China concedes ground to US over rare earth metals [delayed]

China concedes ground to US over rare earth metals [delayed]

As part of continued efforts to resolve its long-running trade conflict with the United States, China recently raised its production quota of rare earth metals to a record 132,000 tonnes. Additionally, customs data published in January showed that China’s exports of rare earth magnets to the US increased by 12% last year, its highest level since the trade war began in 2017.

Rare earth metals – an arcane group of 17 minerals such as samarium cobalt and neodymium – are widely used in consumer electronics and weapons manufacturing, including in precision-guided missiles, infrared sensors and F-35 jet engines.

Until the late 1990s, the US was the world’s largest producer of rare-earth metals. Since then, China has leveraged its ample reserves to assume control of the sector, today accounting for 75% of global mined supply. This dramatic transformation played a key role in last month’s Phase One trade agreement.

According to people familiar with proceedings, concessions over rare earth metals were a major stumbling block to securing a deal. In the end, Beijing reluctantly agreed to raise its exports of rare earth products in exchange for greater access to US consumer markets.

Mindful of its supply shortfall, the US Defence Department is keen to stockpile China’s mineral magnets before building up inventories with strategically aligned producers like Australia, Canada and Greenland.

America is thus in the process of reversing its reliance on a strategic rival for rare earth metals, whilst simultaneously strengthening international supply chains as well as boosting domestic production.

The upshot is that China’s recent customs data can be viewed as part of a wider US strategy to bolster its military heft amid Beijing’s rapidly growing political influence. President Trump, ever mistrustful of government intervention, has thus welcomed it as a means of holding China back.