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ChinaThe president has promised to delay for a year his latest restrictions on exports of rare earths as part of a trade deal that is vital to many high-tech products. donald trump Secured creates an opportunity for the US and its allies to increase their own production and processing capabilities. But it will be difficult to reduce China’s grip on the market.
Rare earth sanctions imposed by China have been a major issue in trade talks between the two countries this year Beijing And WashingtonTrump reacted angrily to China’s latest rules by threatening to impose additional 100% tariffs on all Chinese imports, but he has dropped that demand as part of the deal.
This week’s deal will delay rules that require foreign companies to seek special clearance to export goods that contain even small traces of rare earth elements sourced from China, even if those products are made by foreign companies elsewhere, but it does not eliminate restrictions that were imposed in the spring after Trump imposed the tariffs.
These vital minerals are needed in a wide range of products, from jet engines, radar systems, electric vehicles and robots to consumer electronics including laptops and phones. China accounts for about 70% of the world’s rare earth mining. It also controls approximately 90% of global rare earth processing.
Neha Mukherjee, rare earths analyst at Benchmark Mineral Intelligence, said the one-year delay in China’s new rare earth export controls, which were announced earlier this month, provides some short-term relief that will allow exports to return to more normal levels, but it does not change the broader strategic picture, and it is important for the US and its allies to continue investing in the industry.
“This move appears to be more tactical than structural, a pause to stabilize trade relations with the US rather than a change in policy,” Mukherjee said. “This is a temporary window for the US and allies to accelerate diversification before a potential return to control.”
The White House has prioritized reviving and expanding the domestic critical minerals industry, while also seeking supplies of these elements from allies. pentagon agreed to invest $400 million in rare-earth producer MP Materials and promised to ensure that every magnet made at its huge new plant was bought and set minimum prices for its neodymium and praseodymium products for a decade.
Ian Lang, an economics professor who focuses on rare earths at the Colorado School of Mines, said he thinks the U.S. and its allies can make significant progress in a year’s time to reduce China’s dominance in the rare earths market.
Several promising efforts are already underway. NovoOn will continue to produce rare earth magnets at its plant in Texas, and both MP Materials and USA Rare Earth are scheduled to begin producing magnets at their plants next year. And next year MP also plans to start processing heavy rare earths that China banned in the spring at the only operated US rare earth mine in Mountain Pass, California.
And Lang said other efforts to recycle rare earths and begin producing them as a byproduct at existing steel and zirconium mines could also begin to yield benefits. The United States’ recent agreement with Australia will also help provide additional material to counter China.
China has shown little sign of being willing to allow exports of rare earths to defense contractors, which is worrying given the national security implications. But military demand for rare earths is relatively low, so the US may be able to meet its needs by prioritizing rare earths from other sources for use in fighter aircraft, guided missiles, and nuclear submarines.
Industry executives have said it must be a “Manhattan Project moment” for rare earths if the United States is to break China’s stranglehold on rare earths.
“We are moving into overtime with China and currently have the ball on our 10-yard line. Our best defensive move is to tie together our global refining and supply partnerships with allies and invest rapidly in innovation in the United States,” said Wade Santee, president of American permanent magnet company AML.
Scott Dunn, CEO of NovoOne Magnetics, said that “the details of how China implements this suspension will matter greatly, and with the deal limited to one year, it is clear that the US should use this window to strengthen domestic capabilities and reduce long-term exposure to geopolitical risk.”
Lang said he is optimistic overall because the United States is not starting from scratch, and if these efforts continue at their current pace, the US will be in a much better place in a year, even if some of the things the government is investing in will take years to become a reality.
“Because in a year, we don’t really care what they do. We have an independent supply chain. At least I don’t think we’re too far from that,” Lang said.
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Associated Press writer Didi Tang contributed to this report from Washington.