Chinesisches Monopol auf kritische Mineralien ist ‚das nächste Schlachtfeld für die USA‘

China has a ‚virtual monopoly‘ on many critical minerals, say JP Morgan, adding that for this reason, China could be ‚the next battleground‘ for the US. They also note that the US currently relies 100 percent on imports for 12 critical minerals that are essential for the production of semiconductors and other high-tech products. The situation is certainly not helped by the current US President Biden, who recently targeted many Chinese products with tariffs, including solar cells, electric vehicles, batteries, steel, aluminum, medical equipment, and much more.

– The latest announcement from the Biden administration regarding tariffs on $18 billion of Chinese imports has sparked a discussion about whether Chinese dominance in the critical minerals supply chain will emerge as the latest battleground for US-China strategic competition – wrote Amy Ho, Executive Director of Strategic Research at JPMorgan and Global Head of Research, Joyce Chang.

In 2022, China produced 68 percent of the world’s rare minerals, which are used, for example, in EV batteries, as well as 70 percent of the graphite used in lubricants, electric motors, and even in nuclear reactors.

However, China’s real dominance lies in its processing capabilities for these critical minerals. In fact, China processed 100 percent of the world’s graphite supply in 2022, 90 percent of rare minerals, and 74 percent of cobalt, which is also one of the key minerals for battery production.

– The increasing dependence on critical minerals, which are key inputs for semiconductors, electric vehicles, military weapons, etc., has raised concerns that China could leverage its dominance in this supply chain as retaliation against US industrial policy – warned Ho and Chang.

The trade war between the US and China began in 2018 when then-President Donald Trump imposed tariffs on a portion of Chinese goods, including solar panels and steel, citing intellectual property theft and unfair trade as reasons. Since then, tensions between the two largest world superpowers have only escalated.

Minerals Only for Import

Of the minerals identified by the US Geological Survey as critical for the US economy and national security, the US relied 100 percent on imports for 12 of them. These are arsenic, cesium, fluorspar, gallium, graphite, indium, manganese, niobium, rubidium, scandium, tantalum, and yttrium.

China is the main source for five of these 12 critical minerals, and the second or third largest source for fluorspar, gallium, and scandium. But China is not the only nation the US relies on for critical minerals. Mexico, Japan, and Korea are among other major sources for these minerals.

In addition to these twelve listed, the US relies on imports of over 50 percent for an additional 29 critical minerals. This includes over 90 percent net import dependence for titanium and bismuth.

Monopoly as a Weapon

The authors from JP Morgan wonder whether China will use its ‚monopoly‘ on critical minerals as a weapon?

As the trade war between the US and China heats up, minerals could prove to be a weak point that Beijing could exploit. In the worst-case scenario, where China increases export restrictions on critical minerals or imposes a complete export ban, the electronics, oil refining, defense, and electric vehicle sectors would be particularly vulnerable, Ho and Chang emphasize.

However, for now, JPMorgan strategists do not foresee a serious war over critical minerals.

The pair offered several recommendations on how the US can stabilize its supply of critical minerals to protect the defense industry, support the transition to electric vehicles, and prevent economic consequences of a potential trade war.

First, Ho and Chang noted that creating new mining capacities in the US is not an option for fixing the US’s dependence on mineral imports. Starting new mining operations takes years, comes with environmental risks, and regulatory approval in the US is often uncertain.

On average, it takes 16.5 years for a mining project to go from discovery to production in the US, according to the International Energy Agency. And obtaining a mining permit alone takes an average of seven to ten years.

Instead of new mining operations, Ho and Chang recommended diversifying sources of minerals, implementing new mineral mining technologies, and strategically storing critical minerals. They estimated that technological innovations and recycling could reduce demand by 20 to 40 percent, while material substitution could alleviate supply pressure and reduce costs over the next few decades. Additionally, strategic stockpiling of supplies by the US government and corporations could act as a buffer against sudden supply chain disruptions.