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APD | Major US weakness in the "duel" with China

Top News2020-08-03

ByAPDwriterAliceInternationalmediahasmassivelyreportedontheUS-Chinatradewarsincethespringof2018withprolongednegotiations.ButtheyalsorevealedabigweaknessoftheUSi

By APD writer Alice

International media has massively reported on the US-China trade war since the spring of 2018 with prolonged negotiations. But they also revealed a big weakness of the US in the duel with China. That is the US weapon industry’s heavy dependence on China, although the White House and the Pentagon have taken steps to deal with Beijing’s possible cutting of raw material supply in the 21st century. 

Between 2004-2017, up to 80% of the rare metals that the United States bought came from China. Estonia, France and Japan also supply processed rare earths to the US, but the original ore comes from China. This Asian "giant" controls up to 40% of the world's rare metal reserves, according to a survey by the US Geological Center. In 2018, China provided up to 70% of rare earth consumed globally and Last year, almost 90% of all the processing into usable oxides was done in China.

Could the US start its own refining industry for rare earths? It's certainly possible, but this would take time and the sources of ore could be limited if China were ruled out.

The restriction of exports to the United States, if enforced, could have a major impact on major US industries worth trillions of dollars that rely on rare earth minerals.

The US Department of Defense planned to allocate the necessary budgets for the exploitation, processing and storage of essential metal resources for national security.

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Journalist Guillaume Pitron, who specializes in rare earth research and is the author of many documentaries and news reports, was not surprised that the US Department of Defense directly intervened in this file.

Guillaume Pitron said that on the Chinese side, more than ever, it is aware of the superiority it has with the United States. This is of course an advantage both commercially and industrially and especially strategically. Without China's rare earth, the US could not develop its weapon industry and manufacture F-35 fighters or Abraham armored vehicles...

On the US side, Washington's response covered everything from politics to industry. The US is seeking to reduce its dependence on China by extracting ores and refining for rare metals and then turning these rare metals into magnets. Only in this latter form,will rare metalsbe able to serve high technologies.

TheUS now consumes 9% of the world's rare earth. Until 2019, Mountain Pass in California was almost the only operating mine. However, ironically, 50,000 tonnes of rare earth mined each year here must be sent to China for processing and returned to the US in the form of metal.

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Moreover, it is not easy for the US to restart the supply chain.According to the Pentagon report, by 2022, the US will have three more rare earth mining facilities in operation. Le Figaro revealed Round Top Mountain in Texas, not far from the border with Mexico, could be a solution to help the US become more independent on rare metals. It is home to 16 of the 17 "rare" minerals, which are essential for the high-end electronics industry with mining potential of over 130 years.

Prior to the Pentagon, US President Donald Trump in late December 2017 issued a decree to ensure reliable supplies of vital minerals for national security. Rare earth as well as uranium are on the list of 35 items.

However, as rare metal expert Guillaume Pitron said, rare earth mining is an industrial chain that requires special technology. According to the journalist, the US has acquired Japan's Hitachi Group and a few American companies have mastered this technology but only produce at a small level, not enough to ensure the demand nationwide.

Currently outside of China, the US can count on three other partners including France, Estonia and Japan. However, all three are only capable of providing a limited supply. Meanwhile, Washington is also looking for an alliance with Australia and the European Union (EU).

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An industry analyst cited by Le Figaro as saying that, if the EU, the US and some other countries in the world did not quickly guarantee rare and independent supplies of metals outside of China, it would be the time when China is the only one capable of producing high-tech equipment.

Not only is the US arms industry in demand for rare metals, but at a time when Washington is betting on the electric car market, its demand for rare earth is growing. Therefore, the need for independence from the main supplier, China, is increasingly urgent.

USA Rare Earth Group has loudly announced the inauguration of the first rare earth processing plant outside of China in Colorado. In addition, the US side is also constantly expanding cooperation with partners in Australia or Japan. USA Rare Earth said it will partner with Japan's Hitachi to open a factory in North Carolina with the ability to meet up to 17% of US demand.

The above-mentioned moves show that the US has taken very long steps to gradually separate from the almost monopoly supplier of the world, China. But rare earth expert Guillaume Pitron said China's dominance in this area is not at stake. "China still has a huge advantage over the US," the expert noted. Up to 95% of the rare earth produced in the world is from this country and about 70% to 75% of the rare metal magnets are also from Chinese factories. This is an advantage both in terms of industry and technology that no one can surpass China. It took Beijing decades to climb to the top of that technological ladder, even if the US focused on developing rare earth industry, that could not immediately reverse the situation and China would still prevail for many more years.

(ASIA PACIFIC DAILY)

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