How rare earths got caught in the trade war
Published: Friday, 21 June 2019
A look at Fastmarkets' latest rare earth coverage
Rare earths, a group of 17 elements with a
unique magnetic and physical properties and a wide range of
high-tech applications, have been thrust into the spotlight by
the threat of export restrictions from China.
Relations between the United States and
China have been souring ever since Donald Trump was elected US
president after a running a campaign based in part on a pledge
to boost domestic industry and exports.
Trumps promise's have bought him into
conflict with the Chinese government, which he accuses of
manipulating foreign exchange routes, stealing intellectual
property and imposing excessive tariffs to the detriment of US
The frosty relations have driven a series
of tit-for-tat tariff increases - while the Chinese have been
targeting US agricultural goods, the US imposed tariffs on a
huge swathe of imports.
Matters came to a head in May 2019 when
the latest failure of negotiations saw tariffs doubled to 25%
on a wide range of goods.
At the same time, rare earth prices in
China rose - a ban on imports of rare earth ores from Myanmar
restricted supply. And the Chinese government started to make
heavy hints that it could hit back at the US with a ban on rare
China is the world’s leading
miner of rare earth ores and is dominant in the production of
rare earths. Most material mined globally is shipped to China
There are also concerns that other minor
metals, even if they are not technically rare earths, could be
caught up in the trade restrictions.
Market sources are skeptical about the
real risk of Chinese export restrictions. The consensus is that
even if a ban were enacted, and proved effective, it would only
serve to increase production and processing outside China. Some
even questioned if China had the ability to stop exports, given
the relatively small volumes involved.
But if the threat of export restrictions
has buyers unconcerned, it has proved a boon for non-Chinese miners and
processors, including Australian miner Lynas, US company
MPM and several juniors.