China Mulls Rare Earth Mineral Export Restrictions

Disrupting the U.S. defence sector . . .

The Chinese Ministry of Industry and Information Technology is reportedly contemplating export restrictions on 17 rare earth minerals used as components in high-technology devices, including electronic displays, power systems, and magnets. If implemented, the move is expected to disrupt the United States’ defence supply chain and its ability to manufacture advanced weaponry. According to Natural Resources Canada (NRCan), China accounted for 62 per cent of the global annual production of rare earth minerals in 2019.

U.S. mitigating rare earth mineral dependence . . .

Some Chinese industry executives and officials question whether the export restrictions would be effective, as they may merely motivate other countries to ramp up their production capacities. In fact, in 2019, as U.S.-China trade tensions were intensifying, the U.S. Commerce Department released a report urging the government to take steps to secure the country’s supply of critical minerals to reduce the U.S.’ reliance on “sources of critical minerals that could be disrupted.” Last August, the U.S. Department of Defense signed a contract with Australian rare earth mining company Lynas to build a processing facility in Texas.

Opportunities for Canada . . .

The news of possible restrictions on Chinese rare earth exports comes on the heels of the Joint Action Plan on Critical Minerals Collaboration, a U.S.-Canada initiative finalized last month. According to NRCan, the Action Plan will facilitate co-operation in areas including “efforts to secure critical minerals supply chains for strategic industries and defence.” As Canada already supplies 13 of the 35 minerals that the U.S. has designated as critical for its economic security and national defence, Canada could see greater trade and investment opportunities in the U.S.’ rare earth mineral sector in light of the potential Chinese export control.

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