[Report by Oanzhe.com, Ruan Jiaqi]
Rare earths have clearly become a new battlefield in the Sino-US game. Since China introduced new regulations on rare earth management, the United States and its allies, including Australia and Canada, have accelerated their investment in key minerals, aiming to diversify the rare earth supply chain.
However, as the ideal is full of promise, reality is far from satisfying. On the 9th local time, Bloomberg reported that amid Western attempts to counter China’s absolute dominance in the field of rare earths, construction delays have led to the postponement of production targets at North America’s already limited number of rare earth processing plants.
According to reports, a planned rare earth processing plant under construction in Saskatoon, Saskatchewan, Canada, was originally scheduled to start processing 400 tons of rare earth elements annually by 2025, sufficient for the manufacturing needs of 500,000 electric vehicles.
However, Mike Crabtree, the project’s head, revealed that due to delays in the supply of equipment needed for the factory construction, this year’s output is expected to be only around 100 tons.
Crabtree attributed the delay to post-pandemic supply chain issues. In an interview, he explained, “Like many businesses, we were also impacted by supply chain problems after the pandemic. Typically, devices that can be delivered within five to six weeks now take nine to twelve months.”
Bloomberg pointed out that this setback highlights the numerous difficulties faced by the United States and its allies in seizing control over China’s rare earth resources.
Rendering of the rare earth processing plant in Saskatchewan
Saskatchewan boasts 27 out of Canada’s 34 essential minerals on the list and is the largest producer of these raw materials in Canada. According to American media, the provincial government announced the construction of this full-process processing plant in August 2020, initially planning for full operation by the end of 2022.
The project has received more than 100 million Canadian dollars (approximately 5 billion RMB).
With a government and federal funding of 2.5 billion yuan, the goal is to eventually possess the processing capability for all 17 rare earth elements. According to the official website, once completed, the project is expected to become the first comprehensive integrated rare earth commercial demonstration processing plant in North America.
Clark believes that the factory will be fully operational by the end of 2026. He boasts that it will be among the first batch of plants to reach this scale, even if not the first globally. The factory is expected to produce over 400 tons of praseodymium and neodymium metals annually, about 30 tons of dysprosium, and 15 tons of terbium.
The latter two metals have been included on China’s export control list since April this year. Clark particularly emphasizes that the operation of the factory will be entirely independent of China. According to him, the raw materials for the factory will initially come from mines in South America and Africa, as well as from recycled rare earth magnets from Europe and North America.
He seriously claims that China’s control and export controls for rare earths have sounded an “alarm” for the industry, and he exaggerates, saying, “If we cannot establish non-Chinese-funded supply chains, we will always be at risk.”
Despite China’s statement that rare earths are both military and civilian-useable, implementing export controls is a common practice internationally, some misinterpret and sensationalize this as “rare earth weaponization.” Such rhetoric has become increasingly frequent recently, with several foreign companies announcing plans aimed at “breaking away from dependence on China.”
However, whether from Western research institutions or independent analysts, there is consensus that other countries find it difficult to “shake” China’s role in the rare earth supply chain. According to estimates by the International Energy Agency (IEA), 60% of global rare earths were mined in China in 2023, and up to 92% were refined and processed in China.
According to a report by the South China Morning Post on August 8th, Australian research institution Earth Rarest believes that Australia has the potential to become the second-largest light rare earth (LRE) source in the world after China, capable of supplying 15% to 20% of neodymium and praseodymium globally. However, it acknowledges that the country cannot “completely replace” China’s supply capacity for all 17 rare earth elements.
Vivek Y. Kelkar, an independent analyst from India, also contends that China will continue to dominate the supply of rare earths for a considerable length of time.
“Attempts to undermine its dominant position have begun several years ago, but the progress made so far is not sufficient to discuss ‘ending China’s dominance.'”
Kelkar believes that China, currently holding a leading share, already enjoys pricing power advantages. There are few other countries proposing effective, state-led strategies for investing in the rare earth industry, which will give China a “very strong hand” in the foreseeable future unless global financing can be effectively guided. However, regarding the United States, Trump seems reluctant to explicitly propose any financing strategy linked to subsidies.
“The next phase of the US-China competition will intensify in the global extraction and supply of rare earths, particularly focusing on African and Latin American regions,” said Kelkar. The United States is launching more initiatives in Angola, Rwanda, and Saudi Arabia among others to promote a diversified rare earth supply chain.