Peter McGuire: A couple of things. First up, yes, its dominance is very significant and we cannot take our mind off that China accounts for roughly 70% of the world’s production of rare earths. We all understand the implications and how they operate from the technologies, you have got headphones, you have got laptops, you have got smart watches, you name it, all of that side. Then, you have got the electric vehicle, then you have got more forms of technology from weaponry and from aircraft and all of those. So, not only manufacturing, and the impact that can have on the auto makers.
But given the latest round of talks between US and China in London last evening, they are expected to spill over to today as well. Do you believe this kind of diplomacy could ease the supply that we could have of these rare earth metals in the market or do you believe that China is going to continue to maintain its tight stance when it comes to these REMs?
Peter McGuire: It is a very hard one to speculate on quite simply because of the framework as far as discussions go. We all understand that China took this initiative after President Trump came very heavily down on them, going back about two months or so. In turn, their tit for tat strategy was to implement all of these issues as far as rare earth and the supply chain. We understand that America needs these for weaponry, all the way through to running its own administration and they are a critical part of the key building blocks for their defence industries. I am not sure whether it will be solved over the next 24 hours. One would hope so, but Scott Bessent, Treasury Secretary, is trying to get that on the line.
How realistic or doable is it for countries to have their own viable processing units for processing rare earth minerals because it seems the bigger risk right now seems to be processing of rare earth minerals rather than mining because it seems the concentration right now is as high as 90% with China.
Peter McGuire: That is exactly right. When you control 90% of the market then that changes the framework as far as who is in charge is concerned and for many countries, this will be a wakeup call and over the next decade, countries certainly like India and other powerhouses across Asia are going to be very aggressive in their own processing as far as these minerals are concerned.
One has to look at the likes of Lynas and other rare earths that are doing it offshore. They were doing that in Malaysia, I am sure the US is going to take a very aggressive stance from a security standpoint and really ramp that up. Now, there are new production houses and manufacturers of these, one is in Nevada. Another one is opening in Texas. That is going to be a very solid output for the Trump administration over the next three to six months to get this underway.
It is not just China which has the reserves of these rare earth minerals. Brazil as well as Australia have significant reserves. Brazil has 20% of the global rare earth minerals reserves. But in that too, some reports are highlighting that China has a dominant role and they have stakes in some of these companies in the Brazilian market. Do you believe that going ahead, some of these countries can emerge and try to work on their processing units? Is that doable?
Peter McGuire: I think it is. Australia, Brazil and even India have massive land mass and that would be a path forward. You would have to think that if you have got the metals in the ground, the next step would be who is in charge of them? Have you done sales over the years? Is this going to be renegotiated? These factors are going to play out and that is what President Trump is leaning towards. There is talk about the Darwin Port in Australia. They want to renegotiate those sorts of deals where the Chinese are involved. This is real brinkmanship when it comes to geopolitics. It is going to be very hotly contested for many years to come.
Vietnam and Malaysia seem to have some sort of capacity even though it is restricted, they seem to have some capacity in the production of these REMs. What could this mean for India given that India already imports a good chunk of its palm oil from Malaysia. It has friendly relations with Vietnam, Brazil, and Australia. In the future, could we see a global delinking from China and perhaps all of these countries forming a pact when it comes to production and manufacturing of these REMs?
Peter McGuire: Well, it could. Like any market, there is a dominant player. Not only dominant, but they own the market with 90% control, So, that is the first issue. One needs to look at that from their own security view. For every country that wants to be involved in rare earth –mining as well as production– the next point is whether they can look at strategic relationships and how they can foster those better relationships with other market players.
So, that is all again about negotiation and looking for opportunity and one can leave the politicians and hopefully they have got the best interest at heart to be able to structure a deal that is beneficial not only for their country’s security but more importantly for its people.
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