Subsidies, tariffs needed to counter China's rare earth export restrictions
What's the story
China's recent suspension of rare earth exports is likely to accelerate the establishment of alternative production facilities abroad, despite technical and financial hurdles. REalloys, a US company involved in the industry, has said that this expansion could be expensive and lengthy. Analysts have suggested that subsidies and tariffs may be required to counter competition from Chinese products, which have dominated the global market for nearly three decades.
Market control
China's dominance in rare earth market
Last year, China produced 69% of the world's rare earth ore and controlled 90% of global downstream processing. This process involves converting the rare earth oxides or other compounds into a metallic form. The country also dominates the heavy rare earth market with a share of 98-99%. Heavy rare earths are used in high-performance magnets for defense products, electric vehicles (EVs), and wind turbine generators.
Chance
Export restriction may backfire
China's latest move to restrict rare earth exports is an attempt to leverage its dominance. However, such a step could push important trading partners such as India, Europe, South Korea and Vietnam away from Beijing.
Future prospects
REalloys to invest $50M in production line
Ohio-based REalloys has planned to invest over $50 million in a production line that could produce 1,000 tons of high-performance magnet materials by 2027. The company is working with Canada's Saskatchewan Research Council on this project. As part of its strategy, REalloys wants to source ore mined in Brazil for processing in Canada. A mine development project in Saskatchewan is also being considered.