The metals are used to produce a number of goods, including mobile phones and cameras

This article is more than 1 year old

This article is more than 1 year old

What are rare-earth metals?

Rare earths refer to a group of 17 elements that are prized for their unique magnetic and electrochemical properties.

They include elements such as gadolinium, lanthanum, cerium and promethium, and are vital in the production of cancer treatment drugs, smartphones and renewable energy technologies.

The elements have been designated as “critical” by the US Geological Survey for sectors including national defence.

Where do they come from?

Rare earths are not actually very rare. They can be found across the Earth’s crust. However, they are often in low concentrations and are difficult and expensive to mine.

The process can also damage the environment, with ecosystems put at risk by pit mining, the release of metal byproducts from refineries, and water contamination from particles being dumped during waste disposal.

China is by far the world’s largest producer of rare earths and accounts for about 70% of global production. The country has some 37% of global reserves.

How did rare earths get caught up in the US-China trade war?

Beijing has been looking for further leverage in its trade war with the US, which escalated earlier this month when Donald Trump announced he was increasing tariffs on $200bn of Chinese goods from 10% to 25%.

While China retaliated with tariffs on $60bn of goods it imports from the US – including spinach, batteries and coffee – Chinese newspapers have signalled that its next move could be the restriction of rare earths.

It would be a blow to the White House, as the US relied on China for about 80% of its rare-earth imports between 2014 and 2017.

The editor of the state-controlled Global Times, Hu Xijin, tweeted: “Based on what I know, China is seriously considering restricting rare-earth exports to the US. China may also take other countermeasures in the future.”

What are they used for?

The use of rare earths is vast and varied, spanning national defence to consumer goods.

They are used in healthcare, including for surgical supplies, pacemakers, cancer treatment drugs and rheumatoid arthritis medication. They are also found in telescope lenses, aircraft engines and are used as catalysts in auto exhaust systems to help reduce emissions.

Neodymium is often used to produce high-powered, infrared lasers for national defence, while military suppliers such as BAE systems use rare earths to produce sensors for missile systems.

Which consumer products are at risk?

Rare-earth elements have helped make consumer electronics such as computers and smartphones lighter, smaller and more efficient.

The consumer goods giant Apple, for example, is dependent on rare earths for component parts including cameras and speakers, and says the elements are hard to recover in the recycling process because they appear in such small quantities in the original products.

They are also required for rechargeable batteries used in electric cars and are used in the manufacture of televisions.

Are there other countries that can step in to cover China’s supply?

Countries last tried to cut their dependence back in 2010 during a dispute between China the Japan. Tokyo accused Beijing of halting supplies for political reasons. While rare-earths mines are also found in Malaysia, Brazil, Estonia, Australia, India, South Africa and Canada, few alternative suppliers were able to fill the gap.

The US has a single rare-earth mine in operation, based in California. The Mountain Pass mine exports about 50,000 tonnes of rare-earth extract to China for processing.

However, Australian company Lynas signed an agreement earlier this month with the Texas-based chemicals manufacturer Blue Line to build a processing plant in the US.

Some companies, such as Nebraska’s Rare Earth Salts, are reportedly recycling florescent light tubes for rare-earth elements that make up about 20% of the bulb.

Which companies are benefiting from the threats?

A number of rare-earths companies have seen their share prices soar, as markets anticipate a surge in demand and higher prices, as a result of restricted Chinese supply.

Shares in Rainbow Rare Earths, which is listed on London’s alternative investment market, jumped nearly 15% on Wednesday amid fresh trade threats, while China Rare Earth Holdings ended the day up 24% in Hong Kong.