Five Eyes must break China's rare earth monopoly - voters are willing to pay the price for security
1 August 2024, 10:49 | Updated: 1 August 2024, 10:52
Rare earth materials rarely make headlines, but their role in our everyday lives could not be more critical.
Listen to this article
Loading audio...
From the cell phone in your hand and the TV in your living room to the electric car you drive and the fighter jets defending nations, these technologies all rely on rare earth minerals for their existence.
If the stable supply of rare earth minerals were cut off tomorrow, life would change catastrophically.
Rare only in name and actually more abundant than silver and gold, these minerals consist of 17 metallic elements with unique electrical and magnetic properties. They form the nervous system of our society. The role of these critical minerals, used in the production of EV batteries, is only expected to rise as the world pushes for greener energy.
Experts suggest that the demand for these critical minerals is expected to grow by 400-600%, and for lithium and graphite specifically, the demand could increase as much as 4,000%. Thus, economic dominance in our multi-polar world will rest on a race for these critical minerals that will rival the gold-rush.
Over the past few decades, one country has secured near-monopoly control over these minerals: China. Initially, this arrangement was advantageous – the West enjoyed a stable and cheap supply of minerals, while China bore the environmental costs of mining. Fast forward to today – this arrangement has led China to account for 60% of global rare earth element (REE) production and around 90% of REE processing.
As relations with China continue to deteriorate, many liberal and democratic counties across the globe became concerned about the sustainability of this arrangement. There are growing warnings that China is likely to use its market dominance as political leverage.
These warnings are not unfounded – China has already abused its dominance on several occasions, most recently by restricting exports of germanium and gallium in the latest actions against Washington.
These latest moves by China served as a good wake up call for the West – who was already paying a hefty price for relying so heavily on Russian gas before the Kremlin’s invasion of Ukraine.
In the last few years, many countries began seeking alternatives. The US is ramping up its domestic production, while Australia and Canada are striving to offer an alternative to China. Henry Jackson Society’s latest report dives deeper into the issue, arguing that the Five Eyes Alliance (consisting of the UK, the US, Canada, Australia and New Zealand) ought to expand its scope to include cooperation and trade of these critical minerals.
By conducting a ground poll in all five countries, the report finds most citizens of the Five Eyes Alliance were unaware how much China controls the market – with over 60% of the respondents from all countries stating they were unaware that China accounts for 60% of the REE market. Around 80% of respondents expressed strong, very strong, or moderate concerns about this level of dominance. Only 1% of respondents believe that there will be no consequences to this control, with around 60% stating that China leveraging their market power against other countries is a likely consequence of their control over the world’s REEs.
When asked whether they would prefer to source REEs from within the Five Eyes Alliance or from China, a clear majority favoured sourcing from other Five Eyes countries. Specifically, around 70% expressed this preference, while only about 10% indicated a preference for China. Moreover, a clear majority of voters would support their national governments pursuing a REE diversification policy and reduce their dependence on China for these critical minerals.
Perhaps most surprisingly, respondents who support an active diversification policy away from China, majorities in all countries, narrowly excluding Canada, are willing to pay more to achieve this outcome.
Which is good news for our free-market China sceptic politicians – the public are willing to pay a premium for their iPhone if it means geopolitical security.
From a strategic point of view, it is crucial to diversify away from China. Our geopolitical security cannot rest on access to cheap electrics and polling points to the public in agreement.
George Bernard Shaw once said, “If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.” Just two years ago, we have learned just how expensive it is to rely on hostile actors for critical resources. The West is sleep walking into a very similar crisis.
