Column: Rare earths trade gun is loaded; will China pull the trigger? – by Andy Home (Reuters U.K. – May 23, 2019)

https://uk.reuters.com/

LONDON (Reuters) – Is China about to weaponise its global dominance of rare earths production in an escalation of the trade dispute with the United States? President Xi Jinping’s visit to the Chinese city of Ganzhou earlier this week seemed designed to send a double message.

A stop-off at Yudu was for the domestic audience. The town was the starting point of the Long March, the 1934 retreat by Communist Party forces in their ultimately successful campaign against Chinese nationalists.

The message: things are going to get tough but we’ll win in the end. A side-trip to a rare earths plant operated by JL MAG Rare-Earth Co, was for the United States.

The message: if you’re going to ban Huawei and impose tariffs on our goods, you might want to consider who supplies all the groovy metals that make your modern technology possible. The point was underlined by a sharp jump in both rare earth prices and rare earth equities around the world in the wake of Xi’s high-profile excursion.

The rare earths trade weapon is already loaded. China dominates global supply chains. The country accounted for at least 71 percent of mined output last year and a higher ratio of processed rare earth compounds, according to the U.S. Geological Survey (USGS).

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