Discovery of deposit in Sweden to end Chinese hegemony over rare earth

China, for all practical purposes, has been put on notice following the discovery of deposits of large quantities of rare earths in Sweden. This marks the beginning of the end of the dependency of Europe on China for rare earth materials which, for their widespread usage in hi-tech areas, is considered as valuable as gold.

With an abundant supply of rare earths, China now enjoys a near monopoly on the supply of the valuable geological asset, increasing the price of rare earth materials at will and using the mineral as a geopolitical tool.

As much as one million tonnes of rare earth oxide lie buried deep under the rugged reaches of northern Sweden, well above the Arctic Circle.

It is more unwholesome for Beijing that Sweden is a member of the European Union and is in the process of joining the North Atlantic Treaty Organization.

The discovery has been made by a government owned iron ore mining company of Sweden that mines iron ore in the Arctic Circle area, the LKAB, which has described the find of rare earth as the largest known deposit of its kind in Europe. “This is the largest known deposit of rare earth elements in our part of the world and it could become a significant building block for producing the critical raw materials that are absolutely crucial to enable the green transition,” CEO of LKAB Jan Mostrom has said in a statement. The deposit contains praseodymium or neodymium oxides, materials that are used to produce the special magnets used in electrical vehicles.

In fact, rare earths now reach the lives of almost everyone on the planet, used in everything from hard drives to elevators to trains, and are vital in the field of green energy. Rare earth elements are essential for the manufacture of smart phones, electrical vehicles and wind turbines. Industry Minister of Sweden Ebba Busch has correctly called the find “a gold mine.”

“Take China, with its quasi- monopoly on rare earth and permanent magnets and prices rising by 50 to 90 percent in the past year alone. Supply of raw materials has become a real geopolitical tool,”an AP report from Sweden on January 13, 2023, quoted Internal Market Commissioner of European Commission Thierry Breton. “This must change,”echoed Ebba Busch. “Electrification, the self-sufficiency of the EU and independence from Russia and China will begin with the mine.”The EU, she said, was eager to learn from the experiences of the past and reduce one-sided dependencies like the one it had developed on Russia for oil and gas; beginning to cut ties after the start of the war in Ukraine.

The concern of the EU is understandable because it is lagging well behind the competitors in the market, getting around 98 percent of the supply of its rare earth minerals from China; with none of them so far mined in Europe. On the other hand, in the estimate of the European Commission, the demand for rare earths is likely to increase five-folds by 2030 due to the digital transition and green transition of the economy of Europe.

A rare earth element forms part of a set of 17 chemical elements in the periodic table, specifically scandium, yttrium and 15 other elements of the lanthanide group of metals, including neodymium, dysprosium and holmium. Rare earth elements are all metals. They have similar properties and can be found together in geological deposits. Also referred to as ‘rare earth oxides,’these are typically sold as oxide compounds.

As the use of hi-tech products has increased over the years, so has the demand for rare earth metals, says professor of Nano Mineralogy at Trinity College, Dublin, Juan Diego Rodriguez-Blanco. “This generates geopolitical competition because these are essential for technology, they have become very valuable.”Holmium is used to make control bars in the nuclear industry, microwaves. Neodymium is used to make very strong magnets, robots, cars, hard drives and wind turbines. Rare earth is also used in aerospace and military industries, to make resistant glass, fuel additives and lasers. It is also used in medical research and in certain medical treatments for lung, prostate and bone cancer.

Though called Rare Earth, the elements are not rare, say experts. They are relatively abundant in the crust of the earth and widely dispersed, but the process of their extraction and subsequent treatment is complex and costly, says the US Geological Survey. It is difficult to find a substantial quantity of these elements together and ready to extract. The extraction is done at a high environmental cost. Some of the processes use acids for separation and the combustion with high temperatures emits carbon dioxide, resulting in a dirty process.

China has by far the largest amount of rare earth reserve of any country in the world, about 37 percent, followed by Vietnam, Brazil and Russia. In terms of refining and processing of rare earths China accounts for more than 60 percent of all rare earth production, followed by the USA accounting for 16 percent, Myanmar nine percent and Australia eight percent. The biggest deposit of rare earth identified so far is located in Bayan Obo, a mining town in northern China.

Rare earths have become a key element in the trade war between the United States and China, Beijing being aware that it has in its possession a powerful weapon in the trade war against the USA, dependent on Chinese exports of rare earth elements. Even then, the Donald Trump administration in the U.S. had some years ago called the Chinese bluff, imposing new tariffs on the import of rare earths from China. The Association of China Rare Earth Industry had lodged an angry protest, accusing Washington of bullying; and thus exposing the dependency of the Chinese suppliers of rare earth materials on the American market. Even the own production of the USA of rare earths is not insignificant. The production was 15,000 tonnes in 2018.

To threaten the world community, the Communist Party of China at one point of time had hinted that it was considering the idea of putting restrictions on the export of rare earths. Considering that other countries, too, have large deposits of rare earth elements which may, if extracted, can feed the need of the U.S. and the European markets and end the Chinese hegemony once and for all, Beijing had, however, considered discretion to be the better part of valour and desisted from the idea of putting restrictions on exports.

With the Joe Biden administration announcing on January 20, 2023, that it is time for Sweden and Finland to join NATO, the discovery of a large deposit of rare earths in Sweden will put further pressure on Beijing. The military alliance that China fears the most will have a fresh supply of this critical raw material with many military uses too.

U.S. Secretary of State Antony Blinken said on January 20 that the USA placed great importance on the early accession of Sweden and Finland in NATO.

While the discovery of large quantities of rare earth mineral deposits in Sweden is set to free Europe from dependency on China for the supply of what is considered one of the most critical resources, the hapless Tibetans are a worried lot that the availability of many rare earth minerals in the plateau will further encourage the Chinese authorities to exploit the mineral on a large scale and destroy the fragile environment of what is considered the third pole of the world. A Tibet Policy Institute article says that the National Development and Reforms Commission of China has revealed the plan to step up the exploration of strategic mineral resources like rare earths from Tibet in the five-year period from 2021 to 2025. Among the rare earth minerals, the reserves for lithium are abundant in Tibet. With the demand for batteries for electrical vehicles soaring all over the world, the demand for lithium will increase. The production of lithium carbonate from the Tso-Ngon Lake has already been doubled. China has been practicing all sorts of destructive mining practices in Tibet to exploit the deposits of iron ore, copper and chromium. Their processing, too, has been damaging the environment of Tibet. Now with the emphasis on rare earths, the Chinese exploitation of the natural resources of Tibet will increase further.