The United States is unable to replace the supply of rare earths to China, warns the CSIs

Workers carrying soils containing rare earth elements for export to a port of Lianyungang, Jiangsu province, China, October 31, 2010.

Stringer | Reuters

As China imposes export controls on rare earth elements, the United States could not do the potential false fever, according to the Center for Strategic and International Studies, which could threaten Washington's military capacities.

In the midst of US President Donald Trump's growing prices on China, Beijing earlier this month has imposed export restrictions on seven rare earth elements and magnets used for defense, energy and automotive technologies.

The new restrictions that include elements of average rare and heavy land Samarium, Gadolinium, Terbium, Dysprosium, Lutétium, Scandium and Yttrium will oblige Chinese companies to obtain special licenses to export resources.

Although it remains to be seen exactly how China will implement this policy, the CSIS report, published on Monday, warns that it will probably take a break in exports, because Beijing establishes the license system and will cause disturbances in the supply of certain American companies.

The New York Times reported earlier this week than a break in exports of rare land elements in China was already performing.

While China effectively holds a monopoly on the supply of global treatment of rare land, such restrictions are a serious threat to the United States, in particular its sector of defense technology.

“The United States is particularly vulnerable for these supply chains,” warned the CSIs, stressing that rare earths are crucial for a range of advanced defense technologies and are used in types of hunting jets, submarines, missiles, radar systems and drones.

In addition to export controls, Beijing has placed 16 American entities, except one in the defense and aerospace industries on its export control list. The placement on the list prevents companies from receiving “double -use goods”, including rare earth elements aforementioned.

Not ready to fill the gap

According to the CSIS report, if China's trade checks lead to a complete closure of exports of rare and heavy land elements, the United States will be unable to fill the gap.

“There is no strong separation of rare land in the United States at present,” said the CSIS, although it noted that the development of these capacities is underway.

For example, the Ministry of Defense has set itself the objective of developing a full supply chain of rare land elements which can meet all American defense needs by 2027 in its industrial defense strategy 2024.

Since 2020, the DOD has started more than $ 439 million for the construction of domestic supply chains and strong rare earth processing installations, according to data collected by the CSIs.

However, the CSIs said that when these installations are operational, their production will fall below that of China, the United States was still far from reaching the DOD objective of an element independent of rare earth elements.

“The development of mining and treatment capacities requires long-term effort, which means that the United States will be on the back in the predictable future,” he added.

President Trump also sought an agreement with Ukraine, which would give him access to his mineral depots of rare earths. However, questions remain on the value and accessibility of these deposits.

Implications

The CSIS report warns that export controls constitute direct threats to American military preparation, stressing that the country is already late in its defense manufacturing.

“Even before the latest restrictions, the industrial basis of American defense fought with a limited capacity and did not have the capacity to expand production to respond to requests for defense technology,” said its authors.

They cite an estimate that China has acquired weapons systems and advanced equipment five to six times faster than the United States from an Air Force official in 2022.

“Additional prohibitions on the inputs of critical minerals will only widen the gap, allowing China to strengthen its military capacities faster than the United States,” concludes the report.

The United States is not alone in its concerns about China monopoly on rare earths, countries like Australia and Brazil are also investing in the strengthening of domestic chains of rare earth supplies.

The CSI recommends in the United States to provide financial and diplomatic support to ensure the success of these initiatives.

However, the new China export license system for rare earths could also encourage countries around the world to cooperate with China to avoid disturbances in their own elements, said CSIs.

A research report by Neil Shearing, chief economist of the group at Capital Economics, also noted how controls on rare land and critical minerals were part of the Beijing game book by pushing against Washington.

Shear notes that in addition to the grip of China on certain rare land, the supply of many other critical minerals, including cobalt and palladium, is concentrated in countries that align with Beijing.

“The armament of this control over critical minerals and breed by other countries to guarantee alternative supplies will be a central characteristic of a fractured world economy,” he said.

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