Contrary to Trump’s claim, diversifying the supply chain won’t drive down prices.
Patrick Schröder
a senior research fellow at the Environment and Society Centre, Chatham House.A man in construction clothes and a safety helmet picks up reddish-brown soilA worker picks up a handful of rare earth concentrate that has been left to dry in the sun before it is packed and shipped to Malaysia for further processing, at Mount Weld, northeast of Perth, Australia, on Aug. 23, 2019. Melanie Burton/Reuters
China’s latest announcement of export controls on rare-earth minerals has reignited familiar concerns in the United States, Europe, and elsewhere about supply chain vulnerabilities, technological dependencies, and geopolitical risk. The seeds of this crisis were planted decades ago, when rare-earth production and processing shifted to China because it was cheaper, or even below cost, and came with little environmental constraints. By outsourcing the environmental burden of rare-earth production to China in exchange for cheap materials, foreign buyers created a structural dependency that has since become both economically and geopolitically risky. Much of the world has benefited from artificially low prices while building their high-tech military technologies and now green industries on very unstable foundations.
To address these geopolitical risks and diversify its rare-earth supply chains, the United States and Australia signed a new $8.5 billion agreement on Oct. 20 following several months of negotiations. Commenting on the deal, U.S. President Donald Trump claimed that “in about a year from now we’ll have so much critical mineral and rare earth that you won’t know what to do with them”; he added that “they’ll be worth $2.”
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