Of metals and rare earths

Source– The post is based on the article “Of metals and rare earths” published in Business Standard on 14th January 2023.

Syllabus: GS1-Geography,GS2-International Relations

Relevance: Minerals related Distribution of resources across the world

News- The article explains the need to diversify sources of rare earth minerals.

The news that Sweden has just discovered a large deposit of rare earth minerals sparked off thoughts about “atmanirbhar” in this vital area.

What are the rare earth metals?

Rare earths are a class of metals. Their oxides need to be used in small but significant quantities to make electric vehicles, mobile phones and sundry other consumer electronics, besides wind turbines and solar energy units.

Renewable energy, therefore, depends on these metals.

What is the distribution of metals and rare earth metals across the world?

China has a hammerlock on global mining and production of rare earth oxides. It has 44 million tonnes of proven reserves (2021), estimated at one-third of known global reserves.

China has a 60% of the world’s market share.

The US has a 15-16 per cent market share and Myanmar (with the help of China) holds around 9.5 per cent. India has around 1 per cent market share.

By all accounts, Chinese mining and refining methods of these are fairly carbon-intensive and there have been reports of severe environmental degradation caused by Chinese mining practices.

What are the barriers in diversifying supply chains?

The barrier is really the cost. Given the scale of the opportunity and enabling policies, supply chains can be diversified if it’s made in sufficient quantities with policy support, it may become globally competitive.

However, if you don’t have domestic rare earths in sufficient quantities, you need to import from China. This has hard-to-model implications for geopolitics.

China is also the dominant player in many other elements of global energy and electronics supply chains, including solar panels, wind turbines, electric vehicle batteries, electric vehicle drive trains, dynamos, alternators, and semiconductors.

What is the way forward?

For other elements, US has looked for additional local reserves.

Japan has examined the possibility of undersea mining

Indeed, many nations have domestic capacity and India aspires to join that club with its multitude of production-linked incentive schemes.

This means nations can switch suppliers at need.

In contrast, rare earths have a single-supplier, and China will remain the go-to supplier for the foreseeable future.