Building Away from China's Rare Earth Grip
Might the globe require subsidies and tariffs as a reaction to China's limitation on rare earth exports?
The push to establish alternative production lines for critical metals and strong magnets is heating up, driven by the ambition to reduce the reliance on China's dominant rare earth element (REE) market. This zeal is on full display with the American firm, REalloys, teaming up with Canada's Saskatchewan Research Council (SRC) to create a production powerhouse.
REalloys aims to invest over $50 million to set up a production line, targeting the manufacture of 1,000 tonnes of high-performance magnet materials by 2027. Breaking the Chinese monopoly, one brick at a time, this project could revolutionize the production landscape for critical metals vital for defense, electric vehicles, and wind turbines.
To carry out this mission, REalloys will tap into Brazilian rare earth ore, which will undergo processing in Canada's hallowed soil. And, get this straight, friends – plans for a mine in Saskatchewan are just around the corner, beefing up the local supply and fortifying North American self-sufficiency.
SRC's alliance with REalloys dovetails nicely with Canada's role as a strategic ally to the US, especially in the realm of critical mineral security. The country's got several projects up its sleeve, such as Rio Tinto's scandium demonstration plant and Geomega's rare earth recycling facility in Quebec, all adding up to a more diversified and circular supply chain for REEs. However, many of these Canadian projects are still in the exploration or early assessment phases.
The China-dominated REE market poses daunting technical, financial, and geopolitical challenges for newcomers. Beijing produces about 69% of REE ore and controls over 90% of downstream processing, mainly of heavy rare earths essential for high-performance magnets. In other words, it's a tough nut to crack.
The breakthrough will undoubtedly be costly, drawn-out, and likely call for government subsidies and tariffs to compete with Chinese dominance. The recent disruptions in supply due to China's export halts have already sent shockwaves through automotive plants in the US and Europe, illustrating the necessity of diversifying supply sources.
The US is all in, investing over $70 million in Canadian critical minerals projects under the Defense Production Act, considering Canada a dependable partner in efforts to shake off the Chinese yoke. The collaboration between REalloys and SRC marks a medium-term timeline for developing alternative capacity in North America, with ongoing exploration and recycling initiatives further shaping this evolving landscape.
- The ambitious project between REalloys and the Saskatchewan Research Council (SRC) in Canada aims to establish a production line in the business sector, focusing on the trade of high-performance magnet materials, particularly critical metals essential for industries like defense, electric vehicles, and wind energy.
- To achieve this goal, finance will play a crucial role as REalloys plans to invest over $50 million, with the aim to produce 1,000 tonnes of these materials by 2027, aiming to break China's monopoly on rare earth elements (REE) and energy resources.
- The success of this endeavor could potentially redefine the global economy by fostering a more diverse and circular supply chain for REEs, mitigating the reliance on China's dominant REE market and promoting energy independence among key strategic allies like the US.
