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What are rare earth elements and why are they so important in the US-China trade war?

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What are rare earth elements and why are they so important in the US-China trade war?
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Rare earth elements have become key in the trade war between the United States and China.

A few days ago, the Association of China Rare Earth Industry protested against the new tariffs imposed by Donald Trump, which it accused of "bullying". They noted that those taxes need to be paid by consumers and the US market.

Getting the Chinese lobby of rare earth elements riled up is no joke. Currently, around 80% of the precious metals used by the United States are imported from China. Even if the US’ production is one of the biggest in the world (15 thousand tonnes in 2018 just behind Australia) it's still insignificant compared to China’s (120 thousand tonnes annually).

But what are rare earth elements and why are they so valuable?

A rare earth element forms part of a set of 17 chemical elements in the periodic table, specifically scandium, yttrium, and the 15 other elements of the lanthanide group of metals, including neodymium, dysprosium, and holmium.

Rare earth elements are all metals. They have similar properties and can be found together in geologic deposits. They are also referred to as “rare earth oxides” because they are typically sold as oxide compounds.

“Despite their name they are not rare, they’re called that because they abound in nature, in comparison to other elements or compounds like the pyrite or gold,” explained Juan Diego Rodríguez-Blanco, a professor of Nanomineralogy at Trinity College Dublin and funded investigator in the Irish Centre for Research in Applied Geosciences (iCRAG).

Rare earths are prized for their use in consumer electronics and renewable energy, such as wind turbines and electric cars.

As the use of high-tech products has increased over the years, so has the demand for rare earth metals.

“This generates geopolitical competition because they are essential for technology, they’ve become very valuable,” said Rodríguez-Blanco.

The biggest deposit of rare earths is located in Bayan Obo, a mining town in northern China. It’s responsible for approximately half of the metals’ production since 2005.

“Holmium is used to make control bars in the nuclear industry, microwaves...neodymium is used to make very strong magnets, to make robots, cars, hard drives, and wind turbines,” said Rodríguez-Blanco, adding that rare earths are also used in aerospatial and military industries, to make resistant glass, and fuel additives and lasers.

In addition to technology, they are also used in medical research as well as certain medical treatments for lung, prostate, and bone cancer.

Desired but difficult to obtain

Though these elements are not “rare” as their name indicates, the process of extracting them and subsequent treatment is very complex and costly. Even though they are relatively abundant in the Earth's crust, they are widely dispersed, according to the US Geological Survey (USGS). That means it's difficult to find a substantial quantity of the elements together and ready to extract.

As a result, aggressive methods are used to obtain them, such as extraction through organic solvents, magnetic separation, or at high temperatures of around 1,000 degrees.

"They are very inefficient and environmentally aggressive methods where often more than 50% of the element is lost in the separation process,” said Rodríguez-Blanco.

In many cases, the wastewater from the mine has a higher concentration of rare earths than the rocks, so why not recycle these waters? “There aren’t any efficient methods, they’re so expensive that it doesn’t make sense applying them,” said the professor.

Only 1% of rare earth elements are recycled.

On the other hand, the extraction has a high environmental cost. Some of the processes use acids for separation and the combustion with high temperatures emit CO2 — resulting in a dirty process.

“Rare earth elements often have a radioactive element — thorium. They’re not high concentrations but we don’t know how it can affect the environment and the people in the vicinity,” said the geologist.

A key piece in international trade

China is aware that it has in its possession a powerful weapon in the trade war against the US since the North American country is heavily dependent on Chinese exports of rare earth elements.

Chinese president Xi Jinping’s visit to a production plant in late May unleashed all sorts of speculation and stirred up international markets.

According to data from the US government, China is home to around 36.7% of the world’s known rare earths reserve and was responsible for 70.6% of the total global production of these metals. If Beijing said they were stopping exports, it would be very complicated to obtain the necessary production of the elements, now so indispensable for Western societies.

The Chinese Communist Party hinted it was considering restricting the export of rare earths. “Don’t underestimate the Chinese capacity to counter-attack. Don’t say we didn’t warn you,” it said in the official party newspaper.

But there are countries who have large amounts of rare earth elements, which could — if they were extracted — feed the need of US and European markets and end the Chinese hegemony once and for all.

But extracting them implies a complex phase of research, said Rodríguez-Blanco.

"Rare earths have the peculiarity that their deposits have been formed in a completely different way so that the methods used for their extraction cannot be exported to other countries."

For example, the way to separate the minerals in Bayan Obo would be completely useless in an Australian deposit, explained Rodriguez-Blanco.