China's rare earth exports grind to a halt as trade war controls bite and UK Steel fate decided on Saturday

12th April 2025

Most of us have hardly any idea how rare earths affect the products we use. So let's take a look.

Read the article at Reuters

China has recently imposed export restrictions on seven rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These elements are critical for various industries, including defence, renewable energy, and electronics. The restrictions have caused significant disruptions in global supply chains, particularly affecting the U.S. and Europe, which rely heavily on imports from China1.

These rare earths are essential for manufacturing high-tech products like electric vehicles, wind turbines, and advanced defence systems. China's dominance in rare earth production—accounting for approximately 90% of global output—means these export controls have far-reaching implications.

China has also imposed export restrictions on antimony, a critical mineral used in defense technologies, electronics, and flame retardants. These restrictions include antimony ore, refined antimony metals, antimony oxide, and gold-antimony smelting technologies2. The export controls have significantly disrupted global supply chains, particularly for the U.S. and Europe, which rely heavily on Chinese imports.

Antimony is vital for manufacturing armor-piercing ammunition, night vision goggles, and precision optics, making it a strategic resource for defence industries. The restrictions are part of China's broader strategy to safeguard national security and assert control over critical mineral exports.

China plays a significant role in the global lithium market, but it doesn't fully control it. While China only holds about 8% of the world's lithium reserves, it dominates the lithium refining and battery production industries, processing over 60% of the world's lithium and producing the majority of lithium-ion batteries2. This gives China substantial influence over the supply chain for electric vehicles and renewable energy storage.

However, China relies on imports for much of its raw lithium, sourcing it from countries like Australia, Chile, and Argentina. Its dominance comes from its ability to refine lithium and manufacture batteries at scale, supported by government policies and investments in technology.

China's dominance in lithium processing and battery manufacturing carries far-reaching implications across industries, economies, and geopolitics. Here are some key impacts:

Industrial Impact
EV Market Dependency: China's lithium processing power strengthens its grip on the electric vehicle (EV) market, with nations dependent on Chinese technology for battery production—a critical component of EVs.

Technological Innovation: China's capacity to refine lithium at scale promotes advancements in battery technologies, including solid-state batteries, which could redefine energy storage.

Economic Impact
Market Pricing Power: As a major processor of lithium, China can influence global lithium prices and potentially create volatility in supply chains if restrictions or policy changes are introduced.

Strategic Trade Advantage: This dominance provides China a strong negotiating position in trade deals involving critical minerals.

Geopolitical Impact
Global Power Shift: Control over lithium refining allows China to solidify its influence in the clean energy transition—an area that is vital for global sustainability efforts and future geopolitical alliances.

Supply Chain Vulnerability: Nations like the U.S., Europe, and others risk supply chain disruptions if relations with China deteriorate, driving interest in building alternative lithium refining capacities domestically or in allied nations.

Environmental and Social Implications
Sustainability Concerns: China faces scrutiny over the environmental impacts of lithium mining and processing, raising challenges for international collaboration on sustainable practices.

Worker Conditions: The push for dominance could also amplify concerns about labor conditions in the mining and refining industry.

As nations accelerate their shift toward renewable energy, China's position gives it remarkable leverage over the global clean energy economy.

China's dominance in lithium processing and battery manufacturing affects several key industries, primarily those tied to clean energy and advanced technology. Here's a breakdown of the most impacted sectors:

1. Automotive Industry
Electric Vehicles (EVs): Lithium-ion batteries are essential for EVs, and China's control over refining impacts the global supply chain, influencing production costs and timelines.

Hybrid and Autonomous Vehicles: Batteries used for these technologies are also affected, with potential disruptions in innovation and deployment.

2. Renewable Energy
Energy Storage Solutions: Lithium-ion batteries are crucial for storing energy in solar and wind power systems, making this sector highly reliant on China's capabilities.

Grid Infrastructure: Advancements in energy storage for grid stabilization and peak demand management are directly tied to lithium supplies.

3. Electronics and Technology
Consumer Devices: Smartphones, laptops, and tablets all depend on lithium-ion batteries, which means China's role is pivotal in ensuring consistent production.

Internet of Things (IoT): Battery-powered IoT devices, including smart home products and wearables, are affected by supply chain dynamics.

4. Defense and Aerospace
Military Equipment: Lithium-ion batteries are used in advanced defense systems, drones, and other critical technologies, adding a strategic dimension to China's dominance.

Space Exploration: Lithium batteries are integral for powering satellites and spacecraft, impacting global aerospace projects.

5. Emerging Technologies
Electric Aviation: The development of electric aircraft relies heavily on lightweight, high-capacity lithium batteries.

Artificial Intelligence and Robotics: Portable and efficient energy solutions like lithium batteries are essential for powering advanced AI-driven robotics.

China's leverage in these industries underscores the need for nations to diversify their supply chains and invest in alternative lithium processing and battery manufacturing capabilities.

Here's a detailed look at how each of these rare earth elements is used:

Samarium

Commonly employed in the production of samarium-cobalt magnets, which are prized for their excellent resistance to high temperatures and corrosion.

These magnets are integral in devices such as headphones, personal stereos, optical lasers, and even components in nuclear reactors.

Gadolinium

Enjoys a dual role in both industrial and medical fields. It is critical for making high-strength magnets and electronic components including data storage devices.

In healthcare, gadolinium is a key component in MRI contrast agents—improving the clarity of scans for detecting cancerous tumors—and is also used in nuclear reactor technology.

Terbium

Plays a pivotal role in lighting and display technology: it's used in phosphors that produce the green color in LED lights and low-energy bulbs, as well as in mercury vapor lamps.

Additionally, terbium enhances the safety and efficiency of medical imaging devices, such as X-ray systems, contributing to clearer and safer diagnostics.

Dysprosium

Essential for enhancing the performance of high-temperature permanent magnets used in wind turbines and electric vehicle motors.

Its inclusion ensures that magnets can maintain their strength even under extreme conditions. Dysprosium is also employed in control rods for nuclear reactors, where precision and reliability are paramount.

Lutetium

Although one of the least abundant rare earths, lutetium is valued in the petrochemical industry. It is used as a catalyst in the cracking of hydrocarbons in oil refineries, facilitating the production of gasoline and other fuels.

It also finds specialized applications in certain medical and research fields.

Scandium

When alloyed with aluminum, scandium significantly enhances the strength and lightness of the metal. This alloy finds its way into aerospace components (including fighter jets), high-performance bicycles, and even sporting goods like baseball bats.

Scandium is also utilized in high-intensity discharge lamps, contributing to more efficient lighting solutions.

Yttrium

A versatile element, yttrium is key for the production of white LED lights, lasers, and camera lenses due to its ability to create bright, stable phosphors.

Beyond electronics, yttrium is crucial in advanced materials like superconductors and is used in certain cancer treatments (for instance, Yttrium-90 radioisotope therapy).

The strategic nature of these elements becomes particularly evident when nations depend on them for critical applications in defence, renewable energy, electronics, and medical imaging. China's control over the export of these elements can profoundly influence global supply chains and technological advancements across multiple sectors.

Considering the breadth of applications—from everyday consumer electronics to cutting-edge renewable energy systems and medical diagnostics the tariffs should have had a better plan.

Then Steel in th UK
British Steel is currently owned by the Jingye Group, a Chinese steel-making enterprise. The company's assets were originally acquired from Tata Steel Europe by Greybull Capital in 2016, and then, in 2020, Jingye Group took over, rebranding it as British Steel Limited. This acquisition has raised strategic and economic discussions in the UK, particularly concerning national security and domestic production capabilities.

Given these dynamics, it's interesting to consider how foreign ownership of critical industries can influence industrial policy and national strategy.

With the steel industry about to collapse the UK government meets on Saturday 12 April 2025 possibly to nationalise the steel industry before the furnaces go out for good.

The British Steel plant in Scunthorpe—particularly its blast furnaces—is the one most at risk of closing. The facility, now under Chinese ownership by the Jingye Group, finds itself in a precarious position after the cancellation of vital raw material orders by the owner. This move has threatened the very operation of the plant, prompting emergency debates in Parliament and discussions of potential state intervention to keep the blast furnaces running. The future of the Scunthorpe site remains uncertain, and the potential closure raises wider concerns about the security of the UK's domestic steel production capacity and the thousands of jobs that depend on it.

Given the critical nature of steel to national infrastructure, security, and industry, what are your thoughts on the likelihood of government intervention to preserve this facility? And how might this situation reshape the broader industrial strategy in the UK?

Parliament will decide its fate on Saturday 12 April.