China Threatens To Cut Off Rare Earth Minerals As Trade War Escalates | Velshi & Ruhle | MSNBC

Overview of the Trade War with China

• The trade war with China may be easing, but current signs show it is still ongoing, particularly over rare earth minerals.

• China aims to negotiate a deal, yet past agreements were broken.

• Tariffs imposed are resulting in significant revenue for the U.S., with lower inflation impact on consumers.

Rare Earth Minerals Dispute

Importance of Rare Earth Minerals

• Rare earth minerals are essential for various technologies and industries:

  • Cellphones, electric batteries, medical equipment, defense systems, and exploration technologies.

• Comprise 17 elements that are relatively abundant but hard to mine economically.

China's Control in the Market

• China has significant leverage:

  • Holds 44 metric tons of global rare earth reserves.

  • Increased mining output by over 100 tons in recent years.

• The U.S. possesses only 1.4 million metric tons, making it less competitive.

Recent Developments

• China is signaling potential cutoffs of rare earth minerals to the U.S.

• Xi Jinping emphasizes a 'new long march' indicating a strategic shift in their approach.

• Chinese media warns the U.S. of potential repercussions stemming from this strategy.

Strategic Importance of Rare Earth Minerals

Reasons for China's Dominance

• Over a decade ago, China recognized rare earth minerals as strategic and prioritized their production it.

• Investments in foreign mines (e.g., in Australia and Bolivia) strengthened their position in the global market.

Consequences of a Potential Cut-off

• Without access to Chinese supplies, the U.S. faces production issues:

  • Current manufacturing often requires shipping back and forth between U.S. and China for recycling.

• California has potential reserves but currently has only one operational mine, which relies on processing in China due to stringent environmental regulations in the U.S.

Environmental and Industry Challenges

• American environmental standards hinder the development of local mining and processing facilities.

  • Concerns over community health and environmental safety remain a priority.

Suggestions for a U.S. Strategy

• To combat reliance on Chinese rare earth minerals, focus on enhancing local supply chains:

  • Consider establishing a localized recycling infrastructure to reclaim rare earth minerals from electronic waste.

  • Start with the disassembly of used electronics (like phones and car batteries) to recover and reuse rare minerals.