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US-China competition escalates over rare earths

09 August 2024 03:05

Rare earth elements and semiconductors have become essential to national development, a position previously held by oil and oil products.

Rare earth elements and semiconductors have emerged as crucial to national development, a role formerly occupied by oil and oil products, Caliber.Az reports citing the foreign media.

Despite ongoing competition between the US and China, the latter controls 90 per cent of the global rare earth supply, turning these elements into strategic tools.

China’s Civilian-Military Integration Strategy aims to advance technology, bypass US sanctions, and leverage rare earths to disrupt the global supply chain, posing a challenge to the US and the European Union.

In response to China’s dominance, countries are exploring domestic sources or alternative supply chains. Belgian chemicals group Solvay is stepping up to address this need. According to Reuters, Solvay plans to begin supplying rare metals for permanent magnets and electric vehicles from its refurbished plant in La Rochelle, France, by early 2025. The facility is set to meet 30 per cent of Europe’s permanent magnet needs by 2030 and is the only European plant capable of processing both light and heavy rare earths on an industrial scale.

Solvay's launch of its refurbished plant in La Rochelle is timely, aligning with the EU's push to decrease reliance on Chinese imports and bolster domestic production. The company is actively engaging with Europe’s leading automotive and turbine manufacturers to secure contracts.

Solvay recently reported a better-than-expected core profit for the second quarter, driven by increased volumes that offset the impact of unfavorable pricing. The company’s earnings before interest, taxes, depreciation, and amortization reached 272 million euros (around $294 million), surpassing 261 million euros anticipated by analysts.

The EU's new legislation sets ambitious goals for material independence. By the end of the decade, the EU aims to mine 10 per cent, recycle 25 per cent, and process 40 per cent of its critical minerals domestically. Furthermore, the law restricts reliance on any single country for more than 65 per cent of rare earth supplies.

Permanent magnets, crucial for electric vehicle motors, batteries, wind turbines, and various electronic devices, rely on rare earth elements like neodymium and dysprosium. Despite their importance, an EU study highlights China’s dominance in the production of these essential materials, leaving the EU heavily dependent on imports.

In an interview with Nikkei Asia, Philippe Kehren, Chief Officer at Solvay, highlighted the global shift towards sourcing rare metals from countries outside China due to the latter’s stringent regulations on its rare earths industry. Kehren emphasized that “regionalization” will increasingly benefit customers as new Chinese regulations, set to take effect in October, will likely prompt other players to explore mining opportunities elsewhere.

China dominates the rare earth market through domestic extraction, as well as importing and processing these metals. Recently, the Chinese Government has introduced tighter measures to exert greater control over these critical resources. The State Council has declared rare earth metals as state property, prohibiting any encroachment or destruction of these resources. With the new regulations, starting in October, the government will utilize a traceability database to oversee and regulate the extraction, use, and export of rare earths.

Caliber.Az
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