China Controls Minerals That Run the World—and It Just Fired a Warning Shot at US
SINGAPORE—China’s decision this week to restrict the export of two minerals used in semiconductors, solar panels and missile systems was more than a trade salvo. It was a reminder of its dominant hold over the world’s mineral resources—and a warning of its willingness to use them in its escalating rivalry with the U.S. Around two-thirds of the world’s lithium and cobalt—essential for electric cars—is processed in China.
The country is the source of nearly 60% of aluminum, also used in EV batteries, and 80% of polysilicon, an ingredient in solar panels. It has an even tighter grip on rare-earth minerals that go into crucial technologies, like making smartphone touch screens and missile-defense systems, accounting for 90% of their refining, according to the International Energy Agency. Chinese companies also often control processing that isn’t done at home.
A significant share of the world’s nickel supply, for instance, comes directly from China, but much of the rest is also in Chinese hands, refined by companies from China in places such as Indonesia and Papua New Guinea. On Friday, Treasury Secretary Janet Yellen told U.S. businesses in China that the Biden administration was still evaluating Beijing’s decision announced Monday to restrict the export of gallium and germanium, but the move was a reminder of the importance of diversified supply chains.
China’s hold over the world’s minerals gives it the power to potentially disrupt the West’s energy transition, chip manufacturing and defense industries as its great-power rivalry with the U.S. heats up. A Chinese move to restrict exports of, say, lithium or cobalt would hit non-Chinese automakers hard, throwing the production of electric-car batteries into disarray.
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