CHINA may use the “nuclear option” against Donald Trump in this escalating trade war and ban the exports of rare minerals.
The rare earth metals are an “important and strategic resource”, used in a wealth of technologies including iPhones, and batteries.
Alamy Live News Chinese President Xi Jinping learns about the production process and operation of the JL MAG Rare-Earth Co. Ltd. as well as the development of the rare earth industry
EPA China’s move comes after President Donald Trump imposed fresh sanctions on Huawei last week
China controls around 85 per cent of the mineral industry.
between 2014 and 2017, it supplied around 80 per cent of rare minerals imported by the US, the US Geological Survey has said.
This means the country has the power to damage the US economy through its technology sector, as Apple and other companies rely on Chinese manufacturing.
Without Chinese factories, the price of producing a Tesla car or Samsung Galaxy phone would skyrocket, and analysts worry Beijing is considering pulling the plug.
WHAT ARE RARE MINERALS?Rare earth metals are a group of 17 elements that appear in low concentrations in the ground.
The minerals are used in:
rechargeable batteries for electric and hybrid cars
computers and DVD players
catalysts in cars and oil refineries
monitors and televisions,
lighting and lasers
Several rare earth elements, such as neodymium and dysprosium, are critical to the motors used in electric vehicles.
President Xi Jinping fuelled speculation on his next move in the trade war, a visit to a rare earths Company on Monday, said: “Rare earth is not only an important strategic resource, but also a nonrenewable resource.”
China’s blue-chip stock index dropped to a three-month closing low today, as investors dumped technology shares fearing Chinese firms could bear the brunt in the trade war.
Analysts have classed Jinping’s move as “reckless”, which implies China could suffer as well.
US COMPANIES RELIANT ON CHINESE SUPPLIES
Companies that use rare materials to make sophisticated missiles including Raytheon Co, Lockheed Martin Corp and BAE Systems Plc.
The materials are used in their guidance systems, and sensors.
Apple Inc uses rare earth elements in speakers, cameras and the so-called “haptic” engines that make its phones vibrate.
The company says the elements are not available from traditional recyclers because they are used in such small amounts they cannot be recovered.
Since 2010, the government and private industry have built up stockpiles of rare earths and components that use them, according to Eugene Gholz, a former senior Pentagon supply chain expert, who teaches at the University of Notre Dame.
China blows everyone else out the water when it comes to rare earth production
WHAT ABOUT CHINA?
A top analyst on Chinese rare materials told the South China Morning Post: “I think it is a little bit reckless, from my point of view, for China to ban the export of rare earths to the US directly.
“There’s always some way to have a similar impact…
“Maybe we want to reduce exports to everyone. That is a likely scenario.”
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Apple Chinese factories employ around 1.4 million workers.
In 2017, Apple estimated that its business was responsible for creating and supporting 4.8 million jobs in China, including people who work on apps made for the iPhone and iPad.
So direct assault on Apple could stop other US companies pumping money into Chinese factories.
China’s move comes days after the US blacklisted Chinese phone titan Huawei.
US President Donald Trump ratcheted up tensions between the US and China last week by slapping a ban on technology from “foreign adversaries”, including Huawei – the world’s second biggest phone maker
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