China could restrict its export of rare-earth metals as a trade-war tactic. Here's what they are and why they're so crucial.

Though rare-earth elements are used in trace amounts, their unique magnetic, heat-resistant, and phosphorescent qualities make them essential in the production of products like batteries, car engines, and LCD TV displays.

Rare-earths can interact with other elements to form materials with properties that neither element could offer on its own. For example, when combined with iron and boron, the rare-earth neodymium helps create one of the strongest magnets on the market, which is useful in iPhones and hard drives.

Thulium and lutetium are two of the least common rare-earth elements, but their average abundance in the Earth's crust is still nearly 200 times greater than that of gold, according to the USGS.

Still, there are only a few viable areas on the planet where rare-earth elements can be mined and refined, and they're expensive to extract (and therefore to purchase). Building a rare-earth mine can cost up to a $500 million, according to the Wyoming Mining Association.

According to The Conversation, Europium — the rare-earth used in computer monitors and TV screens — cost about $712,000 per metric ton.

When the Earth formed, the minerals were incorporated into the deepest portions of the mantle.

As tectonic activity has moved portions of the mantle around, rare-earth minerals have found their way closer to the surface. The process of weathering — in which rocks break down into sediment over millions of years — spread these rare minerals all over the planet.

Identifying concentrated reserves of these elements is just one step in a difficult production process.

"Once you take it out of the ground, the big challenge is chemistry, not mining; converting the rare earths from rock to separated elements," Eugene Gholz, a rare-earth expert at the University of Notre Dame, told the Verge.

That separation process is expensive and labor-intensive. First, the raw material is aggregated into concentrated chunks rich in rare-earths. Then, to isolate the elements from each other and the surrounding material, the raw material gets dissolved and funneled through hundreds of liquid-containing chambers. These chambers are designed to separate the rare-earths based on how they dissolve in the surrounding liquid. Sometimes, the raw materials are doused in acids or radioactive chemicals.

The extraction process has to be repeated hundreds of times.

Reuters reported that the DoD accounts for about 1% of the US' demand for rare-earth minerals, according to a 2016 report from the US Government Accountability Office.

The military's night-vision goggles, precision-guided weapons, communications equipment, GPS equipment, batteries, and other defense electronics all utilize rare-earth elements.

Several rare-earth elements are used in electric-vehicle motors as well, including in the Tesla Model 3.

According to the USGS, upwards of 140 million tons of rare-earth elements exist in subterranean reserves across the globe in total. China holds an estimated 61 million tons.

The country supplied 80% of the rare-earth elements imported by the US between 2014 and 2017.

The president's visit to the factory hinted to the world that China could be planning to leverage their near-monopoly on the rare-earth industry to make the US back down in the trade war.

According to Reuters, the DoD sent a report to the White House and Congress on May 29 to ask for more federal funds to bolster domestic production of rare-earth minerals in order to reduce the country's dependence on China.

In 2010, China reduced its export quotas of rare-earth minerals, pushing prices up as much as 10%.

The country was forced to start exporting more of the minerals again after the European Union filed a dispute with the World Trade Organization in 2012, claiming that these export restrictions limited access for companies outside of China.

The California mine ships the roughly 55,000 tons of rare-earth concentrate it extracts each year to China for processing.

MP Materials, the company that manages the facility, has indicated that it plans to kick-start its own processing operation stateside in 2020, since the costs of shipping raw materials to China is rising.

Rare-earths are also mined in Brazil India, South Africa, Canada, Australia, Estonia, and Malaysia.

Waste products (called tailings) from the process of refining rare-earth minerals are often dumped in dams and reservoirs near processing facilities. Sometimes, radioactive chemicals are used during the refining process, and those can enter waterways as well.

One company near Baotau, China — called Huamei Rare-Earth High-Tech Co — dumps its tailings in a 10-square-kilometer dam that can hold 230 million cubic metres of this waste. (That's equal to 92,000 Olympic-sized swimming pools.)

"When we boil the water to drink, this white scum forms on top and it tastes bitter," Guo Gang, a 58-year-old farmer, told Reuters.

Source: Reuters

According to a 2018 study published in the journal Scientific Reports, the deposit near Minamitori Island contains 16 million tons of the valuable metals.

"This is a game changer for Japan," Jack Lifton, a founding principal of market-research firm Technology Metals Research, told The Wall Street Journal. "The race to develop these resources is well underway."