The response of the Chinese administration to the tariff pressure to which the United States wanted to submit in early April was immediate: significant restrictions on the export of rare earths. A measure that ended up relaxing this week, with the concession of export licenses for six months. A truce to which the United States accessed another of the key elements in this commercial war: the admission of Chinese students in American universities.
These are one of the most important pieces of the geopolitical board: they are scarce chemical elements, difficult to extract and refine, and a key resource for the technological, automotive and energy industry, among many others. China is controlling access to these elements to defend their interests, but the key is not just to isolate its rivals of this precious material: it is in the disability outside of China to take advantage of them.
China is the fundamental piece in its prosecuted. China controls rare earth production by 70% and 90% processing them. In the case of heavy strange earth, a subgroup of them even more scarce, their participation in the refining is 99%.
According to The New York Times, China has up to 39 university programs so that its students can train and develop their career in the chemical industry specializing in this field. It is just a sample of the importance it has for the country led by Xi Jinping to continue controlling this geopolitical weapon.
This graph is the best visual test of China’s domain in rare earths.
The access toll. Although the focus on how they are affecting the restrictions on the export of rare earths to the supply chain is currently, there is a key that has gone unnoticed: the real problem is not access, it is the difficulty of working even in the case of obtaining them.
When the Ministry of Commerce of China and the General Administration of Customs imposed access controls to the export of medium and heavy rare earths, the supply chain staggered. From their entry into force, all exporters were obliged to obtain specific licenses for each shipment, even if they are products in which they have already been refined, such as magnets.
Why touch the rest. These licenses are a complex bureaucratic process, slow and studied case by case. Although the primary political objective is the United States, European companies that need heavy land (or materials manufactured with them, such as magnets), are seeing supply interruptions.
Suzuki has already stopped the production of the Swift in Japan due to the scarcity of pieces, Musk is having trouble building their robots and, in Europe, the secretary general of CPA (European Association of Automotive Suppliers) made an urgent call: production is entering the paralysis phase.
“With a deeply interconnected global supply chain, China’s export restrictions are already paralyzing production in the European supplier sector.”
The magnet as geopolitical treasure. William Huo, Ex-Intel and one of the most prominent figures in the critical analysis of Western industrial policy, summarizes it in the best possible way: West has been focusing on optimizing spreadsheets instead of factories, and now it is not able to manufacture a single magnet.
The industry depends on the Chinese refining of rare earths to manufacture high performance magnets. Without them, there is no competitiveness in electric cars, defense, nuclear or consumer technology.
The rest is not prepared to refine rare earths. “Middle East has oil. China has rare earths.” They are words of Den Xiaoping in 1992, who was the top leader of the People’s Republic of China. The country has been acquiring the necessary knowledge to extract and refine these materials, while the rest of the world enjoyed a comfortable (and economic) dependence.
West has tried to self -abuse with at least 10% of the remaining rare earths. Countries like Norway and Sweden are finding new deposits, and have confirmed the intention of exploiting them not beyond 2030. None of this is enough. Refining is the main bottleneck for the use of rare earths in industry, an expensive, sensitive process and with complex waste management.
In WorldOfSoftware | China has built the most elegant economic power lever in modern history: rare earths
