China plays rare earth card as US, India dig deep

The TOI Correspondent from Washington: Dysprosium and Neodymium sound like the names of couple of medications, perhaps cough syrups. In fact, they are two "Rare Earth" elements from group of 17 in the periodic table that are critical for a range of technologies from missiles to wind turbines to EVs, and they made a splash on Monday after China, which has a 90 per cent hold on the field, suspended all exports.

The move, one of the cards held by Beijing in the tariff war launched by US, sent shock waves through American tech industry, even as the White House has momentarily relaxed tariffing some electronic imports. Even though the US has gradually dialed down rare earths import from China from 80 per cent in 2017 to around 70 per cent now, its import from other countries also involve Chinese processing because Beijing owns 90 percent of the world's refining capacity.

The disruption brought into focus tag-team efforts by US and India overcome the Chinese monopoly even as Washington scours the globe - from Greenland to Ukraine -- for deposits and refining capacity. Earlier this year, in a bipartisan US effort, the lame-duck Biden administration lifted decades-old sanctions on the state-owned Indian Rare Earths Ltd (IREL) and the incoming Trump administration followed up by announcing during Prime Minister Modi's visit to Washington a US-India "Strategic Mineral Recovery" to recover and process critical minerals.

"Recognizing the strategic importance of critical minerals for emerging technologies and advanced manufacturing, India and the United States will accelerate collaboration in research and development and promote investment across the entire critical mineral value chain, as well as through the Mineral Security Partnership, of which both the United States and India are members," the two sides said in a statement.

Industry experts say that's start but nowhere near meeting the critical needs of both US (and India) given the head-start China has in the field. In fact, even the Pentagon relies on Chinese-processed Rare Earth Elements for components like permanent magnets in F-35 jets, laser targeting systems, and missile guidance systems -- a shock realization that has propelled the Trump White House to urgently look for other sourcing.

Elon Musk , who needs rare earths for a range of his tech products from EVs to rockets, was among those who reacted cautiously to China's squeeze, noting that Rare Earth materials are not all that rare and is found all over the world (India has the fifth largest deposits after China, Vietnam, Brazil and Russia), but China has a chokehold because it controls almost 90 percent of refining capacity.

"Important to note that what matters is the ability to refine rare earth elements (which are NOT actually meaningfully rare) and manufacture magnets for use in electric motors. People understandably tend to think that rare earth mineral deposits are what’s scarce, given the name. That is false. They’re everywhere," Musk noted in a post on X, conceding that as with lithium, what China has that others lack is the heavy industry of refining the minerals. In fact, even US-mined material is often sent to China for processing.