Chinese export restrictions on metals used in electronics are highlighting just how much control China has because of its dominance in certain mineral and manufacturing markets.
Companies in Wyoming that are seeking ways to develop domestic supplies of rare earth minerals say China sometimes plays dirty as it tries to maintain its dominance.
Retaliation
China announced this week that it would begin restricting exports on gallium and germanium, two heavy metals that are used in the production of microchips.
The move is believed to be a retaliatory response to the U.S. blocking China from gaining access to advanced microchips and the technology to manufacture them.
China controls a lot of the markets in various minerals and metals, including rare earths, which are growing in demand as a result of government mandates to transition electricity production to wind and solar energy. This gives China a lot of economic muscle to flex over the United States.
Playing With Crisis
Grant Hazle, lab manager for Ramaco Carbon in Sheridan, told Cowboy State Daily that China has the power to control global prices of rare earths, which gives them the opportunity to shut out competitors on the world stage.
Ramaco is researching methods to extract rare earths from materials out of the clays found around coal in Wyoming mines. If the plans come together, it would greatly benefit the U.S. domestic supply of the minerals, which are needed for electric vehicles, wind turbines and defense applications.
That’s not something China would like to see happen. Rare earth commodity prices have declined considerably over the past year.
“China can really play with crisis,” Hazle said. “China’s really flooding the market. If they think too many rare earth projects are popping up, they can drive the price down and make it uneconomical.”
Modus Operandi
Developing mining operations requires large amounts of capital, and any successful operation begins with attracting investors. If prices drop, investors are hard to find.
Travis Deti, executive director of the Wyoming Mining Association, said he has heard that China uses these tactics. He pointed to the recent announcement of export restrictions as further proof.
“It’s certainly the modus operandi of the Chinese to manipulate the markets that they control,” Deti said.
Processing Project
Rare Element Resources is pursuing a demonstration project for a processing and separation plant near Upton. The project also is supported with $21.9 million in matching funding from the U.S. Department of Energy. The total cost of the project is about $44 million.
The company has previously sought to build a full-scale rare earth mining operation in the area, but the long federal permitting process outlived the company’s ability to finance the project.
The demonstration project aims to prove a processing method that won’t leave behind waste piles that add large remediation costs to rare earth mining operations.
If the project is successful, it will greatly aid in attracting investors to a full-scale rare earth mining operation.
Federal Shield
Brent Berg, president and CEO of Rare Element Resources, told Cowboy State Daily that China has engaged in price manipulation, which is why the company is building partnerships with the federal government.
“We've seen it in the past for China, where they flooded the market with material and they killed the price. If you're a publicly traded company, your stock can go to zero almost instantly,” Berg said at a Wyoming Mining Association conference in June.
With the federal funding in place, the company is shielded from the impacts of Chinese market manipulation, he said.
“In my heart of hearts, I don't believe there's any company on their own in the U.S. that can go up against the force of China. And we absolutely need to work together to build a domestic supply chain,” Berg said.
Geopolitical Adversary
Deti agrees that the U.S. needs to break Chinese control, and the only way to do that is developing a domestic supply of these needed resources.
“Do you want to be dependent on a geopolitical adversary for the components and the raw materials that are so critical to American life today? Absolutely not,” Deti said.
