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trade war: will china use ‘nuclear option’ of banning rare earth exports to us?

by:Newland     2019-10-18
As China seeks to retaliate against the United States in a rapidly escalating trade war, a potential target is rare earth metals, especially for the technology sector, which is imminent.
These minerals are critical to the production of parts for electric vehicles, which can support Apple\'s iphone\'s audio and camera systems and help American missiles reach their targets.
These elements-little known in addition to chemists, geologists and professional manufacturers, until their political importance has become more evident in recent years-are also mined and refined mainly in China.
As trade tensions escalated, analysts questioned whether Beijing would take advantage of its dominant position in the industry, the nuclear option \", as an inspection of US President Donald Trump\'s efforts to impose tariffs on almost all goods exported from China, he tried to change China\'s industrial and trade policies over the years.
Speculation became rampant this week after Chinese President Xi Jinping and his chief trade negotiator were photographed at a rare earth mining and processing plant in eastern China\'s Jiangxi province. A key area for mining rare earths for electric vehicles.
Shares of Chinese rare earth companies have soared since the visit, as investors expect some rare earth supplies to tighten and prices to rise.
So the price
The heavy rare earth, known as the heavy rare earth, for electric vehicles and defense applications, has risen 30 age points this year, says Helen Liu, senior analyst and head of metal and mining research at Argonaut, Hong Kong.
\"From my point of view, I think it\'s a bit reckless for China to ban exports of rare earths directly to the US,\" Liu said . \".
\"There are always ways to have a similar impact . . . . . . Maybe we want to reduce our exports to everyone.
This is a possible scenario.
Liu said she believes China will eventually reduce rare earth exports to meet domestic demand, regardless of the trade war.
\"We all know that China needs rare earth for electricity.
The auto industry, \"Liu said. “Electric-
Car production is very strong-it is growing at double-digit rates every month, doubling this year from last year.
Demand for rare earths is very strong.
\"A key point to focus on will be June, and China is expected to set a quota for rare earth mining in the second half of this year.
She said the quota for the first half was 60,000 tons, the same as last year.
Despite the Trump administration\'s threat last year, rare earths are one of the few categories of products to avoid US tariffs.
China has imposed retaliatory tariffs on the United States
In June 1, the production of rare earth elements and several categories of these minerals will face up to additional tariffs.
The chemical and physical properties of these 17 elements are similar and sometimes difficult to pronounce, such as la, nd, and yb.
They are richer than precious metals such as gold and platinum, but they can be difficult and expensive to refine and extract.
They are used to provide precision polishing for flat plates
Panel Display, remove impurities in steelmaking, and manufacture optics used in incandescent lamps and LED lights.
Some are even used as pigments in ceramics.
According to the U. S. Geological Survey, the United States has dominated the industry in the past, and it was not until the age of 1980 that it became the world\'s leading miner, when it was replaced by China.
Lower labor costs and loose environmental standards are some of the reasons for mining\'s migration from the United States.
Last year, China accounted for 7 tons per 10 tons of rare earths mined globally, the largest exporter of rare earths in the United States, according to the Geological Survey and the US International Trade Commission.
In addition, China has begun to create an ecosystem that not only extracts raw materials, but also produces components that depend on rare earths, such as magnets that are critical to missile navigation systems and for highpower lasers.
China\'s unwavering dominance in the market has raised concerns among businesses and policymakers, especially as China used to use it as a weapon.
On diplomatic occasions-
In 2010, after a Chinese fishing boat collided with a Japanese patrol boat near the disputed islands, China temporarily restricted the export of rare earth materials to Japan.
China has not publicly acknowledged the restriction.
In the same year, as the number of rare earths used globally in clean energy and defense technologies continues to increase, Beijing imposed quotas, permits and taxes on rare earths.
After complaints from the United States, Japan and EU members to the World Trade Organization, China lifted the restrictions in 2014.
Frankie Chan, senior research analyst at Emperor Securities in Hong Kong, said Xi\'s visit to Jiangxi may be aimed at sending a \"strong message\" to the United States \".
\"We have seen China use these as an effective means of retaliation,\" Chan said . \".
\"Maybe there will be some follow-up after June --up action.
Now, it\'s just a message-I have the upper hand in rare earth.
If we move on without any improvement, I will retaliate.
President Trump and President Xi Jinping are expected to meet during the G20 summit in Osaka at the end of June.
Jackie Chan said he expects Beijing to start with a small quota or limit and gradually increaseby-
Step base if things don\'t improve.
S. Government Accountability Office, an independent, non-
Three years ago, party agencies warned that China\'s dominance \"could pose a risk to the continued supply of rare earth materials for future defense applications \".
Yamaguchi mine in San Bernardino County, California is the only rare earth producer in the United States, and its raw materials are refined in China.
The mine was acquired in 2017 by a US consortium backed by China Sheng and Resources Holdings from bankruptcy.
On Monday, Australian mining company Lynas Corporation Blue Line, a US chemical company, announced that they had signed a memorandum of understanding to develop a factory in Bendo, Texas, that produces separated heavy rare earth products, \"Narrowing the critical supply chain Gap for US manufacturers \".
Concerns about availability and rising prices have prompted technology manufacturers to find ways to recycle and reuse rare earth materials from their equipment and have led governments around the world to step up their exploration efforts.
Japanese scientists recently announced that they had discovered a rare earth enrichment deposit on the bottom of the sea about 2,000 kilometers southeast of Tokyo.
While tensions between the world\'s two largest economies are intensifying, Ryan Castillo, general manager of Amsterdam\'s Adamas Intelligence, said he doubted whether China would ban exports of rare earths to the United States.
\"In very extreme cases, this will be the last leverage,\" Castilloux said . \".
\"Once China uses its rare earth advantage as a political tool, it will drive end users to find alternatives.
Viola ZhouMore from South China Morning Post added: For the latest news about South China Morning Post, please download our mobile app. Copyright 2019.
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