[News] U.S. and Australia Seek Countermeasures, Impact of China’s Critical Material Ban Expected to Wane in the Long Run

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China has taken steps to assert state ownership over its rare earth materials necessary for semiconductor production by enacting a regulation that came into effect on October 1st. Also, the country’s Ministry of Commerce announced on December 3rd that the export of dual-use items involving gallium, germanium, antimony, and superhard materials to the U.S. will generally be prohibited.

According to Radio Taiwan International, China’s measures may have a noticeable impact in the short term. However, as other countries are trying to develop countermeasures and establish their own rare earth supply chains, the long-term effectiveness of this strategy might decline.

China Leads the World in Rare Earth Reserves and Production

Citing a researcher from Taiwan’s Institute of National Defense and Security Research, the report notes that China is the world’s largest supplier of rare earth materials due to its lack of strict environmental regulations, allowing for large-scale extraction and refining. The researcher indicates that China’s export restrictions will  have a significant impact, particularly in the production of solar cells, solar panels, and various semiconductor components. However, in response, many countries are already seeking countermeasures.

U.S. and Australia Expand Local Rare Earth Production Lines

Despite efforts to secure alternative rare earth supply sources, many countries remain reliant on China for refining, constrained by technical challenges and environmental regulations, as noted by the report. Consequently, countries like the U.S. and Australia are actively developing rare earth processing and refining capabilities.

For example, in May 2019, Texas-based rare earth processing company Blue Line Corporation announced a memorandum of understanding (MOU) with Australia’s Lynas Corporation. The report highlights that the collaboration aims to establish a rare earth extraction and separation facility in the U.S., addressing critical gaps in the U.S. rare earth supply chain.

Some countries are also exploring eco-friendly methods to recycle rare earth elements from various components, as the report notes.

The Rare Earth Battle May Shift to Patents for New Technologies

The report also mentions the potential for technological innovation to produce elements that could replace rare earths. However, according to the researcher cited in the report, developing and mass-producing substitutes to meet global demand will require significant time.

Notably, four high-performance rare-earth-free permanent magnet materials have reportedly been developed, but China has already secured patents for these materials. According to the report, the rare earth battle could intensify into a competition over substitutes and patents.

Read more

• [News] China Bans Critical Mineral Exports to U.S. in Response to New Trade Controls
• [News] Chip War Escalates: China to Enforce State Ownership of All Rare Earth Materials in October