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Can the US look up to Zimbabwe for rare earth metals?

By Features Writer – Monday 25 November 2019

HARARE (Mining Index) – WITH the on-going trade war between China and the United States (US) worsening, tensions between the two countries are directing attention to rare earths supply chain issues.

The US relies on China for about 80 percent of its rare-earth imports.

International analysts believe China has significantly restricted exports of rare earth metals in order to fully meet their domestic market requirements, leaving the US in a desperate quagmire to look for other sources of rare earths metals, with a few alternative suppliers having been able to compete with China.

While China has not officially said it would restrict rare earths sales to the US, various Chinese media have strongly implied this will happen.

In May this year, the U.S. Defence Department announced they were seeking new federal funds to boost local production of rare earth minerals to reduce dependence from China amid concerns that China could use its dominant position as a principal supplier of rare earths for leverage in the trade war between these two top world economic giants.

The on-going trade war between the US and China has made the US classify rare earths as ‘critical minerals’ whose demand for compounds and metals was worth US$160 million in 2018.

As the world leader in rare earth production, China controls approximately 37 percent of the world’s REE reserves.

Beijing began producing rare earth oxides in the early 1980s, becoming the world’s leading producer in the early 1990s before it steadily strengthened its hold on the world’s rare earth oxide market early 2000, becoming the dominant consumer and biggest importer of the group of minerals.

The US is the third largest consumer of rare earth materials after China and Japan.

China is the world’s largest producer of the materials by far with output of 120,000 MT recorded in 2018 while the US produced a paltry 15,000 MT of rare earths in 2018, up from no production the previous year. Mountain Pass mine in California remains the only mine that produces rare earths metals in the US, which resumed production in Q1 2018 after being put on care and maintenance in Q4 2015.

The US heavily rely on rare earth minerals for manufacture of military equipment such as jet engines, lasers, night vision devices, satellites and sophisticated missiles that use rare earths metals in their guidance systems and sensors, wielding the most superior military capabilities and equipment in the world making it retain its super power status.

Zimbabwe is geologically well known for hosting a large number of minerals, including 13 million tonnes of proven reserves, battery metals, coal and uranium. The sub-Saharan country is also endowed with the second-largest Platinum Group of Metals (PGM) and chrome resources globally.

The recent acquisition of 10 mines covering 12.6km² in Northern Zimbabwe by UK based Rainbow Rare Earths could make Zimbabwe a prime import source for the US for rare earth metals.

Rainbow Zimbabwe will hold 100 percent of the licences, with no free-carried interest for the government, in line with recent changes to the legal framework covering mining in Zimbabwe.

Will Zimbabwe consider rescuing the US considering existing sanctions and trade embargoes imposed on Zimbabwe?

With the US government having imposed and maintained sanctions on Zimbabwe for the past decade, US Assistant Secretary of State on African Affairs Tibor Nagy last month said his country had put financial and travel restrictions to 85 individuals including 56 companies/organisations facing restrictions not against the country of Zimbabwe.

Nagy added that there is nothing to stop US businesses from investing or from going to Zimbabwe, which is contrary as his country banned arms exports to Zimbabwe, affecting trade which has dwindled since 1993.

With dire need for foreign currency and new export markets, the Zimbabwe is Open for Business mantra does not restrict trade with any nation, the US included.

US Agency for International Development (USAID) and Centres for Disease Control and Prevention (CDC) have been providing assistance to Zimbabwe.

The US government says it seeks to highlight opportunities for trade and investment that will benefit both US and Zimbabwean companies by providing guidance to US companies on how they can take advantage of opportunities in Zimbabwe while complying with US laws.

Trade between the two countries has not halted. Goods exported to Zimbabwe totalled US$34 million compared to US imports of $75 million in 2018. Remarkable mineral imports from Zimbabwe FY 2018 included iron & steel and nickel which accounted for US$54 million and US$1 million respectively.

Zimbabwe’s economic revival has been hinged upon the success and growth of its extractive sector which is expected to grow to US$12 billion by 2023 and has been a major contributor to foreign currency earnings. It is Zimbabwe’s hope to become a major source market for rare earths for the US and other world economies. ENDS//

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