The competition in securing rare earths commodities is intensifying

The war in Ukraine has demonstrated just how inadvisable over-dependence on a simple supplier can be. Russia’s dominance in the European gas and oil market turned into a geopolitical nightmare in the space of a few weeks.

Just imagine if a single country provided you with 90% of your needs for essential commodities. Now imagine how you would feel if that country was China. Actually, we don’t need to use our imagination because that is exactly the reality for Europe’s galloping consumption of rare earth metals.

About five years ago, the west started in our opinion to wake up to this awkward situation and decided to do something about it. But, as the EU, UK and US scramble to diversify the supply chains of rare earths and other critical raw materials, they are discovering that it’s not so easy. Left to its own devices, the market in our opinion will never wean itself off Chinese production.

Governments finally must intervene.

It’s hard to overestimate the importance of China’s mastery of critical raw materials. There is no green transition, no Internet, no nano medical research, no advanced weaponry, basically virtually no technical solutions to our planetary problems, without them. The father of China’s economic revolution, Deng Xiaoping, understood their importance decades ago, noting: “The Middle East has oil. China has rare earth meat metals.”

Rare earth metals are not, in fact, rare. Most countries in the world have significant, if not always accessible, reserves of them. But extracting them involves in our opinion overcoming two challenges. To mine just tiny quantities of the 17 rare earth metals requires removing tons of aggregate. Without stringent controls, this operation is not only highly polluting, but also cost intensive.

Then comes the separation of the metals followed by their preparation for use in high-powered magnets, laser technology or the anti-counterfeiting device in euro banknotes. This is pricey and China can offer you the finished product for 30% less than anyone else. Hence the market’s lack of interest in factoring in geopolitical considerations.

In our opinion it wasn’t always like this, China’s dominance was a product of successive US administrations’ decision from the late 1980s onwards to turn China into the heartland of US manufacturing. One of the industries America shifted across the Pacific was rare earth mining and processing. Until this point, the US enjoyed a monopoly on both thanks to the rich scams in an area of the Mojave desert called Mountain Pass.

In 2017, the EU from the European Raw Materials Alliance in order to start diversifying. At the time, China supplied it with a staggering 98% of its rare earth requirements. Five years later, China still provides 90% of rare earths globally – so progress of sorts, but at a snail’s pace. Nonetheless, the EU has struck up two strategic partnerships since forming the alliance. One is with Canada. The problem is that the second deal was with Ukraine, which has other issues to deal with right now. Ukraine has deposits of 117 of the 120 most widely used minerals and metals. At least 40 of them are needed for the green transition. It is in our opinion a resource superpower, urgently needed for the EU to restrict dependence on China. The problem currently is that about 2000 of those deposits are currently under Russian control. And what that means in terms of a headline is that about 20% of all of Ukraine’s resource wealth is currently in Russian hands. Interesting?!

Russia, too, is part of the scramble for rare earth materials. There are experts claiming that Ukraine was a target for the Russian military not solely as a symbol of imperial decline, but also because of the significant strategic economic interests involved.

There are British, European, North American, and Australian companies now investing systematically in mining and processing. But so far in our opinion this is a drop in the ocean. We at Calvin • Farel believe that over the next three to four decades, the world will consume most probably more metals and minerals than all the metals and minerals we have consumed for the last 70,000 years.

arresting the climate emergency is in our opinion not just a question of ditching fossil fuels it requires constructing an entirely new system of energy production and consumption which itself contains huge risks to the environment if not done correctly

but the greatest risks in our opinion is that the very resources which offer a faint promise for our survival will turn the world once more into a coldron of geopolitical competition.