Who has the upper hand as the battle over rare earths escalates?

China seems better prepared for this round against the US but it’ still too early to bet on an outcome

- HARSH V. PANT & KALPIT A. MANKIKAR

Beijing is tightening its clamps on components that are integral to technology supply chains.

Lithium batteries and related material, artificial diamonds that have industrial uses and rare earths like holmium, erbium, thulium, europium and ytterbium have been put on China’s export-control list.

This development comes on the heels of samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium being added to that list this year. To comprehend the extent of the curbs and China’s supply stranglehold, take dysprosium, which is used in semiconductors. China refines 99% of this rare earth; a facility near Shanghai under its ministry of land resources accounts for the entire world’s production. In what constitutes Beijing's extra-territorialization of domestic laws, entities making products that require such Chinese inputs will need a licence before their output is sold to a third country. For instance, Beijing is seeking commitments from New Delhi that the rare earth magnets supplied by it will be used solely to fulfil domestic needs.