The chemicals used to extract rare earths create toxic run-off. For years China was more willing to bear that cost than other countries
first like a classic Chinese painting: water-soaked paddies nestled against endless green hills. But then the brown begins. Abandoned brown pits on the hilltops. Brown gashes down their sides. Brown sludge in the streams. Ganzhou, until a few years ago, was southern China’s mining country. The damage done in the name of economic growth involves an industry that has given China leverage in its trade war with America.
This is why rare earths now figure in the trade war. America can hobble Chinese tech giants by stopping American firms from selling them components such as semiconductors. But China could, in return, cut off their supplies of rare-earth products. The most important of these are specialised magnets for motors in electric vehicles, generators in wind turbines and missile-guidance systems. China produces more than 90% of the world’s output, according to Citigroup, a bank.
So it is no surprise that in the past few weeks China has brandished rare earths as a possible weapon. State media have played up the threat. “China gears up to use rare-earth advantage” ran a headline inBut doing so is not so simple. After the scare in 2010 Japan lent money to Lynas, an Australian mining company with a refinery in Malaysia. Today, it can meet nearly a third of Japanese demand for rare earths.
But it is far from certain that China will block exports to America. Doing so would also hurt Chinese companies, which are often the ones that build the motors and batteries for American customers using rare-earth magnets. Longer term, a ban would encourage the same process that happened in mining. Foreign firms, perhaps with government support, will invest in facilities to make finished products.
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