China Stockpiles Critical Minerals for Electric Cars

Global communications rely heavily on certain metals. Without them, the internet would not exist. This fact alone categorizes them as strategic, but when international trade tensions and a globally dominant mining industry are added to the mix, the recipe for international conflict is complete.

Following a tariff war between China and the U.S., with duties reaching up to 145%, Beijing added seven minerals to its list of controlled exports, alongside the 17 accepted rare earths. This will necessitate a new classification, which could take months to approve, thereby reducing international trade to a minimum in the interim.

This scenario unfolded late last year with gallium, germanium, and antimony, key elements in the tech industries, particularly semiconductors.

The latest elements classified by China include samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Except for the last two, these belong to the lanthanide family—atomic numbers 57 to 71 on the periodic table—and have critical applications in constructing screens, medical and defense equipment, as well as powerful magnets, which are the foundation of electric car motors and wind generators. Currently, around 400,000 tonnes of rare earths are extracted annually, with China dominating the global market at 69%.

Beijing argued that these minerals have "dual-use"; while they have civilian applications, they can also be used for military purposes and therefore must be controlled. Notably absent from the restricted list are neodymium and praseodymium, used to make powerful magnets. However, analysts note that these are among the most common, with China controlling 89% of the global supply. Malaysia follows with 8.1%, and the U.S. with 1.7%.

Despite being called rare earths, lanthanides are not particularly hard to find in the Earth's crust. However, they are not easy to refine, as they are not usually found concentrated but rather scattered, requiring complex processes to refine them.

What makes rare earths interesting is their internal composition, as they have more electrons around their nucleus than typically orbit in other elements. For example, neodymium has four 'free' electrons spinning in the same direction. This creates positive and negative poles, generating almost permanent magnetic fields, allowing their force to be used in electrical applications. Neodymium is a prime example, as it can transform energy into motion or vice versa, making it useful in zero-emission vehicles and wind generators.

Despite these qualities, neodymium needs to be mixed with other metals to form durable alloys, another virtue of rare earths. In its purest state, neodymium's magnetic forces begin to deteriorate at 80°C—a temperature easily surpassed by an electric motor—and it is also prone to oxidation and cracking.

To operate at the revolutions and temperatures required by an electric vehicle, neodymium is often combined with dysprosium. According to Porsche, whose engineers know a thing or two about building high-performance electric motors, "No alternative matches the power density and performance of permanent magnet synchronous motors with rare earths. It is unlikely that neodymium, dysprosium, and terbium will be replaced in the short term, especially in sports cars."

An electric car contains about 500 grams of rare earths, elements that are almost absent in combustion models—except in small amounts for electronics and lighting.

As decarbonization is the fastest-growing segment projected for the future—not only in transportation but also in energy—it is estimated that the demand for rare earths will increase twentyfold by 2040.

In addition to rare earths, copper, nickel, manganese, cobalt, graphite, and lithium are essential for electric cars. It is estimated that each vehicle contains about 207 kilograms of these elements, nearly six times more than a thermal car.

Although China controls the distribution and much of the mining operations to extract these raw materials, many are located outside its borders. An example is lithium, the chemical base of batteries, with reserves primarily in South America, in Chile, Bolivia, Argentina, and Brazil. The Brazilian government has launched an incentive plan worth 815 million to promote the development of projects related to strategic minerals and rare earths. But it is not just the countries' eagerness to protect their position in a market promising spectacular growth and profit; companies are also rushing to create joint ventures and refineries in strategic locations, such as Canada, which has its own mineral reserves but has begun investing in regions near the clean energy production hub—China—like Laos.

According to the International Energy Agency (IEA), the demand for lithium is expected to nearly double by 2040—currently, the automotive industry already surpasses consumer electronics as the largest buyer of this element. Copper demand will increase by 40%, and nickel and cobalt by 70%. The challenge Beijing faces is that its relative lack of deposits may lead to conflicts with local governments to secure extraction. Therefore, its mining companies have already purchased South American operations.