China currently dominates the global supply of rare earth elements or minerals. In the last few decades, it has also become the largest country in terms of mining and processing of rare earth elements. But if it stops its export or refining, then there can be turmoil in the whole world. But why are rare earth elements so important? To what extent is the world dependent on it?
I am Sarvpriya Sangwan. Think what would happen if we stopped making your phone, laptop, or even your parts. Most people probably don’t even think about this, but it can happen. The whole world’s technology runs on rare earth elements, which China holds a hold on, and if China stops exporting or refining, there will be a big upheaval in the whole world. These elements are going to become the new economic weapon, and is India ready for this or not? Today, the spotlight is on this. First of all, what are rare earth elements? In the outermost layer of the Earth, which is called the Earth’s crust, 17 chemicals are found it, such as lanthanum serum press G and neodymium, promethium, etc. They are called that, but they are in large quantities. The only problem is that extracting them, that is, taking them out of the earth’s crust and then refining them, is difficult and expensive too. And where are they used? It is almost impossible to do anything without them in the world of technology, be it solar panels, electric vehicles, smartphones, laptops, TVs, X-ray devices, or rare earth is present in everything. Elements will be needed; they have a very big role in the defense sector, and they are needed in guided missiles, radar systems, fighter jets, etc. Now the question arises that which country is the best in this entire rare earth elements sector? Then the answer is China
You can call China a superpower in this matter because China has 49% of the world’s rare earth element reserves. 60% of the world’s rare earth elements are produced in China. About 90% of the rare earth elements in the world are refined in China. America, Japan, Malaysia, and India depend on China. India imports most of the rare earth elements from China. So what is the problem? The problem is that America’s tariffs have created a big problem. When US President Donald Trump increased the tariff on Chinese products, China also played its trump card. China made the export of rare earth elements difficult. From April 4, China’s Commerce Ministry has imposed strict restrictions on the export of seven out of 17 rare earth elements, which companies export these elements. Now they will have to take an export license, and these are the elements that are used in the defense, energy, and automobile sectors. For example, the F-35 fighter jet requires more than 900 pounds of rare earth elements, more than 400 kg. And Genia’s class submarine requires 9200 pounds. 4173 kg of rare earth elements. So it is clear whether it is America or any other country, how much is the need for rare earth elements?
In 2010, after a dispute, China restricted the export of rare earth elements to Japan. China never agreed to the export bank but said that it has controlled the export. Due to environmental concerns, China has shown that it can use these critical minerals as weapons in political disputes. Then why is America or other countries so dependent on China? Many countries in the world have large reserves of rare earth elements, but it is difficult to extract them from the surface of the earth and is also expensive. It also affects the environment. Some of these also contain radioactive elements, and hence, the countries of Europe avoid producing them. After extracting them, they have to be refined, and in that too, China is at the forefront. 90% of the refining is done in China itself. There are many universities in China for research on rare earth elements. China has stopped selling the technology for extracting and refining them to the world. A lot of electricity is also required for refining. China has cheap electricity and cheap labor, and hence production is cheaper, but why is India being affected in this dispute between America and China? India produces only around one percent of the rarest elements. Very few private companies work in this sector here, so India is dependent on China for this. India has imported 2270 tonnes of rare earth elements in 2023-2,4, and most of it from China. India is also dependent on China for lithium, silicon, and graphite. These are not earth elements, but they are talked about with rare earth elements because these are also very critical minerals. Nothing can happen without them in modern technology. They are needed for semiconductors, electronics, batteries, and green energy.
So whenever there is a trade war, often there is a disruption in the global supply chain. Even nations that are not directly involved in this trade war are impacted by it. So at present, the impact of the disruption in the supply chain has started showing on the automobile companies of India. India is the third-largest automobile market in the world its effect is felt here too. It will have an impact. Companies like TVS Motor and Bajaj Auto have warned that if the supply of rare earth elements is not available soon, then the production of electric vehicles may stop by next month. Apart from this, the cost of companies making electric vehicles may also increase. If their cost increases, then customers will also get expensive options. According to a report in the Financial Times newspaper, there is a delay in getting licenses to export companies, and this is affecting India, Europe, and Japan. Japanese company Suzuki has stopped the production of one of its cars for the time being. The Society of Indian Automobile Manufacturers had said in early April that there is going to be a huge shortage of components in June. According to news agency Reuters, diplomats from India, Japan, Europe, auto makers, and industry people are trying to meet Chinese officials so that the licensing process of license can be expedited. This entire dispute has raised a concern that if ever there is a major dispute between India and China, can China use this weapon to get its conditions accepted?
EV Crisis Looms: What impact will China’s Rare Earth Magnet Export Ban have on Asia’s Auto Industry?
China’s export restrictions on rare earth magnets are disrupting global EV production, and ASHIYA is no exception. The ban could lead to a shortage of critical components used in electric motors, power steering, and braking systems. This may result in production delays, increased manufacturing costs, and higher prices for EVs in India, especially as the country’s EV sector is still in its early growth phase and heavily dependent on imports from China.
Have you booked an electric vehicle recently, and now the company is delivering it? Can the vehicles become even more expensive in the future? What has happened that auto companies from India to Japan are worried? Once again, China has given such a blow to the world’s auto industry that now the prices of vehicles can increase, and their production can also be stopped. China has imposed a lot of restrictions on the export of rare earth, and now this whole process has become very long. Rare earth magnets are used in everything from defense to tech. It has even been reported that Japan has stopped the production of Swift cars for the time being. But now let’s know what the rare earth magnet is that is being discussed so much. So it does not mean at all what its name suggests. It is not that it is rare. Its name is rare because it is found on Earth, but its extraction is very difficult. That is why it is called rare earth elements, and magnets are made from them. It is used in smartphones, missiles, electric vehicles, and other applications.
It is used in making defense equipment, which means it is a very useful element, but here the interesting thing is that China has a monopoly in everything from its meaning to extraction and export, in such a way that 60% of the rare earth production in the world takes place in China, not only this, 90% of the refining and processing of rare earth also takes place in China, that is, rare earth elements
But China has full control. Now the question arises that what exactly has China done? So they have put a lot of restrictions on the export of rare earth and have also slowed down the approval process. That means if India has to buy earth elements from China and export them from there, they have slowed down this process so much that the work which used to be done in three days earlier will now take time. Apart from this, they have also said that if any company of any country exports rare earth magnets from China, then first, the company will have to register itself. Apart from this, it will also have to tell where these rare earth elements will be used. The genius is that if rare earth elements are being exported from China to any country, then it should make the process longer, and we can say that China is trying to trouble other countries. Now the question is, why has China’s step created a stir in the world? It is because in many countries, production in the auto sector has been put on hold. A shortage of rare earth is being seen in General Motors, Toyota Suzuki because it is used a lot in vehicles, so the companies are very worried. The situation in India is also similar. If the situation remains the same, then its impact on TV production can be seen in the future. Maruti company says that it is not affecting it here right now, but this is a matter of tension; this is also a big challenge for the manufacturers. Now, the question is, why did China do this? We have seen that ever since it imposed a very high tariff on China, China has been doing some such activities that can create pressure in the world, and this step is also being seen in the same way. India can send its delegation to talk to China, not only India but South Korea are some of the countries that are continuously having bilateral talks with China so that the supply of these magnets should not stop and it is made so that the production of TV electric vehicles can run in India and other countries as well, because whatever be the case If the situation continues like this, then the prices of TVs can also increase. If there are no magnets, then the motor will not be made. If the motor is not made, then the car will not work, and it will take time to make the car. If it takes time to make the car, then the production will also be less, due to which the demand can increase, due to and the cars can also become expensive in the future. So basically, China’s step is being seen in such a way that China wants to create pressure all over the world, especially if we talk about it, because all the countries need rare earth magnets very much. India is also a part of it. In India, rare earth magnets are needed for TVs and electric vehicles, for which India is completely dependent on China. And not just India, the whole world, because as I told you, 60% of its production happens in China. So China has a monopoly on magnets, and China is using it completely to dominate the world right now. You will have to see how the rest of the countries solve this matter by talking to China.