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US-China Trade War Sparks Worries about Rare Earth Minerals

Rising trade tensions between the U.S. and China have sparked worries

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Trade, Earth, Minerals
FILE - A mining machine is seen at the Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China, July 16, 2011. VOA

Rising trade tensions between the U.S. and China have sparked worries about the 17 exotic-sounding rare earth minerals needed for high-tech products like robotics, drones and electric cars.

China recently raised tariffs to 25% on rare earth exports to the U.S. and has threatened to halt exports altogether after the Trump administration raised tariffs on Chinese products and blacklisted telecommunications giant Huawei.

With names like europium, scandium and ytterbium, the bulk of rare earth minerals are extracted from mines in China, where lower wages and lax environmental standards make production cheaper and easier.

But trade experts say no one should panic over China’s threats to stop exporting the elements to the U.S.

Trade, Earth, Minerals
FILE – In this April 30, 2009, photo, coral reefs grow in the waters of Tatawa Besar, Komodo islands, Indonesia. Rising demand for copper, cobalt, gold and the rare-earth elements vital in manufacturing smartphones and other high-tech products is causing a prospecting rush to the dark seafloor thousands of meters beneath the waves. VOA

There is a U.S. rare minerals mine in California. And Australia, Myanmar, Russia and India are also top producers of the somewhat obscure minerals. Vietnam and Brazil both have huge rare earth reserves.

“The sky is not falling,” said Mary B. Teagarden, a China specialist, professor and associate dean at the Thunderbird School of Global Management in Phoenix. “There are alternatives.”

Simon Lester, associate director of the center for trade policy studies at the Cato Institute think tank in Washington, agreed. “Over the short term, it could be a big disruption, but companies that want to stay in business will find a way,” he said.

Although the U.S. is among the world’s top 10 countries for rare earths production, it’s also a major importer of the minerals, looking to China for 80% of what it buys from other countries, according to the U.S. Geological Survey. China last year produced 120,000 metric tons of rare earths, while the United States produced 15,000 metric tons.

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Mountain Pass Mine

The United States also depends on China to separate the minerals pulled from Mountain Pass Mine, the sole rare earths mine in the U.S., which was bought two years ago by the Chicago-based JHL Capital Group LLC .

“We need to develop a U.S.-based supply chain so there is no possibility we can be threatened,” said Ryan S. Corbett, managing director of JHL Capital.

The mine’s top products are neodymium and praseodymium, two elements that are used together to make the lightweight magnets that help power electric cars and wind turbines and are found in electronics such as laptop hard drives.

Mountain Pass, located in San Bernardino County, Calif., was once the top supplier of the world’s rare earth minerals, but China began taking over the market in the 1990s and the U.S. mine stopped production in 2002.

Trade, Earth, Minerals
FILE – Workers are pictured at the site of the Lynas rare earth plant in Gebeng, eastern Malaysia, April 19, 2012. VOA

Mountain Pass later restarted production, only to close again amid a 2015 bankruptcy. Corbett said extraction resumed last year after JHL Capital purchased the site with QVT Financial LP of New York, which holds 30%, and Shenghe Resources Holding Co. Ltd. of China, a nonvoting shareholder with 9.9%.

Since then, Mountain Pass has focused on achieving greater autonomy with a $1.7 billion separation system set to go online late next year that would allow it to skip sending rare earths ore to China for that step.

China could hurt itself in the long run by cutting off the U.S., specialists said.

David Merriman, a rare earths analyst for Roskill commodity research in London, said that during a similar trade flap with China in 2011, Japan began looking to other countries, including Australia, for the minerals needed to manufacture electronics.

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Australian rare earths production giant Lynas Corp. Ltd. this month announced a proposed deal with Blue Line Corp. of Texas for a separation facility at an industrial site in Hondo, Texas.

Other deposits

There may be other options, too. Deposits of rare earths have been detected in other U.S. states, including Wyoming and Alaska, as well in several remote areas of Canada. The Interior Department is calling for more prospecting and mining of “critical minerals,” including on public lands currently considered off-limits, and even in oceans.

“We have to be more forward-thinking,” said Alexander Gysi, an assistant professor in geology and geological engineering at the Colorado School of Mines in Golden. “It would be better for the U.S. to have a greater range of sources for rare earths.” (VOA)

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Mike Pompeo Pushes India to Drop Trade Barriers, Give Access to US in Local Markets

Pompeo's remarks at the U.S.-India Business Council refer to a decision by U.S. President Donald Trump

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Mike Pompeo, India, Trade
U.S. Secretary of State Mike Pompeo addresses the India Ideas Summit in Washington, D.C., June 12, 2019. VOA

The United States is open to dialogue to resolve trade differences with India by allowing Americans companies more access to Indian markets, U.S. Secretary of State Mike Pompeo said on Wednesday ahead of a visit to New Delhi later this month.

Pompeo’s remarks at the U.S.-India Business Council refer to a decision by U.S. President Donald Trump to end preferential trade treatment for India from June 5 over the trade barriers.

“We remain open to dialogue, and we hope that our friends in India will drop their trade barriers and trust in the competitiveness” of their own companies, Pompeo said ahead of his June 24-30 travels to India, Sri Lanka, Japan and South Korea.

“We’ll also push for the free flow of data across borders” not just to help American companies — but to protect data and ensure consumer privacy.

Mike Pompeo, India, Trade
The United States is open to dialogue to resolve trade differences with India. Pixabay

He added: “And speaking of privacy, we are eager to help India establish secure communications networks — including 5G networks.”

The privileges come under the General System of Preferences, or GSP, which had been allowing preferential duty-free imports of up to $5.6 billion a year into the United States from the South Asian nations. India is the biggest beneficiary of the GSP program.

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Washington has been particularly annoyed by India’s tightening of regulations that have undermined major U.S. companies but favored domestic entities in the past year. In particular, tighter e-commerce rules that came in earlier this year hurt Amazon.com and Walmart, which last year bought Indian online retailer Flipkart for $16 billion. (VOA)