Link to article: https://www.bbc.com/news/business-62760354
The Australian mining firm Arafura intends to begin mining in the desert of central Australia, in search of neodymium and praseodymium— valuable elements used in the production of strong magnets. These are rare earth elements essential to the electronic industry and are also used in a massive amount of products such as military weapons, renewable energy production devices (wind turbines), and space exploration. The product is required in abundance for the development of renewable energy, which is essential in preventing even more irreversible damage to the earth. The resources mined in Australia could satisfy up to 5% of the global demand.
Current mining of rare earth minerals is dominated by China, so this development has the potential to reshape the international market. Not only does China dominate the mining industry, but China also has a mysterious way of upholding monopolies on supply chains, so it will be interesting to see the tactics they use to drive Australia back out of the market— especially considering Australia’s strong mining history in the iron and coal industries. The issue lies in the processing facilities, which are entirely located in China. There are so many reserves in Australia that simply haven’t been tapped into due to the fact that all the ore would have to be sent to China for processing anyway. The pandemic has spread a wider understanding of the necessity of diverse supply chains, and it might even be in China’s interest to support these new developments.
The American USED and Australian Lynas companies have agreed to build an Australian processing facility in the US to lessen reliance on China’s materials, which is especially impactful due to China’s significance in the renewable energy market and supply chains. Companies in South Korea and France have already signed with the Australian company, and are guaranteed to receive resources. The mine could also be a good resource for Japan, as China has been reluctant to trade such materials with them due to rising tensions over disputed islands between the triangle of Taiwan, China, and Japan. This has been going on since 2010. China has also threatened to restrict trade of these materials with the US, since the US supplies military arms to Taiwan.
In retaliation, Chinese newspapers have denounced this development as a motion for the west to squash down China’s influence with “toxic geopolitics.” It will be interesting to see if the project will allow a chance for countries like Japan who have been seeking larger economic independence to cut its reliance on China.