Rare earths are essential for high-tech products, everything
from electric vehicles to mobile phones and even fighter jets.
However, China dominates the supply chain.
And as relations between the US and China deteriorate,
western countries fear they don't
have an alternative, which could have
serious implications for the future of manufacturing.
Rare earths are a group of 17 metallic elements
with obscure names such as lanthanum and terbium.
They're actually relatively plentiful in the earth's crust.
However, their geochemical qualities
mean they tend to be widely dispersed, making them
relatively difficult to mine and process profitably, hence
the name.
As a group, they tend to have high melting
and boiling points.
But it is when they react with other elements
that they become really useful.
In fact, they're indispensable for many electronic, optical,
and magnetic applications and currently irreplaceable
for modern devices such as electric vehicles
and mobile phones.
They're also vital for the defence industry.
Half a century ago, the Mountain Pass mine in California
was the world's leading source of rare earths.
But a successful push by Beijing to become the global leader
in the sector means it now produces about 80
per cent of the world's rare earths.
The sharp deterioration in relations between the US
and China is fueling concerns that Beijing
could cut off the supply.
In July, China threatened to impose sanctions
on Lockheed Martin, the biggest US arms manufacturer.
This has prompted the US, Australia, and the EU
to step up efforts to create an alternative supply chain.
Currently, there is just one major non-Chinese supplier
of rare earths, Lynas, an Australian-listed company.
But Lynas can only handle the so-called light rare earths
at its Malaysian processing facility,
leaving western companies totally
reliant on Chinese suppliers for heavy rare earths.
In July, the Pentagon provided funding to Lynas and US-based
MP Materials to design heavy rare earths processing
facilities that could be based in the US.
The US and Australian governments
have also signed an agreement to source new rare earth deposits
to boost security of supply.
The task of establishing a non-Chinese supply chain
will not be easy, however.
Even though rare earths are relatively abundant the process
of separating them poses technical and environmental
challenges.
China's dominance of the market enables
it to control prices and put pressure on challengers.
Beijing's Made in China 2025 strategy
is to create a vertically integrated supply chain
that dominates mining magnates in high-tech manufacturing,
such as electric vehicles.
But an increasing number of western experts
say this is exactly why the west needs
to begin producing its own supply of rare earths
and also the high high-performance magnets
required to power the digital age.
Otherwise, millions more high-tech jobs
could migrate to China.