May 18, 2021

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How could CHINA BLACKMAIL THE WEST? (And score points in the TECHNOLOGY WAR)

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Humankind has already gone through thecopper age and the iron age and right now at this very moment we’re in the middle of the lanthanide age say what okay we’re sure that the vast majority of you have never heard of lanthanides in your life

however it is more than likely that here and there you may have seen some news about the so-called rare earths we are talking about 17

chemical elements that are becoming phenomenally important in the global economy due to their use in a multitude of devices to which we must add a highly volatile catalyst china is currently the

world’s largest producer of rare earth elements okay so far so good the problem or the issue is that the asian giant is moving to use the rare metals as a major

bargaining chip in its international political strategy so the questions are how can china take advantage of its

dominance of the global rare earth elements market and why are these mineral elements so

important and what alternative do western bloc countries have to beijing’s moves

friends today at tweetasm we’re going to answer these questions but first let’s take a look at a bit of history

china’s oil perhaps the most surprising thing about rare earth metals comes precisely from their name because the truth is is that some of these metals are as abundant as

nickel copper zinc or even lead even the rarest are 200 times more commonly found in nature than gold so rather than rare earth elements

we could call them i don’t know reasonably abundant earth elements but wait a minute because the problem is that rare earth elements are found in extremely low concentrations even if we are talking about the richest

deposits these 17 valuable elements are only found in concentrations of two percent at mostnand the fact is that rare earth elements

have become a vital input for the manufacture of highly sophisticated productswe’re talking about all kinds of electronic devices such as flat screen

monitors and smartphones their importance is increasing even more with efforts to reduce fossil fuel consumption rare earth elements are used in the permanent magnets that make up for example the batteries of electric

cars or the drivers of wind turbines neodymium and sumerian remember these names they could be palmeira’s new pair of brazilian strikers but in fact they are just two more lanthanites however these metals are the

most sought after by the arms industry their properties make them ideal for precision guidance systems for missiles and smart bombs as well as for use in drones and aircraft so

no one should be surprised when we come across news headlines like this china targets rare earth export curbs to hobble u.s defense industry financial times you see as you all know the star of the world military aviation market

is the f-35 from the u.s manufacturer lockheed martin well each of these aircraft uses no less than kilos of rare earth material we are talking about three percent of each f-35s being rare earth elements and many of you will be wondering but

how on earth is it possible that such powerful american industries as aeronautics and defense can be affected by decisions made by the chinese communist party itself well look at this until the 1980s the united states was

the world’s leading producer of most of these 17 chemical elements the mountain pass mine and processing plants in the state of california was the world’s largest supplier of rare earth elements for decades

extracting up to 20 000 tons of all per day and in fact one of the lanthanides obtained at mountain pass europium made color television possible but even so the exploitation of lanthanides was not a particularly

attractive activity as i mentioned before these minerals are found in very low concentrations even in the richest deposits that is to say it is very difficult and expensive to extract them on a large scale however

the chinese five-year plans bet heavily on rare earth mining perhaps more as a geostrategic than an economic strategy a decision that was made in the highest spheres and

just look at what the father of modern china deng xiaoping said there is oil in the middle east and china has rare earths deng xiaoping leader of china at the end of the 20th century however

you should know that china’s extraction method played a very important role in helping it to dominate the international rare earth elements market let me explain in addition to their low

concentration another of the most characteristic features of rare earth elements is that they are very difficult to separate from the rock in which they are found

the chemicals used to extract these metals from the ore create toxic runoff so dealing with these wastes some of which become radioactive significantly increases the economic cost of these mining operations

and of course let’s not kid ourselves traditionally pollution was not something that china was very much concerned about this made it much easier for china to start large-scale production and as this was happening the prices of

these metals plummeted wiping out the profitability of mines in other countries forcing them to close chinese producers took advantage of virtually non-existent environmental regulations and low wages this is how

china took control of the global rare earth’s market by the end of the 20th century china had wiped out foreign

competition and cornered 97 of world production and that was where the communist regime wanted to move on

to the second phase of the plan wait a

minute precisely what kind of plan are we talking about well listen up 17 metals to rule them all after gaining a privileged position china came to play a role in rare earth mining similar to that of

opec in oil beijing came to control a kind of monopoly and a decade ago tried to use rare earth elements for political purposes in the dispute with japan as you all know japan has an important electronics and automotive industry which is precisely why it uses one-fifth of the world’s entire supply of rare earth elements so its economy faulted when china blocke rare earth exports to the land of the rising sun in 2010 after a diplomatic incident occurred over the detention of a chinese fishing vessel in japanese territorial waters that beijing claims as its own japan denounced china to the world trad organization and the waters returned to normal when the united states and the european union supported the japanese complaints but beijing’s warning was still very clear all this however has not prevented china from progressively reducing its exports of rare earth elements year after year and keep in mind it is not just that the communist regime wanted to deliberately harm the economies of rival powers it was mainly a question of business management first of all because rare earth mining is expensive so reducing the supply in a market where demand is increasing all the time well you can imagine the result supplies squeezed rare earth prices surge new york times hold on a minute because the most important thing is that china is not a mere exporter of this raw material the important key issue is that it has become virtually the only country that has developed the industry that refines these metals and turns them into materials ready for manufacturers china controls about 80 of the world’s rare earth refining capacity and in fact the united states has to send their extracted minerals containing these elements to china so the asian giants realized what a huge business it had on its hands and quickly changed its strategy since 2015 china shut down a lot of unlicensed minds granted to exploit rare earth elements and focused its efforts on importing these metals from other countries its overseas purchases of rare earth’s increased tenfold in just three years by 2018 china had already become the world’s leading importer of rare eart concentrate for example myanmar malaysia and vietnam provide 25 of all rare earths processed by the chinese industry

and you see as new technologies have led to the boom in the demand for these metals the rise in the price of lanthanides has meant that rare earth mining has become economically profitable again in other countries and because china did not want to lose its control of the market it moderated its presence as a producer currently for example its mining contributes 60 of the world’s production of rare earth elements in this way its rare earth refining industry buys a large part of this raw material from foreign countries thus preventing them from becoming suppliers to the west and this kind of strategy is why china continues to dominate the global rare earth market even if a whole trade war with the united states has been unleashed along the way however in case things get ugly with washington again beijing has already implemented its plan b better safe than sorry china boosts rare earth output amid growing tech war with u.s asia nikkei in this way beijing’s goal is to increase its domestic production of rare ea hs by 30

this also fits in with the new technological aspirations of this giant which for example aims to ensure that by 2035 all vehicle solds in the country will be electric or hybrid a technological war that the united states has to face with such a scenario and not only that we could show you similar graphs from japan or the european union and don’t forget all this is happening at precisely the same time that the 17 chemical elements that comprise the rare earths are increasingly important for the technology industry in developed countriesso the question the big question we can all ask ourselves is is there any alternative to being at the mercy of the wishes of the communist party of china listen up the battle for rare earths i don’t think i need to remind you that lately the relationship between beijingand washington well it’s been going through a bit of a rough patch we only have to take a look back and remember the trade war all the measures that the us government took as recently as last september 2020 against companies such as huawei or smic the semiconductor manufacturing international corporation china’s largest chip manufacturer evidently these moves did not amuse xi jinping’s regime which of course did not sit idly by in december 2020 china passed a new control law for strategic materials whereby beijing can arbitrarily limit the export of these minerals you know the good old national security excuse perhaps the oldest political excuse in the world but hold on a minute because that’s not all the latest thing that china is preparin has set off alarm bells halfway around the world china tightens rare earth regulations policing entire supply chain asia nikkei with this new law the communist regime intends nothing less than to have everything related to rare earth elements under its control from extraction to export incling all industrial processing to

convert the minerals into refined metals and then to transform these into ready for the manufacturer of other goods whether they be hard disks or tomahawk missiles okay stop wait a minute in theory it is complicated to think that china would consider turning off the tap mainly because doing so would also hurt chinese companies which typically make the motors and batteries for u.s companies that use rare earth magnets but of course when the time comes if things go wrong the question being asked in many western foreign departments and intelligence services is what on earth could be done if the chinese nevertheless decide to press the red button and my friends at this point all eyes turn to japan a country that has been trying for a decade to shake off its dependence of the chinese communist party so the question is what did japan do after that diplomatic incident in 2010 well basically it acted in three ways the first was efficiency thus the main objective of the japanese manufacturers has been to reduce the amount of rare earth elements needed to achieve the same product in other words smaller motors require less neodymium so although japan now manufactures more electric and hybrid vehicles than a decade ago demand for this metal including alloys has fallen by about 30 compared to 2008 levels the second easure was to look for

alternative supplier countries vietnam for example has significant reserves of rare earths but lacks the necessary investment to exploit them so that’s where the big japanese technology corporations came into the picture loaded with cash so did the government which has even financed foreign companies this is the case for example of linus the australian mining company with a rare earth refinery in malaysia in this way japan has managed to reduce its almost total dependence on chinese imports to 58 and finally it has put in place a tool that is as basic as it is effective in tokyo they asked themselves

done japan to stockpile rare metals as part of effort to reduce dependence on china japan forward and this is the playbook japan has passed on to washington and the rest of the world on how to deal with china to prevent beijing from being able to punish the western tech industry for the time being the united states has resumed operation of the large mountain pass mine which was closed in 2002 due to increasingly stringent environmental requirements in california and because it could not compete with chinese operations in addition democrats and republicans have agreed that they should push for a stateside rare earth refining industry so that all of the processing that these metals undergo is done on u.s soil in this regard a rare earth processing plant has already been opened in colorado but setting up a project of

this type takes time and this plant will not begin to bear fruit until 2023 in any case the important thing is that everyone in the united states is aware that we cannot continue to depend on china and yes they have also taken good note of the japanese playbook pentagon awards 30 million dollars inrare earth funding to australia’s linusreuters surely now you can understand why greenland has made so many headlinesin recent yearsyes it is estimated that there are manylanthanides there anyway at this pointthe question is now over to you how doyou think western countries should actto secure their supply of rare earth elements should they collaborate with china or

put up the money to challenge its dominance but hang on a minute while the Chinese have rare earth the western allies have something even more important control over the semiconductor industry something that we already covered in the past video about tsmc Taiwan and the chip war.


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