The U.S. government, which has been heavily reliant on rare-earth imports from China, is reportedly seeking a potential rare-earth partnership with Afghanistan, but industry sources told the Global Times on Monday that such a deal is unlikely to affect the Sino-U.S. rare-earth trade, not at least in the short term.
"But the new move [of the U.S. turning to Afghanistan for rare-earth trade cooperation] signals that the U.S. has concerns about the security of its rare-earth supplies, the majority of which come from China," Wu Chenhui, a Beijing-based rare-earth analyst noted.
According to a Reuters report on September 22, U.S. President Donald Trump and Afghan President Ashraf Ghani backed letting U.S. companies develop Afghanistan's reserves of rare-earth minerals.
Data from the U.S. Geological Survey posted at minerals.usgs.gov in January showed that the U.S. imported about $120 million worth of rare-earth compounds and metals in 2016, down from $160 million a year earlier.
The website of U.S.-based Diplomat magazine noted on August 29 that in 2016, more than 70 percent of U.S. rare-earth imports were from China.
An executive at Gansu Rare Earth New Material Co surnamed Yang said that so far her company's rare-earth exports to the U.S. had not displayed any significant changes. But she declined to give details such as the volume of rare-earth exports to the U.S. in the past few years.
"Nowadays rare earths are widely used for various applications. Most domestic rare-earth companies depend more on the domestic market than on overseas demand," Yang told the Global Times on Monday.
Yang questioned whether such a U.S.-Afghanistan deal would affect Chinese companies' rare-earth exports to the U.S. greatly.
"Even if the U.S. government wants to open a mine in Afghanistan, whether it can actually succeed still remains a question. There are cases where U.S. companies failed to properly run rare-earth mines in the past," she noted.
Around mid-June in 2015, U.S.-based Molycorp, which owned the country's major domestic rare-earth supply source Mountain Pass mine, filed for bankruptcy, according to media reports.
An executive at Baotou Steel Rare Earth International Trade Co told the Global Times on Monday that the company's rare-earth exports to the U.S. are going on as usual, but she declined to disclose more information.
China Rare Earth Co didn't reply to an interview request as of press time, and Jiangxi Tungsten Holding Group Co could not be reached for comment.
Analyst Wu agreed with Yang that a possible U.S. deal with Afghanistan wouldn't affect domestic companies in the foreseeable future. "It might take a decade for a mine to start production, so the influence, if there's any, will be very slow," he told the Global Times on Monday.
He also noted that demand is rising for China's rare-earth products from the domestic and overseas markets, which will help offset any negative influence from a U.S.-Afghan deal.
China exported 34,757 tons of rare earths in the first eight months this year, up 13 percent year-on-year, customs data showed in September.
"The growth rate might slow down a bit in about three years, as a result of the U.S. reducing dependence on Chinese products," Wu noted.
He also stressed that the U.S. government's move sends a signal that the U.S. government is concerned about letting China having a stranglehold on its rare-earth supplies, which are vital to modern defense industries like tanks and nuclear reactors.
"It's understandable that the U.S. wants to multiply its rare-earth import sources, but I don't think it can find a total substitute for China, which supplies almost 90 percent of the world's rare earths right now," Wu said.
He added that the Chinese government has also called for exports of high added-value products to replace exports of domestic resources. Therefore, the reported move by the U.S. "might not be a bad thing at all," he noted.
