China may soon ban rare earth metal exports, following a decision by the United States to impose restrictions on semiconductor exports to Beijing. This won’t be the first time China suggested such a ban, as formal threats began circulating more than two years ago.
Rare earth metals are used in the components of most devices we use in our everyday lives, including smartphones, computers and TVs. They are also used in wind turbines as well as in the batteries of electric vehicles. Military technology used in the U.S. is dependent on these metals, as well, with the F35 fighter jet needing more than 400 kg of rare-earth metals such as yttrium and terbium.
The East-Asian country is currently the biggest producer of usable rare earth metals, making up 60% of its mining. The country also accounts for 90% of high-strength permanent magnet manufacturing and 85% of rare earth metal processing. This means that China’s ban coming into effect would negatively affect the U.S. as well as Europe, which would also need to diversify its supply.
Japan may help meet this demand as it has diversified its rare earths sources in the last decade or so. At the moment, Japan only imports 60% of its rare earth metal supply from China. The country has also been looking into the ways to tap into its deep undersea reserves.
The U.S. diversifying its rare earth metal sources could bring up a fresh debate on the environmental consequences of processing these metals. The environmental impacts of rare earth production include water contamination and creation of toxic waste, which has a high risk of causing damage to human health as well as the surrounding environment.
So, while phasing out the use of coal in favor of cleaner energies such as electric vehicles and wind turbines may help save the environment, the process of obtaining the critical metals and materials required to actualize this dream will require then nation to discuss the downsides and dangers of processing rare earth metals.
It is also expected that China effecting the ban will cause the price of rare earths to increase significantly. Additionally, while the sanctions may not fully prevent America from accessing these metals, they will cause issues in the supply chain.
The same will be true if rare earth metal production commences at the domestic level, as this will mean higher prices for Western consumers. This will affect a majority of individuals globally, given that almost every gadget used today requires these metals.
However, companies such as Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) are ramping up operations in North America, and this could bridge the supply gap created should China ever make good on its threat to cut rare earths exports to the West.
NOTE TO INVESTORS: The latest news and updates relating to Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) are available in the company’s newsroom at http://ibn.fm/UURAF
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