Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China October 31, 2010. Stringer | Reuters

European manufacturers will need to keep an eye on China's "near-monopoly" on the extraction and supply of rare earth minerals as they move toward electric power, experts have told CNBC. Rare earths — minerals found in a wide range of everyday consumer electronics — hit the headlines over the past week as China hinted at stopping the export of rare earths to the U.S., after Washington increased tariffs on $200 billion worth of Chinese goods. The group of 17 minerals aren't actually rare, but are produced in fairly scarce quantities compared with abundantly mined metals like copper. They have grown in prominence in recent years due to their use in high-tech equipment, defense manufacturing and electric vehicles. China extracted 70% of the world's rare earths in 2018. Martin Eales, CEO of London-listed Rainbow Rare Earths, which runs an ongoing mining project in Burundi, told CNBC that China may not opt for an outright export ban but rather a reduction in its production quota, which "by definition would reduce the amount of rare earths material available for export and potentially create supply problems for rest-of-the-world users."

The automotive revolution

The long-term concern for European manufacturers, however, will be the increased volume of rare earths required, according to the British Geological Survey's Science Director for Minerals, Andrew Bloodworth. As the automotive sector moves from internal combustion engines to electric vehicles, many of those electric motors will rely on high field strength electric magnets which contain rare earth components. "This isn't going to happen overnight, but as the automotive sector moves from petrol and diesel power to electric, you can make a very efficient small powerful electric motor using high field strength magnets," Bloodworth told CNBC. "The difference there is just that the volumes required to manufacture the millions and millions of cars every year are going to change the game, because they're going to up that demand for materials."

Vertical integration