A recent report has shed light on the significant dependence of countries within the Five Eyes intelligence partnership - the United States, the United Kingdom, Canada, Australia, and New Zealand - on China for rare earth elements (REEs). These metallic elements are crucial in the mineral supply chain market, particularly for the production of military equipment.
The Five Eyes alliance, known for its collaboration on intelligence matters and sharing sensitive information, faces a vulnerability in its military supply chains due to the heavy reliance on Chinese exports of REEs. The report emphasizes the need for diversification away from China to minimize trading risks.
Currently, the U.S. imports up to 80% of its REEs from China, highlighting a significant shift from its previous role as a key player in the market. The report warns that the overreliance on China exposes the Five Eyes countries to potential political leverage by China, impacting defense technologies and global influence.
China dominates the global production and processing of REEs, accounting for 60% and almost 90%, respectively. Apart from military applications, REEs are essential in manufacturing various consumer electronics like smartphones, digital cameras, and LED lights.
The report underscores the urgency for the Western alliance to reduce dependency on China to avoid potential risks similar to Europe's past reliance on Russian gas before the invasion of Ukraine. Collaboration within the Five Eyes Alliance, along with ramping up domestic production in countries like Canada, Australia, and the U.S., is proposed as a solution to decrease China's influence in the market.
The U.S. has initiated efforts to strengthen its domestic supply chain of REEs, with investments announced by the Department of Energy to reduce environmental impacts and enhance national security. The report concludes that addressing these vulnerabilities is crucial to safeguarding the interests of democratic countries and mitigating risks associated with China's market dominance in the REEs sector.
