RARE earth elements (REE) producers are advised to plan and execute whole chain of production rather than just parts of producing REE operations to break the China monopoly.
This was the opinion of the head of the world’s biggest rare earths producer outside China, Amanda Lacaze, the Chief Executive Officer of Lynas, Malaysia.
That was her indirect advice towards the Australian government proposal about opening up a US$3 billion (RM12. 45 billion) pool for defence contractors to help fund the development of new mines producing REE and other so-called “critical minerals”.
The Australian quoted Lacaze as saying that the Australian government funding plan for new projects was pointless if the raw material was sent to China for processing.
It's also just wasting taxpayers money if such development plans don't include investing in downstream processing.
“It’s not just about digging more stuff out of the ground. The big issues are about processing and the downstream value-adding steps.
"These are more complex, richer areas for governments to explore. It has to be whole-of-supply chain. It’s no use starting a mine then exporting the concentrate to China, because you’re back in the same situation," said Lacaze.
China not only dominates mining of REE but also the processing and conversion of the materials into alloys, metals and magnets, critical ingredient in hi-tech production is of mobile phones, wind turbines, electric cars and fighter jets, to mention a few.
Other suppliers of REE include Japan, Russia, France, United States, India and Brazil.
Lynas Malaysia has played a big part in stopping China from monopolising the REE industry with the world more conscious of the effects if they are dependent on Beijing for the minerals.
In 2010, for example, China reduced its REE exports to Japan, the US and the European Union by around 40 per cent after the detention of Chinese fishermen by Japanese authorities.
China is also making moves to solidify its grip on REE resources, according to an analysis by Norbert Chang, Research Assistant, Indo-Pacific Research Programme and published by Future Directions International.
It said ‘possessing mine-side supplies is only half of the equation; innovation and the creation of more processing facilities are required to counter a monopoly of REEs’.
"For instance, China looks towards Afghanistan to secure the estimated US$1 trillion in REE deposits in Helmand province. That figure equates to about 1.4 million metric tons of REE.
"That motivates Beijing to negotiate Kabul’s involvement in its Belt and Road Initiative (BRI) project, especially now that the US appears to have decided to withdraw from the area," said the analyst.
Furthermore, Beijing has also increased its grip by adding the number of patent registrations for processing REE.
"Between 1950 and October 2019, China registered 25,911 patents, versus 9,810 registered by the US, 13,920 by Japan and 7,280 by the European Union," said Chang.
In short, it is now critical for more governments to get involved if new, non-Chinese sources of supply are to come to market.
The Australian quoted Northern Minerals managing director George Bauk as saying that China’s dominance in REE meant the free market was not working to stimulate needed development.
“If free markets aren’t strong enough to support new projects because the economics aren’t sound enough to drive multi-hundreds of billions of dollars of investment, that’s why governments are trying to work out how they play in a space governments don’t traditionally want to play in,” Bauk said.