[ad_1]
A simple visit of an obscure factory by Chinese President Xi Monday is all that has been done for China to consider cutting the supply of critical materials to the United States and paralyze large parts of its industries. In addition, fueled by the political insinuations of Xi's recent appeal to a newLong walk"In reference to a founding principle of the Chinese Communist Party, speculators are increasingly suspicious of China's export restrictions on the United States, including rare earth minerals.
As the world's largest producer, the Middle Kingdom has control over rare earths.
Rare earth minerals, also known as "chemistry vitamins", are a group of elements used in the manufacture of a wide range of equipment in small doses to produce powerful beneficial effects. These minerals are widely used in smartphones, batteries, turbines, lasers, electromagnetic guns, missiles, advanced weapon sensors, stealth technology and scrambling technology. For example, lanthanum is used in lighting equipment and camera lenses; neodymium in hybrid vehicles; praseodymium in aircraft engines; europium in nuclear reactors and gadolinium in MRIs and X-rays. Petroleum refiners also use rare earth catalysts to turn crude oil into gasoline and jet fuel.
China has produced more than 90% of the global supply of these essentials over the last decade, but its share was less than 71.42% last year.
In 2018, the US Geological Survey identified 35 minerals for the economy and national security of the country. America is highly dependent on the import of these minerals, producing less than one-tenth of the world's supply and importing half of what it consumes. It clearly highlights the soft belly of the United States.
It is therefore not surprising that rare earth minerals are among the few products that have escaped Trump's latest tariffs.
(Click to enlarge)
Source: TRT World
What's the problem?
President Trump's order last week to ban Huawei, China's biggest tech company, from doing business with US companies could be the last straw that drives the Asian nation to act relentlessly (though Huawei was suspended for 90 days).
Related: China on the verge of defying US sanctions against Iran Once again, Beijing has received a strong geopolitical influence and will probably weigh the weapons of its arsenal that it can use to fight back – and the rare earths are among the most powerful. As usual, Beijing has maintained a deafening silence on the subject, leaving the media of its animated states to make the main speech:
"It is normal for the senior leader to investigate relevant industrial policies. I hope everyone can interpret it correctly.
Meanwhile, the Global Times has been jubilant, "The United States needs rare earths, an asset for Beijing".
At this point, it is still only speculation, but assuming that the worst happens and that Beijing chooses the option called "nuclear"?
In the short term, the situation would become rather gloomy for the hordes of American industries.
Quoted by ReutersRyan Castilloux, founding director of Strategic Metals Consulting at Adamas Intelligence, says the automotive, renewable energy, defense and technology sectors will all suffer. There are still no precise figures on the extent of the economic damage, but it would seem that if China closed the tap of critical materials, it would directly affect large parts of the American economy.
It would essentially be like calling the technology industry a few decades back.
It is therefore natural to wonder why the United States has exposed itself in this way.
Related: OPEC faces an existential crisis
In fact, the country was the largest producer rare earth from the 1960s to the 1980s at its Mountain Pass mine in California. The treatment plant was closed for environmental reasons in 1998 and the entire site was decommissioned in 2002 to remain in the toxic wastewater. In short, the country's position is: the exploitation of rare earths is an expensive, messy and dangerous affair; why not let someone else do it?
To make matters worse, the US mine still relies heavily on Chinese companies for processing, again for environmental reasons.
(Click to enlarge)
Source: The Verge
An asset in the hand of Beijing?
However, some experts are not convinced that the crippling scenario described here would necessarily occur in this way.
Tim Worstall, a former rare earth trader, told the Edge that an embargo on China would cause only temporary pain in the United States, that they would be able to resolve before long. Critical operations such as the army and defense probably have enough stocks to survive such a ban.
It turns out that not all rare earths are so rare, the United States Geological Survey (USGS) classifying 17 of these as "moderately abundant" with significant deposits in the United States, Canada, in Brazil, India and Australia. The major problem for the United States would not be the lack of these resources as such, but the speed with which they could increase the production of their existing facilities – and possibly increase.
Eugene Gholz, associate professor at the University of Notre Dame and rare earth expert, also told Verge that a similar conflict between China and Japan offered valuable lessons. In 2010, China had cut rare earth exports to Japan, but the island nation was no less resistant to wear and tear. This is because prices have skyrocketed, prompting Chinese smugglers to develop systems to deliver goods away. At the same time, production in other regions grew rapidly, while Japanese manufacturers sought ways to use less materials.
It may have been almost ten years ago, but the United States would probably get even better, given the even greater extent of economic integration across the world. the world.
By Alex Kimani for Oilprice.com
More from Reading Oilprice.com:
[ad_2]
Source link