President Biden upped the ante in the ongoing spat with China last month when he targeted<\/a> Chinese products including solar cells, EVs, batteries, steel, aluminum, medical equipment, and more with a raft of new tariffs.<\/p>\n \u201cThe Biden administration\u2019s latest tariff announcement on $18 billion of Chinese imports has elevated the debate on whether China\u2019s dominance in the critical minerals supply chain will emerge as the latest battleground for U.S.-China strategic competition,\u201d wrote JPMorgan\u2019s executive director of strategic research, Amy Ho, and global head of research, Joyce Chang, in a note to clients.<\/p>\n In 2022, China produced 68% of the world\u2019s rare earth minerals, which are used for things like magnets and batteries, and 70% of its graphite, which is used in lubricants, electric motors, and even nuclear reactors.<\/p>\n However, China\u2019s real dominance lies in its mineral processing capabilities, according to JPMorgan. China processed 100% of the world\u2019s graphite supply in 2022, 90% of rare earths, and 74% of cobalt (another critical mineral for batteries).<\/p>\n \u201cIncreasing dependence on critical minerals, which are key inputs to semiconductors, EVs, military weapons etc., has raised concerns that China could use its dominance in this supply chain to retaliate against U.S. industrial policy,\u201d Ho and Chang warned.<\/p>\n The U.S. and China\u2019s tit-for-tat trade war<\/a> began in 2018, when former President Donald Trump slapped tariffs<\/a> on a range of Chinese goods and commodities, including solar panels and steel, citing the country\u2019s intellectual property (IP) theft<\/a> and unfair trade practices<\/a>. Since then, tensions between the world\u2019s two largest superpowers have only escalated, with a high-stakes battle<\/a> over semiconductor IP and manufacturing taking center stage amid the AI boom.\u00a0<\/p>\n Of the minerals that the U.S. Geological Survey has identified as critical to the U.S. economy and national security, the U.S. was 100% reliant on imports for 12 of them.\u00a0<\/p>\n Top source: <\/strong>China<\/p>\n Applications:<\/strong> Semiconductors<\/p>\n Top source:<\/strong> Germany<\/p>\n Applications: <\/strong>Research and development<\/p>\n Top source:<\/strong> Mexico<\/p>\n Applications: <\/strong>Manufacturing of fuel, foams, refrigerants, and more<\/p>\n Top source:<\/strong> Japan<\/p>\n Applications: <\/strong>Integrated circuits and optical devices<\/p>\n Top source:<\/strong> China<\/p>\n Applications: <\/strong>Lubricants, batteries, fuel cells<\/p>\n Top source:<\/strong> South Korea<\/p>\n Applications: <\/strong>Liquid crystal display screens<\/p>\n Top source:<\/strong> Gabon<\/p>\n Applications: <\/strong>Manufacturing of steel and batteries<\/p>\n Top source:<\/strong> Brazil<\/p>\n Applications: <\/strong>Manufacturing of superalloys<\/p>\n Top source:<\/strong> China<\/p>\n Applications: <\/strong>Electronics research and development<\/p>\n Top source:<\/strong> Japan<\/p>\n Applications: <\/strong>Manufacturing of alloys, ceramics, and fuel cells<\/p>\n Top source:<\/strong> China<\/p>\n Applications: <\/strong>Manufacturing of electronic components, capacitors, and superalloys<\/p>\n Top source:<\/strong> China<\/p>\n Applications: <\/strong>Manufacturing of ceramics and lasers<\/p>\n China is the top source for five out of 12 of these critical minerals, and the second or third top source for an additional three: Fluorspar, Galium, and Scandium. But China isn\u2019t the only nation the U.S. relies on for key minerals. Mexico, Japan, and Korea are among the other top sources.\u00a0<\/p>\n The U.S. relies on imports for 50% or more of its supply of an additional 29 minerals beyond the dozen listed above. This includes a 90% plus net import reliance for titanium, 14 rare earths, and bismuth.<\/p>\n With the U.S.-China trade war heating up, minerals could prove an exploitable weak point for Beijing. In a worst-case scenario where China increases export restrictions for key minerals or implements a full ban, the electronics, oil refining, defense, and EV sectors would be especially at risk, JPMorgan\u2019s Ho and Chang noted.<\/p>\n Still, for now, JPMorgan\u2019s strategists don\u2019t foresee a serious mineral turf war taking place. \u201cThere are growing concerns that China will weaponize its position, but we expect China\u2019s response to remain proportionate and limited based on past actions,\u201d they wrote Monday, adding that the U.S. can also look to alternative suppliers and substitutes.<\/p>\n The pair offered a few recommendations for how the U.S. can stabilize its supply of critical minerals to protect the defense industry, support the EV transition, and prevent economic fallout from a potential commodity trade war.\u00a0<\/p>\n First, Ho and Chang noted that creating new U.S. mining capacity isn\u2019t an option to fix the U.S.\u2019s reliance on mineral imports. New mining operations take years to start, come with environmental risks, and regulatory approval in the U.S. is often uncertain. It takes 16.5 years, on average, for a mining project to move from discovery to production in the U.S., according to the International Energy Agency. And securing a permit for a mine alone takes an average of seven to 10 years<\/a>.<\/p>\n Instead of new mining operations, Ho and Chang recommended the diversification of mineral sourcing, the implementation of new mineral mining technologies, and strategic stockpiling of key minerals. They estimated that technological innovation and recycling could reduce demand by 20% to 40%, while material substitution could alleviate strains on supply and reduce costs over the next few decades. In addition, strategic stockpiling by the US government and corporations could act as a buffer against sudden supply chain disruptions.<\/p>\n \u201cMore opportunities exist to diversify critical mineral suppliers than there are for oil, and the countries that are in the process of broadening their mining and process capabilities include allies such as Canada, Australia, the EU, and Japan,\u201d they added. \u201cThe U.S. should remain optimistic.\u201d<\/p>\n<\/div>\n<\/div>\nImport-only minerals<\/h2>\n
1. Arsenic<\/h3>\n
2. Cesium<\/h3>\n
3. Fluorspar<\/h3>\n
4. Gallium<\/h3>\n
5. Graphite<\/h3>\n
6. Indium<\/h3>\n
7. Manganese<\/h3>\n
8. Niobium<\/h3>\n
9. Rubidium<\/h3>\n
10. Scandium<\/h3>\n
11. Tantalum<\/h3>\n
12. Yttrium<\/h3>\n
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Will China weaponize its \u2018near monopoly\u2019 on critical minerals?<\/h2>\n