Rare earths and Quad

To create a simple iPhone, in excess of 3.2 million pieces of which were sold in India alone over the past year, we need Europium for the display, Neodymium for the magnets that power the speakers, and Cerium for polishing the finished product. Apart from JEE aspirants, few would recognize the names, let alone locate them on a periodic table. However, if one were to fetch a copy of the modern periodic table, one could notice these names in a row below the table. All the elements in this row (collectively called the Lanthanide series) combined with the mid-table elements: Yttrium and Scandium are known to us (or not!) as rare earth elements (referred to as REEs hereinafter). Contrary to the name, these elements are far from rare.

To put it in perspective, Cerium is about as abundant as Copper in Earth’s crust. It is the expenses of mining and refining the elements that add to the prohibitive costs of REEs. Reducing these has been the mainstay of China’s aggressive and relentless enterprise to establish its hegemony over the world’s supply of REEs. Despite having only about a third of the world’s reserves, China has cornered 97% of its production. This domineering presence of China in the global market for REEs has come about on the shoulders of its sweatshop culture that supplies cheap labour and state-of-the-art facilities. Much like the member states of the OPEC cartel who determine the supply and production of crude oil, China has, over the past decade, fiddled with production and export quotas. REEs have been put to use in almost every industrial sphere – from defence technology to petroleum refining. Therefore, the worsening of Sino-American ties and China’s frequent, often capricious, restrictions on REEs have been a rude awakening for the world. Aware of its vulnerability, it has grown increasingly concerned about the Chinese monopoly on the production, refinement, and export of REEs.

As mentioned above, REEs are abundant across the Earth’s crust, but China’s cornering of the market over the past couple of decades has ensured that mines in many countries, including but not limited to the United States, exit the market. To resuscitate them to the extent that they can overcome the current market entry barriers is a colossal task that no single country can manage on its lonesome. But that is far from the only obstacle in the global attempt to check China’s hegemony. Its refinement capacity ensures China’s monopoly in REEs. Even American mines are forced to outsource the refinement of their product to Chinese facilities. All these factors have made REEs a leverage tool in the hands of China. One that China is not afraid to use to fend off the US or any other country should another trade war arise.

Thus, at such a moment, global cooperation to counter China’s anti-competitive streak seems paramount. At the vanguard of this pushback are the Quadrilateral Security Dialogue countries: India, Japan, Australia and the US. Better known as the Quad, this group was created at the height of the Manmohan Singh – George Bush camaraderie to create a counterweight to China in the Indo-Pacific region, but the initiative fizzled out after a few perfunctory naval drills in the Pacific Ocean. However, Trump’s hostile China policy has revived the group that seeks to restore balance not just in the South China Sea but also in the business of rare earth elements. Although between the four of them, the resources are not nearly enough to challenge China in the global exports market, the immediate goal is to attain self-sufficiency or, at the very least, to reduce their dependence on Chinese REE exports. India is critical to this alliance as with 5.8% of the world’s REE deposits, and it outstrips the other countries by some distance on the question of availability of raw material. India’s meagre mining figures belie this fact. In 2020, while the US and Australia mined 38000 and 17000 tonnes of REEs, India struggled to reach the 3000-ton mark. This presents a huge untapped opportunity for the Quad countries who will seek to harness it to the best of their abilities. Japan is a key partner in this initiative as it is the only country that has managed to reduce its reliance on Chinese rare earth. It was also the first victim of China’s weaponization of its hegemonic position in the rare earth element’s market. When infuriated by Japan’s nationalization of the oil and gas-rich Senkaku Islands in the East China Sea, China imposed a trade embargo on REE exports to Japan – a country that was addicted to REEs. Japan has since successfully reduced the reliance on Chinese REE by 40%. It is also the only country that has found REE-rich muds in the waters of its Exclusive Economic Zone, and this, too, presents untapped potential that might come handy, especially when China’s domestic demand has skyrocketed; China needs to import REEs from Myanmar to satiate its domestic demand. Also, much like the oil countries, China’s reserves are drying up at an alarming rate too. All these factors make the time ripe for an insurrection against China’s stranglehold on this highly lucrative trade. But, make no mistake; the struggle will be long and costly. Greater cooperation may be required to check China’s control over this trade indeed.