The trade war with China is heating up, which has both businesses and consumers nervous. But one of the biggest unknowns is what will happen when China plays its trump cards. One of those is its domination of the market for rare earth metals. These metals, which actually aren’t that rare, are used in a whole host of electronic devices. And a ban on their export could hamstring companies that rely on them to produce their products. If China does enact a ban, just how serious would that be?
If you haven’t heard of scandium, yttrium, dysprosium, thulium, gadolinium and the other metals that make up the 17 rare earth metals, that’s probably because you’re not a high school chemistry student currently staring at a periodic table. But those metals exist, and they play an increasingly important role in modern life.
The rare earth metals are used in a variety of products, from automotive components to electric motors to batteries to lasers and X-ray machines. And China produces 80% of the world’s current supply of those metals. That’s all well and good while trade relations are peaceful, but with China possibly cutting off the supply of rare earth metals, that could be dangerous.
Despite the abundance of some of these metals, their concentration in economically viable mining deposits is poor. That’s why many countries haven’t bothered to try to tap into their resources and find alternative sources for these metals. Even though it’s long been known that companies and countries are highly dependent on China for these metals, economic concerns have put the damper on exploration for these metals.
That will have to change now that China might be looking to restrict supply. And finding new sources for these metals isn’t going to happen overnight. So if you want to enjoy the next iPhone or drive a Tesla at some point in the future, you’d better hope that China doesn’t decide to play its trump card.