Tuesday, March 31, 2020
China Poised to Use Rare Earth Elements as Weapons
Korean High-tech Companies on Alert
China Poised to Use Rare Earth Elements as Weapons
  • By Jung Suk-yee
  • May 30, 2019, 08:49
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A Chinese official has suggested China might restrict rare earth exports to the United States.

With the U.S.-China trade war ongoing, an official at the National Development & Reform Commission of China said during his interview with Xinhua News Agency that attempts to suppress the economic growth of China by using products based on rare earth elements exported from China will make Chinese people unhappy. The remark made on May 28 implies that rare earth element export from China to the United States can be restricted.

China seems to be thinking that it is controlling the supply of rare earth elements in the United States and is capable of significantly affecting high-tech industries of the United States by monopolizing the elements. China warned South Korea and Japan not to side with the United States in the trade war, too.

South Korean companies are paying sharp attention to the possibility of rare earth element weaponization in that the elements are essential and indispensable for a wide variety of high-tech industries. At present, South Korean electric vehicle battery and semiconductor manufacturers’ rare earth element inventory is likely to run out in one year and the period is as short as 100 days in the case of Korea Resources Corporation.

Under the circumstances, South Korean semiconductor manufacturers such as Samsung Electronics and SK Hynix are trying to diversify their rare earth element supply sources for risk reduction. Likewise, electric vehicle battery manufacturers such as LG Chem and SK Innovation are making more efforts for import source diversification to Australia and Congo. The South Korean government began to check the rare earth element inventory of companies importing the elements.

“Chinese rare earth elements currently account for approximately 60 percent of South Korean companies’ total rare earth element imports whereas the ratio used to exceed 90 percent,” the government said, adding, “The ratio is expected to keep falling as more and more countries will begin to produce rare earth elements on their own with the prices of the elements on the rise.”