The Western countries from the United States and Taiwan to the international alliances are actively preparing to break the monopoly by Communist China, from rare earths and minerals to batteries, from electric vehicles to key supply chains of drones. The scale and scope of these efforts demonstrate the increasing strength of the global democratic countries in confronting the threat posed by the Chinese Communist Party in the technology sector.
According to the Financial Times on September 23, an alliance called the “Minerals Security Partnership” composed of 14 countries and the European Commission will launch a new financing network to support key mineral development projects in a joint UN General Assembly event in New York. Their aim is to strengthen international cooperation to break the Chinese monopoly on crucial minerals for high-tech industries.
Apart from the European Union, the members of the MSP alliance include the United States, Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, South Korea, Norway, Sweden, and the United Kingdom.
During the UN General Assembly, the alliance is expected to release a joint statement stating that they will “enhance cooperation, promote information exchange, and mutual financing.” They have listed ten key mineral projects supported by partner governments of the MSP alliance.
Representatives from international investment firms like BlackRock, Goldman Sachs, Citigroup, Rio Tinto, and Anglo American are planning to attend the meeting to attract private investors and miners for further investment in the industry.
Jose Fernandez, the US Deputy Secretary of State for Economic Growth, Energy, and the Environment, mentioned that MSP is evaluating an additional 30 key mineral extraction projects as Western governments compete to secure essential raw materials for manufacturing products ranging from electric vehicles to advanced weapons. Fernandez criticized China for maintaining control over global critical mineral supplies through “overproduction and predatory pricing,” accusing Beijing of following monopolistic practices to exclude competition.
Fernandez emphasized the significance of establishing the MSP alliance, stating that “we realize we can’t solve this problem by any country alone, we will be stronger together.”
Amid the ongoing trade tensions between the US and China, Washington has imposed export restrictions and other limitations on semiconductor and other advanced technology. In retaliation, China restricted the export of certain minerals to the US, including antimony—a vital metal used in armor-piercing ammunition and night-vision goggles.
Chinese companies control over 90% of global rare earth processing capabilities and more than half of processing capacities for cobalt, nickel, and lithium used in manufacturing electric vehicle batteries.
Abigail Hunter, Executive Director of the SAFE Center for Critical Minerals Strategy, a non-government organization collaborating with the US State Department to promote investments in critical mineral supply chains, expressed that they are “changing the game” as Chinese enterprises were the sole players previously.
The US International Development Finance Corporation plans to issue a letter of interest to provide debt financing for a large mining project in Tanzania aiming to challenge Indonesia’s control over the nickel supply chain with backing from China. Nickel is a crucial raw material for batteries.
The Tanzania Kabanga nickel mining project developed by Lifezone Metals, located in Isle of Man, with 17% ownership by BHP, aims to counter Indonesia’s rapid rise as a de facto monopolist in the nickel market under Beijing’s support, currently claiming 55% of global production, significantly higher than its 2017 share of 16%.
DFC has not disclosed the loan size for the Tanzania project, with CEO Scott Nathan emphasizing the importance of ensuring fair treatment for the private sector to drive financing and investments stimulating industry growth.
Industry experts attribute China’s lead in critical mineral projects over the West to government subsidies, easier access to financing, robust mineral extraction processing technologies, lower costs, and lax environmental standards.
Private investors anticipate a surge in demand for materials necessary for energy transition to create a lucrative and stable market. However, they call for further support and public-private collaboration to attract more capital.
Dominic Raab, Global Affairs Director at key mineral investor Appian Capital Advisory, emphasized the necessity of potential returns to capture investor interest but voiced the difficulty and the need for perseverance in achieving success.
The drive for clean energy and sustainable transportation demands a transition in mineral supply chains to reduce reliance on foreign sources, as emphasized by White House economic advisor Lael Brainard and climate advisor Ali Zaidi.
Notably, US-based companies like Albemarle, Dow Chemical, and Group14 Technologies are set to receive significant funding from the US Energy Department for producing materials crucial for batteries, reflecting efforts to advance domestic production capabilities.
Additionally, Monroe Capital LLC announced a new $1 billion fund collaboration with the White House to enhance the prospects of US electric vehicles and facilitate loans for small car part suppliers, contributing to the industry’s transformation.
In parallel, the US Treasury allocated $9.1 million to initiate Michigan’s automotive supplier transition program, supporting small businesses in acquiring financing for electric vehicle component manufacturing amid shifting industry dynamics and emission regulations.
The Alliance for Automotive Innovation sees Monroe’s “Drive Forward Fund” as pivotal in enabling small suppliers to access private capital for modernization to support the industry’s shift towards sustainable transportation.
As part of broader efforts, the US and Taiwan are exploring collaborations between their drone companies to establish alternative supply chains and mitigate risk, aiming to overcome China’s dominance in the global drone industry.
A delegation comprising executives from 26 US drone system manufacturers and counter-drone system providers engaged with their counterparts and military procurement officials in Taiwan, focusing on fostering partnership and diverse manufacturing collaborations.
The visit underscores the shift towards “de-risking” industries in response to China-related safety concerns, with a primary aim to leverage Taiwan’s technological capabilities to strengthen Western roles in global supply chains.
Taiwan’s Defense Minister Chiu Kexi mentioned that collaboration with US drone companies presents opportunities to integrate Taiwanese firms into international supply chains and engage in joint production. This aligns with Washington’s emphasis on reducing China’s influence in supply chains, notably in the drone sector with dual military and civilian applications.
Taiwan boasts several leading electronic component manufacturers and drone companies, but the scale of its enterprises remains comparatively smaller than China. Nonetheless, the “National Team for Unmanned Aerial Vehicles” initiative aims to foster industry development post the Ukraine conflict impact to increase Taiwan’s drone industry robustness.
Challenges remain as private companies left out of recent Taiwan defense orders struggle with the cost of advancing capabilities. However, the collaboration with US drone firms offers prospects to address such hurdles.
Chiu expressed optimism that integration into US supply chains could amplify Taiwan’s drone industry, stating, “If we manage to enter international supply chains, we have the opportunity to expand our scale.”
In Canada, Saskatchewan province vows to compete with China in rare earth processing and production, aiming to become North America’s primary rare earth commercial alternative source, given the metals’ application in manufacturing electronic vehicles and wind turbine magnets.
Renowned for its mining prowess, Saskatchewan is home to Canada’s copper, potash, and uranium mines.
China holds a 95% global monopoly on rare earth production and supply, enabling price determination and uncertainty for end-users through export controls.
Amid China’s export restrictions on key metals like germanium, gallium, and antimony, Western countries have sought alternatives.
The Saskatchewan Research Council (SRC) rare earth processing facility has commenced commercial-scale production to meet the rising demand for magnets driven by OEMs like automotive manufacturers in the upcoming years.
Imran of SRC stated that their focus is to remain competitive in the Asia Metal Price Index, stressing the application of AI to optimize processes for efficiency.
The prices for rare earth metals like NdPr fluctuate between $65,000 to $75,000 per ton, currently dictated by the Chinese government.
Yet, some miners argue that metals produced outside China should command a higher price due to China’s lower environmental, social, and governance (ESG) standards.
Imran stressed that the market will remain competitive, and manufacturers need to align with the Asia Metal Index benchmark.
He noted, “The market tells you what the price for rare earths is, and if someone can strike a better deal, that’s great. Premium or non-premium markets, both will be competitive.”
These developments highlight the global efforts to diversify supply chains, enhance national security, and foster innovation, underlining the collaborative endeavors between Western countries to overcome challenges posed by Beijing’s monopolistic practices.