Extract from ABC News
Critical minerals needed to drive modern economies and tackle climate change could be cut off to Australia and its allies as tensions with China escalate further, experts say.
Key points:
- Rare earths are critical to modern technologies from wind turbines to military hardware
- China is the world's dominant rare earths supplier with 70-80 per cent of the market
- Experts say government support is needed to develop alternative supplies in Australia
Amid frayed relations between Beijing and governments in Washington and Canberra, an Australian think tank has warned of China using its near-monopoly of the rare earths trade as a "weapon" against its rivals.
Jeffrey Wilson, a research director at the Perth USAsia Centre, said China's dominance gave it leverage over the ability of other countries to reduce emissions or even equip their defence forces.
It comes two years after David Gainer, the US Consul General to Perth, visited a rare earths mine near Laverton in outback Western Australia just days into the job.
That America's top diplomat in WA made his first order of business a flight to the state's remote desert says much about the growing importance of the little-known minerals to the world's top superpower.
The episode also brings into sharp focus the central nature of rare earths to the economy of the 21st century and the race between Washington and Beijing over which superpower should control it.
At stake are efforts to tackle climate change, electrify transportation and even equip defence forces around the world.
So what are rare earths, and why are they the subject of increasingly intense competition between the US and its allies on the one hand and China on the other?
China the world's 'monopoly'
Dr Wilson said the name rare earths was a misnomer and that the minerals were relatively abundant.
What was rare about them, he said, was their availability in sufficient concentrations to allow mining to take place at a commercial scale.
Dr Wilson said there were about 15 minerals that made up the stable of rare earths and they were used for technologies ranging from wind turbines and electric cars to smartphones and military hardware.
Pointedly, he said China currently dominated the world's supply, accounting for between 70 and 80 per cent of global production.
"China's monopoly over these minerals that are critical for technologies gives it a really powerful economic weapon," Dr Wilson said.
"And indeed it has cut off supply of rare earths in the past to Japan in 2010.
"So
as China's relationships with a number of countries — Australia, Japan,
the US, and Europe — has steadily gotten worse over the past 12 months,
there's a present threat that China may use its monopoly to deploy the
rare earths weapon to punish others if they fall into diplomatic
disagreements."
'Very complicated, very expensive'
According to Dr Wilson, China's pre-eminence in rare earths owed to state subsidisation of the companies that mined and processed them.
On top of this, he claimed environmental standards were much lower in China than in developed countries, allowing processing to take place far more cheaply than could be achieved elsewhere.
"It's very challenging to produce rare earths minerals and it's not like the classic mining industries we would be familiar with in Australia," he said.
"Extracting the rocks in one thing.
"But they also require very intense chemical processing in a process known as hydrometallurgy to produce the minerals that are actually required to go into wind turbines or EVs [electric vehicles] or electronics.
"This means that the effort and technology required to set up a new rare earths project is very complicated and very expensive."
Government support required
Amanda
Lacaze, the chief executive of Australian rare earths provider Lynas,
described the playing field between Chinese producers and the rest of
the world as "legendarily unlevel".
Lynas, which owns the Mount Weld mine near Laverton in WA, is the only major rare earths supplier outside China and recently won a $US30.4 million ($40 million) tender from the US Department of Defence to build a pilot processing plant in Texas.
Ms Lacaze said Australia had the potential to become a major rival to China thanks to its big reserves of rare earths and its expertise as a world leader in mining and resources.
But she said that potential was at risk of going unfulfilled unless governments at the highest level were willing to help companies compete with China on costs.
"I think organic growth for the industry does present some challenges," Ms Lacaze said.
"The issue of the distortion of the market by having such a dominant position from China has been recognised for some time and market forces haven't been sufficient to fix it.
As part of the push, Lynas is looking to develop a cracking and leaching plant at the mining hub of Kalgoorlie, about 600km east of Perth, as the company seeks to repatriate some of its Malaysian operations.
Call for alternative supplies
At the same time, ASX-listed mineral sands miner Iluka has also proposed a rare earths refinery estimated to cost $1.2 billion at Eneabba north of Perth, while a number of smaller companies are trying to capitalise on reserves elsewhere in Australia.
Mr Gainer noted the rare earths market was relatively small at the moment but predicted it would grow significantly as demand boomed.
He said while the US preferred not to interfere in markets "we've been working with Australia and other like-minded partners for several years now looking at how we can help address the supply chain issues that pop up in rare earths".
"That's why it's important to have a diversified, resilient and responsible supply chain for rare earths.
"You know where your rare earths are coming from, you know the environment in which they're being mined and processed.
"And you know at the end of the day that you have a resiliency of supply."
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