Rare Earth Metals (Episode 1) – “The War for World Domination”

 

From “Oil is Black Gold” to “Data is the New Oil” the new geo-politics & geo-economics buzzword is “Rare Earth Metals”. One such metal, Lithium, is being touted now as “White Gold”! And, there is a war being strategized and fought for the same on multiple fronts - on the Earth, below the Earth, and even on the Moon!

To set a bit of a background, Oil & Gas rich regions & nations in the Middle East, West Asia, North Africa and the likes of Venezuela, Russia, USA etc. over the past many decades shaped the dynamics of the world economy and geo-politics (leveraging their abundant oil reserves as a tool through the OPEC cartel). And at the receiving end of their cartel games, were big net oil importers like China, India, Japan, South Korea, Europe and to some extent even the US.

Two factors have now re-shaped the world, viz., a) dwindling oil and gas reserves, and b) the evolution of high-tech and knowledge-based sectors and economies. The traditional oil rich countries have hence been forced to pivot. Examples being UAE, Saudi Arabia, Qatar, etc. who all are investing in non-Oil sectors like Finance, Retail, Manufacturing, even IT!

What Are Rare Earths and Why are they so important, especially now?

Rare earth metals (REM), rare earth elements (REE), and rare earth oxides (REO) are terms for 17 elements on the periodic table. Examples being Lanthanum, Cerium, Yttrium, Terbium, Scandium, Erbium, etc.

Despite their name, rare earth elements are relatively plentiful in Earth's crust. E.g., Cerium is the 25th most abundant element in the world (even more than copper!). Because of their geochemical properties, rare earth elements are typically dispersed and not often found concentrated in rare earth minerals. Hence, commercially feasible / economically exploitable ore deposits are sparse (possibly the main reason why they are called "rare"!).

In terms of their usage, compounds containing rare earths have diverse applications in electrical and electronic components, lasers, glass, ceramic, magnetic materials, and industrial processes.

In today’s context, it is these rare earth metals that go into making the chips and other applications which are used in various fields, viz, computers & accessories, cars, rockets & satellites, aeroplanes & missiles, ships & submarines, mobiles & telecom towers, retail super market kiosks & checkout counters, plants & machineries, X-ray machines & lasers, EV cells & LED bulbs, et al.

Its therefore a no-brainer that countries “already having” or “finding a way to own” the lion’s share of these rare earth metals and control their supply chain, will drive the future geo-political & economic landscape and be the next big superpower(s).

Which Nations are Having & Producing the bulk of the Rare Earth Metals?

As per an article published in Rare Earth Investing on June 16, 2021, the total global rare earths reserve amounts to 120 million MT.

Of these reserves, the top countries are: 1) China (44 million MT, 2) Vietnam (22 million MT), 3) Brazil (21 million MT), 4) Russia (12 million MT), 5) India (6.9 million MT), 6) Australia (4.1 million MT), 7) US (1.5 million MT), 8) Greenland/Denmark (1.5 million MT)

However as covered earlier, commercial extraction of rare earths is a tough proposition. Along with that, quality of the rare earth (soft or hard) is another big factor in defining who are the actual leaders in rare earths.

A closer look at China, and What is China up to?

Though the first 4 rare earth elements were discovered in Sweden starting way back in the late 18^th century, it was China who first foresaw the long-term strategic value of rare earths and has been early in the game. Since the last decade China has built up a near-monopoly in the extraction, production, and supply of rare earths. This is at the cost of most other countries with sizeable rare earths reserve who are still struggling to master the technology to economically extract these rare earths! This has enabled China to project its power ambitions and capabilities globally, to the extent of threatening the US & it’s allies to cut off supply of their rare earth metal requirements, as per its whims.

However, like with Oil, Rare Earths are also a finite resource. China’s own rare earths reserve and production capability have also been steadily declining over the years. This has led it to smartly “invest” (again earlier than other countries!) in other rare earths-rich countries like Madagascar, Afghanistan, Myanmar, Greenland, etc., to ensure its continued access to the sourcing of rare earths. All these investments possibly are being made under the garb of China’s Belt & Road (BRI) / One Belt One Road (OBOR) initiatives which is now increasing being called out and seen as its infamous Debt-Trap diplomacy (Sri Lanka is a glaring and unfortunate current example!)

Further, amongst all the various news that China makes that impacts the world, one recent key one has been its steady outreach and long-term embrace of the Pacific Island Countries (PIC) Network, comprising of tiny island nations viz., Cook Islands, Fiji, Kiribati, Republic of Marshall Islands, Federated States of Micronesia, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

China is now working overtime to sign an umbrella agreement of partnership with the PIC Network. While its military objectives vis-à-vis the US, Australia & Japan are being ascribed and reported as the prime motive of China behind this move, another key objective however remains hidden! The Pacific Ocean bed is another rich rare earth metals source (with reserves yet unknown), which is yet to be tapped. China wants to again leapfrog other countries, and how easier can it get done than by getting the PIC Network sign an innocuous deep-sea mapping and mineral exploration agreement with China?

If we thought all the above strategies were the most that China can do to ensure continued and predictable supply of rare earth metals for themselves, we would be wrong! Recently a news snippet caught my attention. NASA purportedly claimed that China’s investments and explorations in the space domain (especially its Permanent Space Station, the Moon landings, Anti-Satellite missile tests/ASATs, etc.) are all about China’s efforts to colonise the Moon in the long run and ensure that the Moon is out of bounds for other countries! It was also further reported that the Chinese official spokesperson of course vehemently denied the same.

Who will Win the Race?

To conclude, the war for Rare Earth Metals is in full swing. The battles are being conceptualised and fought on the Earth, beneath the Oceans & on the Moon! China has an undeniable decisive lead at this juncture and is running away fast to claim the spoils of this war!

It should be a rude wake-up call for other countries to prioritise their strategies, collaborations and investments on Rare Earth Metals, before China towers as the only superpower dominating the world in almost all aspects of life, till the foreseeable future and/or till the next big-ticket innovation / disruption / evolution.

It will be interesting to see how countries like the US, Russia, Japan, the EU, India, etc. (in isolation or in alliances) are and will play out their parts in this resource war. More on that, in another blog.

A Blog Series on Geo-Politics & Geo-Economics

Dated: July 24, 2022

Author: Subham Sarkar (https://www.linkedin.com/in/subham-sarkar-519b7114/)

Disclaimer: The contents of this blog are authored purely in an individual capacity and based on the personal opinions of the author.