Donald Trump’s commercial war with China has intensified the battle to control the critical mineral market that are essential in products ranging from electric vehicles to military iPhones and hardware, and stressed Beijing’s dominant position in it.
China’s response to the punitive rates of the president of the United States was to introduce controls on the export of a group of elements in the category of rare earths, generating fear in Western companies, such as American car manufacturers, which depend on them. Trump responded by ordering an investigation into the security risks raised by the American unit of imported critical minerals, a process that generally results in radical tariffs.
The confrontation threatens to undermine years of efforts to build the complex but fragile supply chains in critical minerals that extend throughout the world, and the challenge facing the West to free itself from the domain of China’s domain.
What are critical minerals and rare earths?
Critical minerals traditionally referred to products such as tin, nickel and cobalt that were vital for the defense sector.
But a set of expanding materials is now labeled as a critic due to its importance in a variety of high -tech industries, including clean energy, semiconductors and other advanced technologies, and the greatest risk of supply interruptions because extraction or processing is dominated by a single country, in many cases, China.
The EU has designated more than 30 due to its economic importance and risk of supply, while Trump’s executive order was applied to a broader list of approximately 50, including zinc and lithium.
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Rare earths such as Disposio, Terbio and Ititrium are a smaller group of 17 elements that, despite their name, are quite abundant, although they are often difficult to extract due to their low concentrations. They also tend to be grouped, which makes it difficult and expensive to separate one from the other.
The magnetic, luminescent and catalytic properties of the rare earth make them indispensable for the powerful magnets used in winds, wind and electronic turbines, as well as the lasers used in missiles and catalytic converters.
Why are they so important?
Just as coal helped underpin the British empire and the United States rose to supremacy on an abundant fossil fuels, the battle to control the supply of critical minerals is a new border.
Modern technologies such as semiconductors, drones and electric vehicles respond on critical minerals, and domain in these sectors will more and more global economic and military superiority.
China’s decision, which has been building its market position for years, to move on to a licensing system to control rare earth flows has the potential to be greatly harmful, experts say, although it is not clear how it will develop in practice.
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Thomas Kruemmer, author of the Rare Land Observer blog, said that the rare earths in China’s restricted list were those where Beijing had an almost complete, chosen domain “to have a maximum impact on the American military-industrial complex.”
A question as the new license regime works is the scope of western countries and companies. It is not unheard of celebrating several years of inventory for critical minerals, since the amounts can be small.
Ionut Lazar, a CRU products analysis group consultant, said it would take two months for the effects of the restrictions to feed the users, which puts a variety of industries in Testerhooks.
Where is China more dominant?
China is, with much, the main player in the critical mineral sector, but its grip is often stronger about the so -called “Midstream”, the refining and processing of metals, than on mining itself.
David Merriman, research director of The Project Blue Consultancy, said Beijing had applied export restrictions on the particular rare earths to which he addressed because he had the “greater control over the global supply for these elements”, giving the potential of the maximum interruption.
In addition to being a negotiation tactic in the growing Chinese-American commercial war, the measure will help protect China’s domestic magnet manufacturers while undergoing US competitiveness in electric vehicles, electronics and computing, said Merriman.
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The United States Geological Service said in March that China directed the production of 30 of 44 critical minerals, from arsenic to Tungsten. In a previous study, he said that the materials that were believed to have the greatest risk of supply were gallium, vital for semiconductors and night vision glasses; cobalt, an aerospace and battery metal; and Neodimio, a rare “light” land used in permanent magnets.
Sir Mick Davis, the former Xstrata chief who runs Vision Blue Resources, a critical mineral investor, said this month in Washington that Beijing had a strategic and competitive advantage due to his investments in the processing within his own borders.
“West, Europe, the United States has been asleep at the wheel seeing this happens,” he said.
Who does Beijing depend on?
This depends on the mineral. In some cases, China is almost self -sufficient. For example, China extracted more than three quarters of the world’s graphite in 2023, the main material used in the anode of a battery.
But Beijing has also invested a lot to ensure supplies of mineral resources abroad, sometimes in exchange for infrastructure investment.
It has increased its dependence on the neighbor Myanmar for heavy rare earths, since internal resources have fallen, but still needs raw material to enter its separation and refining plants.
South Africa supplies precious metals such as platinum and rhodium used in catalytic converters and hydrogen fuel cells, led by Anglo American Platinum.
Chinese groups Zijin Mining, Huayou Cobalt and CMOC have also bought mines in Asia, Africa and Latin America that produce lithium, nickel and cobalt, all important battery metals.
Can the United States ensure alternative supplies?
The construction of critical mineral infrastructure to allow the United States to overlook China would take years, since companies would have to go through long research phases, allowing processes and construction.
However, market interruptions and higher prices could end up being good to diversify supply chains, because new mines and processing facilities would be more invertible at higher prices.
“This is not simple,” said Willis Thomas, head of the CRU Basic Product Analyst Analyst. “It will take two years to solve any really adjusted supply crunch.”
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Financials can hesitate to finance new projects, because China has the ability to collapse prices when raising production and flooding the market. Another complication is that critical minerals are highly specialized are often made with customer specifications.
Experts believe that long -term government support mechanisms, such as concessional financing, as well as raw material reserves from China countries, to create an independent supply chain.
However, the investigation of the critical minerals of the United States and the deteriorated relations of the nation with Canada, a superpower of minerals, could hinder international efforts to diversify the critical supply chains of minerals, they warned.
“Much of what you see in Trump’s policy is potentially self -destructive,” said Timothy Puko, director of Basic Products of Eurasia Group, a political risk consultancy. “Especially the effects of the wave of how it handles trade.”
