Finance

China’s boost in its rare-earth production threatens US growth plans

The United States is facing a new challenge against China’s dominance in the market for the production of rare-earth materials.

China is dominating the market for rare, exotic materials that are used in building almost everything from fighter jets to smart devices.  The country declared that it is increasing its yearly mining quota concerning rare-earth material to about 132,000 tons, which is 10 percent more than the previous year’s mining records. This move will result in a setback for rival countries including Australia and the United States, nations that admitted previous week to mutually boost new schemes in an attempt to broaden the supply.

China produces approximately 70% of the rare earth materials. It dominates 90 percent of a global market worth $4 billion for materials that are used in motors and magnets to power wind turbines, phones, military hardware, and electric vehicles.

Because of the trade rumours between the United States and China, it was feared that the access to these rare-earth materials might come under restricted circulations. However, according to Ryan Castilloux, the managing director of Adamas Intelligence, China is in a process to bulk up its resources.

In the United States, that places a target mainly on California-based Mountain Pass (MP) Materials. The MP Materials is the only operating mining company that mines rare-earth materials. The site resumed its sales the previous year after being shut down in the year 2015.

As per a person having knowledge about the operation, the company is expecting to give out an output of about 30,000 tons or more this year. The person who asked his identity to be hidden, further said that the company is planning to produce up to 15% of the rare-earth materials mined across the globe.

That production is now dispatched to China for processing. However, according to the CEO of JHL Capital Group LLC, James Litinsky, that might change this year.

Mountain Pass Materials is planning to inaugurate a processing center of its own and if the plan succeeds then the company will handle its production work, said Lintinsky. That will enable the company to market its products directly to the manufacturers in the US, he added.

Almost three decades ago, China decided to make rare earth material a strategic component, prohibiting foreigners from mining them. As China produces both magnets and minerals in the largest quantities amongst all nations, it draws sustenance from makers of electric vehicles like Tesla and Ford Motor Corporations.

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