In retaliation to recent U.S.-imposed tariffs, China suspended the export of critical minerals and rare earth materials, including magnets.
"Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while the Chinese government drafts a new regulatory system," according to the New York Times.
China's dominance of rare earths--up to 92 percent or more are processed in China--is its trump card in a renewed trade war with the United States. The minerals are used to power everything from iPhones to electric vehicles, defense systems to green systems like wind turbines.
"We have been purchasing permanent magnets and permanent magnetic tooling for decades," said Bill Klaus, president of Cincinnati, Ohio-based AEC Magnetics. "The one thing I can tell you, from speaking with our China suppliers, is no one can accurately predict how this will play out. It is anyone's guess how this will affect price and availability of permanent magnets." History shows, Klaus said, China can be bold when weilding the strength of its rare earths dominance. "China has shown it is unpredictable, and it will use rare earths to its geopolitical advantage."
Klaus shared some historical highlights: "In the early 2000s, China occasionally squeezed the markets with pricing and import limits. But China was emboldened in 2010 when a Chinese trawler and Japanese Coast guard vessel collided in contested waters. It retaliated against Japan by banning all Japanese imports of Chinese rare earths. All Japanese-manufactured goods containing permanent magnets were affected, which of course affected noot only Japan, but the Europeann Union and the U.S. which imported Japanese-manufactured goods. The European Union and U.S. appealed to the World Trade Organization for relief. The WTO ruled against China; China lost its appeal and lifted the sanctions, but did it did get revenge. Investors worldwide scrambled to secure capital to open new avenues of rare earths mining and production outside of China. As investments grew, China pulled the rug out from the entire industry, slashing rare earths prices. Nervous investors withdrew, unwilling to risk investment in a volitile sector dominated by Chiina. That one, swift move also closed the West's only rare earths facility in Mountain Pass, California, and, until President Trump, most all investors wouldn't touch rare earths."
China's rare earths dominance has been on President Trump's radar since his first term. He bolstered domestic production at the once-shuttered Mountain Pass Rare Earths Mine, issued executive orders to boost mining and production through streamlining permits, financing loans and providing investment support. The Financial Times reports President Trump has signaled his intention to issue an executive order allowing the U.S. to stockpile critical rare earth materials mined from the Pacific Ocean floor, in case of any conflict that might arise and constrain imports.
Rare earth minerals, which are not rare, can be found virtually anywhere, but it takes an enormous amount of material to gain enough to process. The process itself is harsh, beginning with mining such a huge magnitude of the earth. Extracting the elements and compounds requires massive chemical treatments. This purifies the material and creates oxides and salts so that metallization, the step that transforms the oxides into rare earth metals, can take place. Depending on the application, these metals are combined with other elements to produce a variety of rare earth alloys. Finally, the rare earth magnets are sintered, or bonded, into blocks and then cut, coated or otherwise manufactured into functional permanent magnets.
For the United States and the West, it is critical all these steps be done domestically. "China's domination in rare earths affects the world. If no one can mine and process rare earths, everyone will be dependent on China for rare earths. Defense, green technology, cell phones, computers, cars, generators and so many other things we depend upon will be basically in their hands unless a significant, new, way forward can be forged, and soon."
Follow Bill Klaus, and AEC Magnetics, at www.aecmagnetics.com. Bill would love to discuss permanent or electromagnets with you. Call (800) 635-3954 to discuss your application. If it's magnetic...it's AEC!