Taipei, Taiwan – As U.S. President-elect Donald Trump prepares for a second trade war with China after taking office on January 20, rare earth minerals vital to the production of electronics, cars and weapons are expected to be drawn into the war. .

While rare earths are abundant on the Earth’s surface (despite their name), China controls about 70 percent of their production and 90 percent of their processing, according to estimates from the U.S. Geological Survey and the International Energy Agency.

The 17 elements include scandium, promethium and yttrium, which are used to make everything from smartphones, semiconductors and electric car batteries to F-35 fighter jets, drones, wind turbines, radar systems and nuclear reactors.

In an era of heightened geopolitical tensions, the vulnerability of rare earth supply chains has become a growing concern for governments around the world.

Last month, China banned exports of gallium, germanium and antimony to the United States after President Joe Biden’s administration announced the latest restrictions on sales of advanced chips and machinery to the country.

The move was widely seen as symbolic because the United States has other sources of gallium and germanium.

But it still marks Beijing’s further use of rare earths as a tool for geopolitical advantage after declaring them state-owned in October and banning the export of technology used to extract and separate the materials.

It also recalled the Chinese government’s decision to briefly ban exports of such minerals to Japan in 2010 amid a maritime border dispute between the two sides.

As Trump pledges to impose a slew of new trade restrictions on China — ranging from 10% tariffs on Chinese goods over Beijing’s failure to curb fentanyl exports to 60% tariffs for unfair trade practices — — Beijing may further restrict rare earths to deal with species.

Even if the Chinese government doesn’t retaliate with an export ban, Trump’s tariffs could make minerals more expensive to obtain.

Ryan Castilloux, a rare earths expert at a Canadian research and consulting firm, said: “Looking forward to the next 12 to 18 months, the global geopolitical landscape is full of uncertainties that may have an immediate and significant impact on the prospects of supply chains and the economies they serve.” Adamas the intelligence service told Al Jazeera.

Washington is particularly concerned about rare earths such as neodymium, praseodymium, dysprosium and terbium, which are used to make powerful neodymium magnets, also known as NdFeB magnets, Castilloux said.

Finished products such as rare earths and rare earth magnets, which are many times stronger than standard magnets, are considered a “weak spot for U.S. manufacturers and the defense industry” because the U.S. and its allies have not yet developed better alternative sources than China. That’s despite mineral production projects underway elsewhere, including in three U.S. states and Estonia, Castilloux said.

Washington has made establishing a “sustainable mine-to-magnet supply chain” a top priority.

In March, Acting Deputy Assistant Secretary of Defense for Industrial Base Resilience Danielle Miller said efforts to build a pipeline capable of supporting all U.S. defense needs by 2027 were “on track.”

While many countries, from Angola and Australia to Brazil, Canada and South Africa, have vast reserves of rare earths, extending supply chains beyond China is a challenging task.

Neha Mukherjee, a senior analyst for critical minerals, said China has been able to maintain its dominance in the industry thanks to its economies of scale, government subsidies and the accumulation of large inventories that allow it to trade at “unprecedented prices.” Reasonably Low Prices” Undercut Competitors Benchmark Mineral Intelligence.

Rare earths are a byproduct of mining other minerals such as iron ore, and their production is unpredictable. Therefore, the quantities and prices of different rare earths among these 17 minerals can vary widely.

Mukherjee said China was committed to keeping rare earth prices stable to support the domestic electric vehicle industry, even if doing so would harm the mining industry.

China’s near-monopoly and unrivaled prices have historically made operating rare earth mines and processing facilities unattractive to many investors.

“They prevent anyone from becoming a competitor. It’s not feasible to develop a mine when you can buy semi-processed materials at a competitive price,” said Mike Walden, senior director at TechCet, a consulting firm specializing in electronics supply chains. Mike Walden told Al Jazeera.

Walden added that time is also long, taking 10-20 years from exploration to construction.

A watershed moment in U.S. efforts to secure rare earth supplies was MP Materials’ reopening in 2018 of its Pass Mountain mine in California’s Mojave Desert, first discovered in the 1870s.

The company has since opened a magnet factory in Texas.

Other rare earth-related facilities outside China include a mine in Yellowknife, Canada, a magnet recycling plant in Texas, and a rare earth magnet factory in South Carolina, with more projects under development across North America.

Since 2022, the U.S. Departments of Defense and Energy have provided more than $440 million in grants to rare earth companies and provided additional tax credits under the Inflation Reduction Act.

Walden said the projects could help the U.S. weather the storm if China cuts off rare earth exports, although the country may still struggle to become fully self-reliant.

“The key here is that there are operational facilities in North America. Is it enough to meet all North American needs? The answer is no. Is it enough to support North America’s strategic needs? The answer seems to be yes,” he said, referring to Washington’s priority areas such as defense and energy.

Even when mines are opened or reopened outside China, rare earth minerals are still sent there for processing in many cases, analysts say.

China controls 99% of the processing of heavy rare earths, a subset of rare earths that are less abundant but vital to the production of electric cars, wind turbines and fiber optic cables.

North America isn’t the only region trying to catch up. After 15 years of development, Brazil’s first rare earth mine in Serra Verde went into commercial production in January this year.

Europe has rare earths processing facilities in France, Estonia and Germany, but no mines have yet been opened despite large deposits in Sweden, Finland, Norway and Spain.

Australia also has a large number of operating mining and processing facilities, and the government is investing hundreds of millions of dollars to develop more.

Benchmark Mineral Intelligence’s Mukherjee said such moves would still not be enough to reduce dependence on China.

“There is an urgent need for a circular economy. There is an urgent need for recycling facilities. The United States urgently needs to develop processed midstream and upstream facilities, and there should be significant funding redirected in this way,” she said.

Some hesitation – especially in Europe – is due to the environmental costs associated with rare earth mining and processing, including the separation and removal of the radioactive materials uranium and thorium.

Mining and processing produce large amounts of waste rock and can release residual concentrations of rare earths, radionuclides, heavy metals and acids into the surrounding air, soil and groundwater, according to a 2021 Canadian study.

Australia’s Lynas Rare Earth, the largest rare earth processing company outside China, faced massive protests in Malaysia in 2019 over the toxic waste produced by its rare earth processing facilities.

Analysts say some of these concerns can be overcome with new technology and automation to meet the higher environmental standards required by many governments, but that would take time and money.

Ironically, the industry could get a further boost if Beijing blocks its exports, said Adamas Intelligence’s Castilloux.

“The last time China restricted rare earth exports, it resulted in years of demand destruction as many end-users looked to reduce consumption or switch to alternatives over the next few years,” he said.

“Restrictions on magnet exports, even temporarily, may increase government investment in alternative supply chains domestically and internationally.”

With Trump just days away from returning to the White House, there is considerable uncertainty about how he will handle the rare earths industry.

During his first term as president, he issued an executive order declaring a national emergency for rare earths because the United States relied on “foreign adversaries” to obtain them.

Trump is widely expected to roll back environmental regulations that create barriers to mining and operations, but he has also expressed opposition to key financing initiatives such as the Inflation Reduction Act and the Bipartisan Infrastructure Act.

Some analysts worry that Trump may invoke the International Emergency Economic Powers Act to impose tariffs on imports of rare earths and other minerals, or direct the Commerce Secretary to launch a “Section 232” investigation into the impact of such imports on national security, as he did As it did in 2017. In 2018, despite aluminum being crucial to the economy.

In the meantime, the industry is preparing for a bumpy road ahead and stockpiling resources accordingly, Walden said.

“There are preparations. Everyone is expecting, not a cooling down, but a further escalation. So it’s tit-for-tat: revenge, next step, revenge, next step,” he said.