Global superpowers around the world are on the hunt for rare earth minerals. As the global clean energy transition gains traction, key components of clean energy and electric vehicle infrastructure are seeing soaring demand. As a result, a new form of geopolitics is rapidly evolving as nations rich in rare earth minerals such as lithium and cobalt gain leverage on the global stage. Now, historic heavyweights like the United States, the European Union, Russia, and China, are competing to woo governments in Latin America, Africa, and other developing regions to establish trade relationships and cost-competitive supply chains.
So far, China is blowing the competition away as both a producer and buyer of rare earth minerals. Beijing is already the “dominant producer of rare earths and graphite globally,” The South China Morning Post recently reported based on recent BloombergNEF data. “It also owns around a third of global rare earths, a sixth of graphite and an eighth of lithium reserves.” China’s chokehold on global supplies means that clean energy sectors around the world are reliant on Chinese supply chains to keep overhead reasonable as they work to grow their own clean energy sectors.
While they’re comparatively late to the game, the United States is now making a concerted effort to end its reliance on Chinese suppliers and become a clean energy competitor in its own right. This will require the acquisition of massive amounts of rare Earth minerals that China doesn’t already have established claims to. This has proven to be somewhat difficult. In Latin America, for example, where China has been rapidly expanding a green energy empire, the United States has had a comparatively difficult time entering into the market and establishing trade agreements.
As the United States searches for new rare earth markets free from Chinese influence, it has ended up in an ironic position. The West’s newest mark for a rare earth minerals trade agreement is sandwiched smack-dab between two of its biggest competitors: Russia and China. Last month, senior officials from the U.S. paid a visit to Mongolia as part of a “global charm offensive” to try to kickstart a rare earth minerals trade relationship. Mongolia has been historically referred to as “Minegolia” for its incredibly rich reserves of metals and minerals. “At the center of the Biden administration’s strategy is a sales pitch,” Scientific American recently reported. “The U.S. will give countries a better deal for their resources, officials say.”
In a sense, what the United States is telling Mongolia (and anyone else who will listen) is that whatever Beijing can do, Washington can do better. “Mongolia is facing a generational opportunity. And that generational opportunity is a need for us to find critical minerals and rare earths in order to achieve our clean energy goals,” Jose Fernandez, undersecretary of State for economic growth, energy and the environment, told E&E News. “What we offer is a way for them to do so responsibly, in a way that observes and adheres to ESG principles and that benefits the community.”
Mongolia isn’t the only subject of the United States’ current campaign. Fernandez also visited South Africa, the Democratic Republic of Congo and Mexico within the past year. At the same time, the U.S. is ramping up its own lithium production capacity. It’s clear that Washington is wasting no time securing as many possible rare earth supply chains as it can in order to keep up with a coming surge in clean energy additions.
The International Energy Agency (IEA) projects that worldwide, 107 gigawatts (GW) of new global renewable capacity will be added by 2023 – the largest absolute increase in history – bringing the global total to more than 440 GW. Meanwhile, electric vehicle sales are expected to see “explosive growth” this year, expanding by 35% to reach a fleet of 14 million, offsetting the need for 5 million barrels of oil a day by 2030. All that growth is going to require an enormous boost in clean energy manufacturing, which hinges on rare earth minerals. A January report from Popular Mechanics states that “an electrified economy in 2030 will likely need anywhere from 250,000 to 450,000 tonnes of lithium. In 2021, the world produced only 105—not 105,000—tonnes.”
The United States – and its competitors – are therefore working under an extreme sense of urgency to develop new rare earth resources, or risk a) failing to meet their climate pledges, and b) being locked out of the new global economy.
By Haley Zaremba for Oilprice.com
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