Chinese grip on rare earth elements It could take a decade for the West to challenge the East Asian giant's dominance over critical minerals, according to Goldman Sachs.
“China’s dominance is truly enormous,” Daan Straven, co-head of global commodities research at Goldman, said in a podcast published Tuesday.
He noted that approximately 92% of the world's recycling of rare earth metals and 98% of magnets made from these materials occur in China. This gives Beijing enormous leverage in trade disputes and makes the market highly sensitive to political news headlines.
Straven's comments read like this: President Donald Trump continues his journey through Asia, where he has signed a series of rare earth agreements with Japan and several Southeast Asian countries aimed at diversifying supply chains.
Rare earth elements, a group of 17 metals, have become one of the world's most geopolitically sensitive resources.
Their strategic importance made them constant flash point in tensions between Washington and Beijing.
Despite their strategic value, the global market for rare earths is small—about 33 times less than copper in total production value—but these minerals are critical to defense systems and advanced semiconductors.
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Western governments have pledged billions of dollars in recent years to rebuild domestic rare earth production capacity, but Goldman's Straven warns progress will be slow.
“It will take years to build independent supply chains in the West,” he said, adding that building a mine would take about 10 years and building a refinery would take about five years.
Trump is expected to meet with Chinese leader Xi Jinping on Thursday in South Korea, where rare earth elements could be a key issue for discussion.
Beijing expanded controls on mineral exports earlier this month, and new restrictions will take effect on November 8, just days before a 90-day trade truce with Washington expires.
“Ultimately, the final contours of any trade agreement between the US and China still need to be signed by the presidents of the two countries,” Straven said.
“And I don't think this problem is going to go away anytime soon,” he said.
