While China controls the world's market for rare earth elements, Australia is positioning itself to benefit from the shift to mining and refining the minerals outside of the sphere of Beijing's control. Credit: Pexels.

Neodymium begins life as a “rare earth” element (REE) encased in another mineral.

Once pulled from the ground, the rock has to be crushed and cracked — a process that involves heating the material to break the chemical bonds that bind it together.

After that comes “leaching,” where a chemical wash is used to dissolve the rare earth so it can then be gathered up as a concentrate. From there it’s refined into a pure oxide ready for manufacture.

It’s a costly, complicated and tricky extraction process that can be extremely polluting.

It’s also becoming increasingly necessary, for the world’s shift from internal combustion engine vehicles, to electric and hybrid vehicles, The Guardian reported.

Check out these stats:

  • There are an estimated 1.4 billion cars on the world’s roads today. To head off the worst effects of climate change, every single one will need to go electric eventually.
  • In each car, there is roughly a kilogram of magnet providing the motion needed to fire engines and electrify windows.
  • Roughly 30% of this material is made up of rare earth material known as neodymium and praseodymium (NdPr).
  • This material is three times stronger and a tenth the size of conventional magnets – and essential to the process.
  • In 2016, Japanese car manufacturer Honda tried and failed to build a hybrid vehicle without rare earths.
  • Over the next decade the use of NdPr in electric vehicle magnets alone is projected to soak up 40% of total demand, according to some projections.

In May 2015, the Chinese government released its 10-year industrial development plan titled Made in China 2025.

While the country already had the capacity to make wind turbines, photovoltaic solar cells and electric vehicles in huge enough quantities to make them cheap, the ambition was to turn a low-tech industrial base into a high-tech manufacturing sector, The Guardian reported.

Doing so, however, called for Chinese companies to ensure 70% of the components and materials they used were sourced domestically by 2050.

Today, China is the world’s largest supplier of REEs, producing a whopping 140,000 tons – not counting the volume added by the off-the-books trade, The Guardian reported.

That amounts to controlling 80% to 95% of the world market, depending on the mineral, thanks to its control of the intellectual property around the process and ability to run these industrial operations cheap and dirty.

John Coyne from the Australian Strategic Policy Institute says none of this happened by accident.

“I don’t think you get this sort of dominance of the market when you aren’t well endowed with those rare earths, I think it was a natural extension of their economic miracle,” Coyne told The Guardian.

“Someone in China saw that opportunity early on and now they dominate the market.”

And domination, which can often go along with political weaponization, is a fact that democratic nations can’t ignore.

When former US president Donald Trump launched his trade war against China in 2019, Chinese president Xi Jinping took a highly publicized tour of a rare earth production facility.

Meanwhile, as if on cue, state-controlled media The People’s Daily floated the possibility of retaliation.

“Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all?” the paper asked.

“The answer is no mystery.”

Although not as rare as gold, the group of 17 metals are used in the manufacture of advanced technologies, including electric vehicles, wind turbines and even missile guidance systems.

Your iPhone probably contains a number of them. Each F-35 fighter jet has about half a ton of these strategic elements.

Though Australia may have dragged its feet on climate change, the prospect of making a killing in the electric vehicle supply chain is getting attention.

The only other refinery outside of mainland China is found in Malaysia and is operated by the Australian company Lynas Resources, The Guardian reported.

According to the US Geological Survey, Australia contributed 17,000 tons of rare earths to the global supply last year — that number could see a drastic increase, as the Australian government positions itself to meet the new demand.

In March, a teleconference between the US, Japan, Australia and India held as part of the Quadrilateral Security Dialogue – a strategic partnership originally formed to counterbalance the influence of China in the Asia-Pacific – focused on the urgent need to find alternative sources of rare earths and build more refining capacity.

Critical Minerals Strategy had already been released in 2019, but rare earths received special mention under prime minister Scott Morrison’s $1.5bn National Manufacturing Priority roadmap in September last year, The Guardian reported.

Under the plan, rare earth projects could access dual financial support from Export Finance Australia and the Northern Australia Infrastructure Fund.

Elsewhere, Australian companies have been jostling for new business.

While the Malaysian government has moved to close Lynas Resource’s refining plant after sustained pressure over the environmental impacts from pollution, the company has proposed shifting production to Kalgoorlie in Western Australia.

It has also inked a deal to build a new refinery in Texas funded by the Pentagon.

Other companies are also planning their own rare earth projects.

Arafura Resources in particular is looking to break ground on its long-running Nolans rare earth project 135km north of Alice Springs in the Northern Territory.

Managing director Gavin Lockyer says it has taken 10 years to develop plans for the deposit, with its large concentrations of neodymium and praseodymium, The Guardian reported.

The vision is for an all-in-one operation where all remediation work takes place progressively over the mine’s projected 33-year-lifespan instead of leaving it all to the end.

“What makes us different is that we’re doing it all at the point of extraction, and we’re dealing with all our waste at the point of extraction. We’re just basically putting it back where it came from. We’re not transporting it around, or sending it to another country,” Lockyer says.

“This is seen as very favourable, particularly among European companies that want traceability in their supply chains.”

The end product will be an NdPr oxide that is 99.99% pure and has the consistency of talcum powder.

The only thing standing in the way currently is finance.

Lockyer says with prospective customers not willing to officially sign on the dotted line for fear of retaliation by their current Chinese-based suppliers, and the government-backed financial support previously offered yet to flow through, the clock is ticking.

“Australia’s got an opportunity here not just to dig it up and ship it overseas. We could become a world leader in this area. We’ve got good quality deposits and we’ve got good know-how,” Lockyer says.

“But we don’t have forever.”

Not everyone is jumping on the REE bandwagon, however.

Greenland’s left-wing Inuit Ataqatigiit party (IA), which has pledged to oppose a large rare-earth mining project, announced a new government coalition on Friday, as it reiterated its strong environmental stance and vowed to combat acute social issues, Reuters reported.

The Arctic island of 56,000 people has gained international attention since former US President Trump offered to buy it in 2019, partly to help address Chinese dominance of rare earth mineral supplies.

“We are one people and we must stand together in Greenland, especially because our country is under incredible focus from the outside world,” new Prime Minister Mute Egede told reporters in the capital Nuuk.

For only the second time in 40 years, IA won a snap election last week with more than a third of votes, dethroning the ruling Siumut party, which backed REE international mining companies interested in mineral-rich Greenland, Reuters reported. 

It is estimated that Greenland holds up to 25% of the world’s key elements.

Locale fisherman near the proposed Kvanefjeld mine project feared that dust from the mine would hurt their fishing grounds and drinking water, despite assurances from the Australian firm behind the project, Greenland Minerals, that strict anti-pollution measures would be enforced.

— with files from Forbes magazine