The rush for rare earths carries great geopolitical risks

The writer is rector of the Institute for Humanities in Vienna and presenter of “The Scramble for Rare Earths” on BBC Radio 4

The war in Ukraine has shown how over-reliance on a single supplier can be inadvisable. Russia’s dominance of the European gas market has turned into a geopolitical nightmare in the space of a few weeks.

Imagine if a single country provided you with 90% of your essential commodity needs. Now imagine how you would feel if that country was China. In fact, we don’t need to use our imaginations because that is exactly the reality of rampant consumption of rare earth metals in Europe.

About five years ago, the West began to take notice of this delicate situation and decided to do something about it. But, as the EU, UK and US strive to diversify supply chains for rare earths and other critical raw materials, they are discovering that it is not so easy. Left to itself, the market will never be weaned from Chinese production. Governments must intervene.

It is difficult to overestimate the importance of China’s mastery of critical raw materials. There is no green transition, no internet, no medical nano-research, no advanced weaponry, virtually no technical solutions to our planetary problems, without them. The father of China’s economic revolution, Deng Xiaoping, understood their importance, noting: “The Middle East has oil. China has rare earth metals.

Rare earth metals are actually not rare. Most countries in the world have large reserves of it, if not always accessible. But extracting them involves overcoming two challenges. Extracting tiny amounts of the 17 rare earth metals requires removing many tons of aggregate and rock. Without rigorous controls, this operation is very polluting.

Next comes the separation of the metals followed by their preparation for use in high-power magnets, laser technology or the anti-counterfeiting device for euro banknotes. It’s expensive and China can get you the finished product for 30% less than anyone else. Hence the market’s lack of interest in taking geopolitical considerations into account.

It wasn’t always like this. China’s dominance is the product of successive US administrations’ decision from the late 1980s to make China the heart of US manufacturing. One of the industries that America moved across the Pacific was the mining and processing of rare earths. Until now, the United States enjoyed a monopoly on both thanks to the rich seams of an area of ​​the Mojave Desert called Mountain Pass.

In 2017, the EU formed the European Raw Materials Alliance to start diversifying. At the time, China supplied 98% of its rare earth needs. Five years later, China still supplies 90% of the world’s rare earths – so progress of sorts, but at a snail’s pace.

However, the EU has entered into two strategic partnerships since the formation of the alliance. One is with Canada. The problem is that the second agreement concerned Ukraine, which has other problems to deal with at the moment. SecDev, a Canadian company that provides strategic advice, investigated Ukraine’s mining assets. Its co-founder, Rob Muggah, explains that “Ukraine has deposits of 117 of the 120 most used minerals and metals. At least 40 of them are needed for the green transition. It is a resource superpower.

SecDev discovered, adds Muggah, “that about 2,000 of these deposits were under Russian control. And what that meant in title terms was that about 20% of all of Ukraine’s natural wealth was in Russian hands.

Russia is also part of the rush for rare earths. Olivia Lazard of the Carnegie Endowment found evidence that Ukraine was a target for the Russian military not only as a symbol of imperial decline, but also because of the significant strategic economic interests involved.

British, European, North American and Australian companies are now systematically investing in mining and processing. But so far, it’s just a drop in the ocean. Guillaume Pitron, author of The war of rare metalssays that over the next three decades, “the world will consume more metals and minerals than all the metals and minerals we have consumed in the past 70,000 years”.

Stopping the climate emergency is not just about ditching fossil fuels. This requires building an entirely new system of energy production and consumption, which itself contains enormous environmental risks if not done correctly. But the greater risk is that the very resources that offer little promise for our survival will turn the world once again into a cauldron of geopolitical competition.