China’s Monopoly in Strategic Minerals

China’s Monopoly in Strategic Minerals

• China controls 60% of rare earth production, 60% of critical minerals production and 80% of the processing worldwide.
• It is the top source for five out of 12 critical minerals and the second or third top source for an additional three: Fluorspar, Galium, and Scandium.
• It dominates every supply chain segment — upstream, midstream, and downstream, covering mining, extraction, refining and processing. Thus, China’s decision has profound implications for global security.
• India, too, remains vulnerable due to its strategic dependence on China. It is heavily dependent on the imports of critical minerals such as lithium, nickel, cobalt and copper, which resulted in an import cost of around ₹34,000 crore in FY23.

Use of monopoly to weaponise the critical mineral supply chain

• Critical minerals export controls have become a part of China’s foreign policy objectives. It has been using mineral resources as a political tool to leverage its status as a mineral power.
• Some instances of export controls by China:
  • It has increased restrictions on its critical minerals exports nine times between 2009 and 2020.
  • In 2023, it announced curbs on the export of gallium and germanium (used in solar cells and computer chips) to the Netherlands due to the latter’s restriction on supply of semiconductor equipment.
  • In 2023, it curbed the export of synthetic graphite material and natural flake graphite (used in EV batteries, fuel cells, and nuclear reactors), following the US export curb on advanced computing and semiconductor products to China.
  • It restricted the export of rare earth processing technologies in making rare earth magnets used in EVs and technologies used to extract and separate critical minerals.

Implications of China’s monopoly

• Impacts green energy transition: China’s near monopoly in minerals like lithium, cobalt, and rare earths, crucial for EVs and solar panels, slows down the global energy transition. Any disruption to China’s supply could delay the production of clean energy technologies.
• Economic and security dependencies: A targeted supply-chain disruption could cripple the production of consumer products and weapons systems (fighter jets, missile systems, and satellites).
• Global price volatility: China’s control over strategic mineral supply allows it to influence global prices, leading to price volatility, especially during geopolitical tensions or supply chain disruptions. E.g. Production slowdowns and export delays during covid-19 pandemic led to spikes in prices of rare earth metals.
• Resource diplomacy: China’s mineral monopoly forces countries to form strategic alliances and engage in resource diplomacy to secure access to alternative supplies.

Way ahead

• Diversification of mineral sourcing by developing mining projects in other regions and implementing new mineral mining technologies.
• Technological innovation and recycling of critical minerals could reduce demand by 20% to 40%, while material substitution could alleviate strains on supply and reduce costs.
• Strategic stockpiling could act as a buffer against sudden supply chain disruptions.

Additional Information:

Antimony

• Antimony is a semi-metal. In its elemental form, it is a silvery white, brittle, fusible, crystalline solid that exhibits poor electrical and heat conductivity properties and vaporises at low temperatures.
• Antimony is not an abundant element but is found in small quantities in over 100 mineral species.
• China produces 88% of the world’s antimony.

Uses of Antimony

• Antimony is used in the electronics industry to make semiconductor devices, such as infrared detectors and diodes and in plastic production as a heat stabiliser in PVC.
• It is used in solar panels to improve the stability of the solar performance of the glass upon exposure to UV radiations.
• A lead-antimony alloy is used in batteries. Other uses of antimony alloys include type metal (in printing presses), bullets and cable sheathing.
• Antimony compounds are used to make flame-retardant materials, paints, enamels, glass & pottery.

Author: Arjun Kr. Paul