COMMERCIAL WAR WITH THE UNITED STATES

PEKIN'S ARMY RARE EARTHS

Rare earth?

It is a set of 17 metals essential to advanced technologies, found in smartphones, plasma screens, electric vehicles and weapons.

In detail, the rare metals include scandium, yttrium and the fifteen elements of the group of lanthanides. These mineral materials have optical and magnetic properties used in the manufacture of high performance permanent magnets, which themselves are used for wind, electronics, robotics and arming.

Contrary to what their name suggests, rare earths are relatively abundant but their electromagnetic properties - particularly sought after - make them "strategic metals". These seventeen essential metals for the manufacture of technological products are said to be "rare" because they are difficult to detect, to exploit and to isolate chemically.

China is not only the world's largest producer of rare earths, it is also the world's largest refiner and Washington is 80% dependent on the Asian giant for supplies.

The virtual monopoly of China

The Middle Kingdom produces 80% of the rare earths and serves almost two-thirds of the world's demand - even though the country has less than half of the world's reserves.

This quasi-monopoly is to be found especially in terms of the ease of extraction - and low costs - of these elements in clay sand in the south of the country.

But also on the side of environmental regulations less demanding than in other countries, such as the United States for example. China has agreed to "pay" the ecological cost of extracting and refining rare earths, which explains its dominance of the sector.

Rare earths give China an enormous political and economic leverage against the United States. The trade war between the two giants has intensified since the Trump administration banned US companies from selling technology to Huawei. This decision could jeopardize the world number two of smartphones, soon deprived of a crucial supply of electronic chips.

If Beijing had hitherto been limited to innuendo, the tone has suddenly become more threatening at the end of the week. "If anyone wants to use products made from our rare earth exports to curb the development of China, then I think (...) the Chinese people will be dissatisfied," warned a senior official. powerful economic planning agency (NDRC).

What about the threat ?

Beijing intends to limit its exports of rare earth "to countries that turn against China," to quote the Chinese Minister of Commerce.

In the trade war against Washington, Beijing threatens to reduce its exports of rare metals, essential to many industries in the United States, including weapons.

The threat comes as new surtaxes come into effect Saturday in China on US products, in retaliation for the tariff increases announced by Donald Trump in early May on Chinese products.

If China put its threat into effect, the technology industry - American in particular - could end up in an uncomfortable situation.

But despite its near-monopoly on supply, China is not the only country with significant resources. Brazil and Vietnam each have estimated deposits of 22 million tonnes out of a global total of 120 million, according to the US Geological Survey (USGS). China's reserves are estimated at 44 million tons. And any restriction on rare earth exports could trigger a hunt for alternative sources.

Despite all the impact on US manufacturers could be disastrous causing the closure of almost all assembly lines of cars, computers, smartphones and aircraft if China decided to impose an embargo on these materials.

In 2010, had China not already used this means of pressure against Japan in a dispute over the Senkaku Islands ?