivotal minerals are acting as tailwinds for miners such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) as geopolitical dynamics favor local or regional production as opposed to relying on supplies from across the world.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
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