Future Demand and Supply Chain Security

When you're a maintenance engineer in a beverage manufacturing plant, you keep production lines moving and quality on track because there's no room for slowdowns . With Granger's vast selection of high quality motors, sensors, belts and hard to find parts. You can get what you need fast and all in one place , so nothing gets in the way of getting the job done. Call one eight hundred granger, clickranger. com or just stop by . Granger. For the ones who get it done . Sky News , the full story first . Hello , Ed here. Before we start, just a reminder, you can become a member of our subscriber club, which we're calling more stuff matters by becoming a Sky News insider. With the subscription, you'll get each new episode a week ahead of everyone else , exclusive bonus episodes, and access to our community forum where you can chat with the Stuff Matters team, other listeners, and ask us questions for future Q and A's. To subscribe, go to skynews com dot forward slash stuff matters. And if you use the code stuff thirty three, that's STUF , you get a third off your first yearly subscription. So go ahead, join our club. We would love to have you. You can find the terms of the subscription in the show notes. Right? Let's get on with the actual podcast . Okay, do you want to do the you've got yours as well? Yeah. Yeah, and I just literally just do it. Yeah, I think we'll yeah. All right, ready? Do you hear that sound ? Can you guess what it is here ? I want to do it too. I want to try. You might even have what Stuff Matters producer Jake and I are playing with. They might even be in your ears . It's kind of tempt ed it's tempting to just keep on doing it . This is the sound of an AirPods case more specifically an AirPods case being shut . Other brands are available, it's worth saying. And the reason that case snaps shut in such a satisfying way comes down to something inside it. A set of tiny madness made from an obscure element called neodimium. Neodymium ion boron magnets, to give them their full name , are so strong, you just need a tiny amount to produce a massively strong magnetic field . That tininess is their secret weapon . But the story of these magnets , it's also the story of something else . Airpods are kind of the story of the modern age , because that neodymium inside them belongs to a group of chemical elements that have been in the news quite a bit recently. Tonight, President Trump launched a new national security investigation that could lead to tariffs over critical minerals, which are essential for everything from cell phones to fighter planes. Neodymium is a rare earth mineral . It's an exotic element that alongs,ide its cousins, has become kind of indispensable for a whole range of things that make our world go round. And you know what? Airpods, these little things that go inside your ears might just give you a clue about the fate of the world around us I'm Ed Conway and you're listening to Stuff Matters, a podcast from Sky News , where we take an object, crack it open like an atom or a walnut , and reveal the world shaping forces hidden inside . In this episode , AirPods Now there's a good chance you're listening to me right now on a pair of airpods or something like them. I'm pretty sure there hasn't been a day in the past few years when I haven't stuck mine in my ears to make a phone call, to watch something on my laptop , or to listen to a podcast . But they're such an everyday item that it's easy to forget that not all that long ago, it simply wasn't possible to squeeze a set of speakers and microphones into something so small . That we can, it's largely thanks to that neodymium, which doesn't just help snap the case shut, but it also helps make those tiny speakers or drivers actually work . In other words, those little things you might stick in your ears , they are just one tangible manifestation rare earths , a set of minerals with ex otic sounding names that very few people actually understand . So why don't we start with that? With the basics ? Well, tell us so what are rare earths? Yeah , Serre Earths are a group of elements. If you ever look at the periodic table, they're kind of that bottom row, and then there's a couple other ones that are kind of on the border . They're a group of really interesting elements that have very unique properties that when you add them to different metals or alloys or different chemical processes, they kind of add this kind of magic zooch to it, you know, they make some of the strongest magnets in the world , they make alloys that are really good for space and for fighter jets. So they're kind of this magic sprinkling of chemicals . This is Jordan. Jordan Calderon. The researchers all sorts of critical minerals at the Colorado School of Mines, but mostly critical mineral policy, looking at the wider strategy questions around mining rather than just the geology of it all. Just kind of a generic enough top ic that I end up dabbling in history and a lot of other stuff . Including the history of rare earths, which it turns out is actually far more fascinating than I ever expected. Take the fact that they all have these slight ly weird names, so it's not just neodymium, but Holmium and Herbium and Thuleum . By the way, the single best way to wrap your head around these names, strange as this is going to sound, is to listen to the Element song by the late great Tom Lamb. There's Home and Helium and Happening and Irmium and Phosphorus and Francis and Florida and Chris, and Mac and Rakin Libyan and Muscosium and Scandium and Cydian and Cesum and Lynn. Yeah, I love that the strange names . So they have all these terrible names. There's herbium and terbium and it trium . That's it Y T R I U M ich might sound like someone sm ashed their fist down on a keyboard, but actually that's a bit of a backstory . They're named that way because of the way we ended up discovering them . It's about late seventeen hundreds, somebody found a black rock and Utaby kind of kicked off the rare earth discovery , the Swedish town of Itabi Y T E R BY . This was at the height of the enlightenment. Eighteenth and nineteenth century was really exciting because they were on this elemental the ory, which basically revolved around the fact that the world was made of distinct chemical elements . Building blocks that you couldn't break down any further . And that triggered a sort of race. So bunch of chemists got really excited and they started trying to break down these minerals into their base components . It's kind of like this wild west of the early days of elements. Yeah, and they were like these, you know , people in the eighteen hundreds in Europe just like, we're just gonna boil this in acid for seventy two hours and see what happens. And they're like, we made something pink. We're going to call it Signo Dinium and then like, you know, fifty years later they're like, Hey, I looked at your seodinium and I burnt it for fifteen hours and it turned into two elements. So we're going to call it Codinium and Aodinium and it's like just this crazy trying to b some eagle . Yeah . So for one of them was, yeah, the utrium that they found and they're like, oh, this is an element called utrium . So that's Itrium, one of the rare earths from that lump of black rock found in Italbe in Sweden . And then ten years later they'd find a new way of separating minerals and they'd be like, actually it's three minerals . And so they'd end up just keeping one of them called eterium and then they'd name the two other ones like herbium and terbium because they're from this other atrium mineral and they're like, it's just a variation . So they kept these crazy naming inventions . And it was mostly scientific, was it? Or was there a kind of sense of okay, this is actually useful? No, it was almost all scientific . There was no real use for rare ts. They were so difficult to separate from each other that there was almost no industrial use until I think the eighteen hundreds with an Austrian chemist was the first one to kind of make money off of it . It was Carl Aurvan Wellspach. You know, the Bunsen Burners and all the chemistry labs . He worked in Bunsen's lab as a student doing research and they started playing with putting rare earths and other chemicals into the fire so they could get different colors and different intensities . And he noticed that you could increase the intensity of a flame by adding certain rarets to it. So he ended up making these really beautiful gas powered lamps that kind of lit up Europe for many years That rare earth was called Serium, which sounds pretty exotic, but its main use is this sort of flint. Which I love that fact because it's if you've ever litten a bun sen burner, you use the flint and so it's kind of this full circle . Even today, when you use a lighter, you're almost certainly using a flint made of serium. Either way, for most of history, even after their discovery and the enlightenment , rare earths were little more than a chemical curio. Yeah, so if you read some of the old papers, academic papers, they kind of refer to everything up until the nineteen forties as like the darkes Ag for rare earths . Manhattan Project comes along the Manhattan Project, the one with Oppenheimer, the nuclear bombs, all that. Really kicks in the gear, this idea of that we need specific minerals , specifically uranium, right? We hadn't really processed uranium for anything in large scales. The scientists developing the atomic bomb kept hitting this roadblock . They needed really pure uranium to make nuclear fission work. And in the course of processing the uranium ores, the geologists working on the Manhattan Project kept finding rare earths. So one of the big challenges was removing those rare earths from the uranium. And eventually one of the scientists on the team, again named Frank Speding, cracked it. He became the first one to be able to produce r ites in really high quantities and really high purities. After World War II, Speding sets up a research lab and becomes the go to guy for rare earths. The US government also worked with them and they distributed it to scientists, start producing kilograms and kilograms, and it sent it to scientists all across the world into different companies . And then those companies and those scientists started doing their own research and finding uses for like color television. That's all right. Old school cathode ray tube TVs, the big old boxy ones. They were also dependent on rare earths, which made the picture much brighter and more vivid. And that's really where we got this kind of rapid increase in industrial uses because we could finally produce in industrial quantities. And off the back of all this excitement, the US set up the world's biggest rare earths mine in the nineteen fifties. It was called Mountain Pass in the Mojave Desert in California, an enormous brown pit carved into the wilderness. And the more rare earths the Americans produc ed, the more clever things they found to do with them. They make stronger magnets than any other type of magnets we can make. Back to those neodymium magnets inside your airpods stronger than any other permanent magnets known to humankind . They're so strong that if you end up putting two of them too close together, they'll shoot at each other and shatter because they're just so it's such a strong force. Oh my god. You can potentially thunk a magnet to a car and it'll rip the car door off. You know, you can hold your weight with like a magnet that's the size of your fist or less. Super fun . In case you're wondering, yes, Jordan does collect his own. Yeah, I love rearrows magnets . But the most impressive thing about these magnets, more impressive even than being able to tear the doors off a car is what they enable us to do . Because magnets are quietly at the heart of the modern world . Think about the motors that make an electric car or a drone work, or about the heart of a wind turbine or even things like speakers and microphones, they all function thanks to magnets . And what Neodymium opened up was a whole new world of superpowered magnets. The old time the cartoons always have, you know, the giant magnet right the big u . We can do that with a pebble now. We can use a little magnet that produces the same side field. So we can shrink the electronics down and that makes us that we can have smaller and small electronics with a stronger magnetic field . And that's the difference is that if we tried to make headphones with the big old timey cartoon magnet, the headphone had to be that big, but now just we can make that same magnetic field with kind of just a very, very small magnet , we can make the casing around it smaller as well. Most people now these days have got these tiny little AirPods or whatever the different brand is that fits into their ears . Would that just literally not be possible without Neodim agnus? Yeah , not that I know of . The way I like to think of rare earths is as a sort of mineral condiment. They' sere aasoning you sprinkle onto other metals to give them superpowers. So, neodymium makes magnets more powerful. Dysprosium and terbium make those magnets extra heat resistant. Itrium makes aluminium and magnesium alloys even stronger . They go into everyday items like lighters and earphones but also into the circuitry of computers. They go into lasers, they go into fighter jets and radars and military drones . So you can see why there's so much mystique about them . But contrary to what the name suggests, actually, rare earths, they're not that rare . No, that's that's the classic line, right? Rare isn't that rare . They're actually relatively common in the Earth's crust . So rare earths are powerful. Literal superpowers , even just with a tiny sprinkling. And they're also pretty abundant What's the catch? Some people I knew were having a party in a flat . It was just a bunch of middle aged men hanging about and you know, having a chat and a drink. It is the early nineteen nineties . Tim Werstal is a thirty something brit in of all places, Moscow . And he's at a party. We were drinking vodka, you know, it was Stulichenyer, and it was the good stuff not, the fake bathtub stuff rebottled. It's just after the collapse of the Soviet Union . I went through the London School of Economics and then the grand event of the nineteen nineties was the complete collapse of the Soviet Union . And anybody who was interested in economics just had to go and see it to see the rubble of a civilization as the attempt at socialism collapses. So I did that started to see that I could actually make money. Tim is one of many western young folks flocking to this new Russia at this point, this new capitalist economy ready to turn their hands to pretty much anything . Started out doing computer games. We also picked up the business distributing the English newspapers in Moscow . And it just sort of snowballed from there. And at that party in Moscow, Tim had a fateful encounter . I literally bumped into a bloke at a party and he was getting drunk in a corner, Sergei, and he was complaining bitterly that he couldn't sell his scandium. Scandium sitting at the edge of the rare earths on the periodic table, it's another obscure element with some really powerful , if slightly niche applications. The Soviets have developed some beautiful alloys . Sprinkling a tiny amount of scandium into aluminium makes it much stronger without making it heavier, and that makes it incredibly useful if you're, I don't know, sending rockets out into space. NASA developed some aluminium lithium alloys to build fuel tanks on the space shuttle. The Soviets had used aluminium sc andium to achieve the same sort of effect on their shuttle, the Burra . And back then, the Soviets were kind of the world leaders in Skandium. In fact, strictly speaking, Sergei was pretty much the world leader him self . The problem, he confided in Tim over that vodka was no one was buying his stuff , which is where Tim came in. I spoke English. That was really the advantage I had, and so I could pick up a phone and start phoning around and investigating and so on and so on . And I found the very few people who did buy it . And so we had a trade Having moved to Moscow to make video games, all of a sudden Tim is a scandium trader, looking for buyers who could use scandium for all sorts of obscure reasons. For lighting, the metal halide bulbs , using scandium in those makes it a bit more like sunlight. The market's moved on now to the aluminium alloys it was first designed for like the people started making baseball bats out of it and bicycle frames . We supplied the U. S. Navy, they make a part of one particular class of ships out of it. Airbus made a wing . In fact, soon enough, Tim was one of the world's top scandium traders . At his peak, about fifty percent of the global supply passed through him. He's so renowned in this admittedly small world that, at one st age he was even contacted by none other than Elon Musk. He found one of the two or three English speaking people in the world who were able to answer his question Should I put scandy into my rocket? No, I didn't know who he was. This is, you know, just as he was starting up SpaceX before he got involved with Tesla . And I just emailed Bank and said, No , it won't help you. It'll make your rockets easier to weld but it won't make them any lighter. Tim doesn't deal Scandium anymore. Today he's an economics journalist and a commentator , but he is one of the small number of people who actually understand the market and the minerals . Chemistry is about the number of electrons in the outer shell of an atom. Physics is about the nucleus of the atom, the protons and the neutrons at the center. So when you try and separate materials through chemistry , you're worried about how many electrons are whizzing around in that outer shell . The problem with rare earths is that they all have the same number of electrons in that outer shell . But they have different number of neutrons and protons in the nucleus of them and different numbers of electrons in inner shells . This means you can't use chemistry to separate which is what you're doing with most other things. Yes. To separate the rare earth you need to use physics or very, very inefficient chemistry . And so this is why rare earth factories or separation plants are billion dollar plants . Refining rare earths is just hard, and it's made harder by the fact that most of the rare earth elements, fifteen out of seventeen , are found in the same ore and you can extract that by chemistry and you end up with a concentrate of rare earths . A concentrate, like a powder in which all the different rare earth elements are all mixed together , and the key challenge is separating them out from one another , which takes a lot of work A lot . If you want to go and get one specific rare earth, say neodymium to make the magnets that go in these little speakers or microphones. You end up having to get all the others as well. Kind of inefficient if you're after one thing? Yes, and it means the economics are weird because in every rare earth concentrate, there'll be some amount of serium and some amount of lathium and some amount of neodymium and so on. And it gets less and less and less as you go along the process. So if you want to get one of the later ones that's there in a concentration of one percent or one percent in your concentrate , you've had to extract all the ones before , which means that you can end up with vast piles of the ones before as a result of getting the one you want . And current technology, this process costs twenty dollars a kilo of the concentrate. And yet lanthanum and serium, which are the first two and which make up forty five, fifty percent of any of these concentrates , they only sell for a dollar a kilo , but you make up your money on the neodymium which sells for forty or fifty dollars a kilo and the turbium for your magnets is currently about one thousand seven hundred a kilo. But that might again be zero point one point two percent in your concentrate . In other words, when you're finished processing rare earths, some of the stuff that comes out is incredibly valuable , but a lot of it you',re basically selling it a loss and that's the economic problem with RareS I try to talk to the chemists on campus. They talk a little bit down to me and I'm very grateful for that when they try to do the basic explanations. Back to Jordan Calderon, the critical minerals researcher and rare earth magnets enthusiast , and a pretty striking illustration of just how much complexity and prec ision you need to extract rare earth elements from their concentrates. One of them was saying is you ever tried to filter water or the seen the survival guides where you're filtering water where it's like you put it through the pebbles and then you put it through like the smaller sand and you put it through the charcoal . And the researchers was like, yeah, just imagine that just like a mile tall and you have to do it a thousand times . And it has to be very specific. So rare earths might not be all that rare in the Earth's crust, but building the facilities to refine them that is a rare feat . Made harder still by the fact that the specific cocktail of rare earth oars, that's totally different, depending on where in the world you're mining. Rare earth oars in California are totally different to rare earth oars from say China or Greenland . Oh and there's another thing . Rare earths are relatively dirty to produce. They occur with thorium and uranium. When you process them, you end up with something called tenorms, which is technically enhanced naturally occurring radioactive material, tenorm. Oh, wow. So you're creating radioactive waste. Enhanced radioactive waste. Technology technically enhanced enhanced radio just not just your vanilla radioactive waste. This is extra enhanced. I'm sure it's it's probably not as bad as the nuclear waste people are actually imagining. But yeah, that's the term for it . It sounds terrible . So if you're mining rare earths, you're also faced with a non trivial question , what to do with all that technically enhanced radioactive waste . For instance, you remember that old mine in California Mountain Pass . Mountain Pass ended up spilling some tenorm like in a national park. That spill in two thousand two, not the only spill, by the way, essentially led to the closure of mountain pass , the place where rare earth mining really began in earnest went bankrupt . And this brings us to the geopolitics of it all because as America began to reduce its rare earth mining and processing , another country was stepping into the void . All eyes on whether President Trump and President Xi Jinping can hash out some sort of deal to ease export controls , particularly on those rare earth minerals that China controls so much of the global supply off that America really, really needs. Today, China produces more than ninety percent of all rare earths . So how did we get to a place where nearly all of those obscure, exotic minerals were being extracted in a single country? That's up next up next . When you're a maintenance engineer in a beverage manufacturing plant, you keep production lines moving and quality on track because there's no room for slowdowns. With Gangrer vast's selection of high quality motors, sensors, belts, and hard to find parts, you can get what you need fast and all in one place , so nothing gets in the way of getting the job done. Call one eight hundred granger, clickranger. com or just stop by . Granger for the ones who get it done My trip to Bao To was a little bit sticky. I'd only been looking around for half an hour as a growing number of unmarked cars were following me . Bautu is a rare earth mine in China . And then as I went into an alley that had the entrances to rare earth refineries off of it, but I did not even enter one of these refineries . There are police checkpoints to prevent correspondents from getting there. I ended up with seven or eight police car loads of uniformed officers detaining me and they ended up putting me in the back seat of a squad car and starting to take me downtown. Just 'cause you wanted to look at the Rail Route refineries. Actually, they were mostly upset because before looking at that, I'd been looking at four square mile toxic sludge lake of waste from the processing of rare earths and steel , which is gigantic and is slightly radioactive and there's not a really good answer for what to do with it. But that degree of scrutiny and heavy handedness is that usual or is that way beyond what you normally encounter? That is way beyond what I usually encounter This is Keith Bradshire, the Beijing Bureau Chief for the New York Times. You must have, you know, in your career, you've been focused on rare earth for a long time. You must find there's these moments where suddenly other people are like, Oh, rare earths, we need to talk about rare earth and then it goes away and then it comes back. But of all of those kind of spikes in attention, this presumably in twenty twenty five was one of the biggest. This is by far the biggest . Until twenty twenty five, even some of my own editors used to roll their eyes when I proposed yet another rare earth story because I'd been writing. Really? It's just Keith again with his rare earth obsession. That was exactly what they used to say for fifteen years from twenty ten all the way up until twenty twenty five . It's thanks to Keith's obsession that we can begin to understand how it is that China came to control ninety percent of the production of rare earths. It didn't happen by accident, says Keith. China really got going when Deng Xiaoping as a member of the Polit Bureau at the time under Mao. The Polit Bureau being the very top governing echelons of the Communist Party went in nineteen sixty four to an enormous iron ore deposit near the Mongolian border of China and visited it. The mine is called Bayonobo or Treasure Mountain about seventy miles into the Gobi desert, and it had not only iron ore but they realized that there was a lot of rare earth there. In fact, it is the world's largest single deposit of rare earths. And Deng Xiaoping personally went in nineteen sixty four, along with other senior Chinese officials to inspect it and said then that China needs to pay a lot of attention to rare earths . So very early, sixty two years ago , you already had a top person in the Chinese Communist Party very interested in rare earth at a time when probably most Western Prime Ministers and presidents had barely ever heard of rare earths. Even today, many of them have never heard of it. Well , they should have by now because a lot of their businesses are panicking for lack of them . And so Deng Xiaopingp oversaw very a energetic effort in making technological progress in the refining of rare earths . But that wasn't straightforward. They had far fewer resources than the West. It didn't have really good quality stainless steel. And the way that rare earths were being processed in the West was using an expensive kind of acid that you couldn't put into just any old container . You had to put it into stainless steel containers . China couldn't make that stainless steel for itself . And with the tremendous poverty that China still had, particularly during the Cultural Revolution, it couldn't afford to buy that stainless steel from other countries. So they turned to a scientific pioneer from their own nuclear program As well as his wife, also a scientist . Gao Xiao Sha . They were being brought back from internal exile under very grim conditions because they were distrusted as intellectuals who had studied the in United St ates. They had been banished to hard labor on a farm, but they were brought back to Beijing during the Cultural Revolution and put to work on this project In nineteen seventy one, the Chinese military tasked this husband and wife team with purifying rare earths for battlefield lasers, super alloys, weapons . For years, they shut themselves away in their lab . And they figured out a new way to process rare earths . And their technique used a different kind of acid that could be put in just regular old plastic tanks. So that made it much cheaper. And even better than that, they figured out a way to do a cascade of hydrochloric baths that gradually separated it and you had different rare earths coming out at different steps in the process. So you had the beginning s of almost an assembly line for breaking apart these seventeen different rare earths. This brand new, cheaper, more effective refining method was put into operation . And then, when Chairman Mao died in nineteen seventy six, he was succeeded by Deng Xiao Ping , the man who essentially started China's rare earth program , he was now in charge. And to him, rare earths, they weren't just obscure minerals . He declared that they were the key to the future of China's economy . Saying, The Middle East has oil, but China has rare earths. As they began ramping up their industrial sector , China began really trying to expand . In many categories, one of them for starters was steel, and for some forms of steel, you need serium, and that's exactly what they began producing in large quantities at the Bayonobil Mine. So China began really becoming serious heavyweight, rare earth power in the nineteen eighties . And so that decade, over a hundred rare earth mines and refineries were built across China. Well, remember, in the US, there was basically still just that one, mountain pars. What was also important then was that rare earth magnets had been invented in the United States and Japan , but there was one problem with these new rare earth magnets . They tended to lose their magnetism if they became hot, which can easily happen in all kinds of parts of a car, and then they'd be worthless as a magnet. So these would be the ne odymium magnets, those ones that are in your airpods, also in things like cars . The solution was to add two or three percent of the weight of the magnet of a kind of rare earth that for decades and decades could really almost exclusively be found only in south central China. Those crucial additional rare earths are terbium and dysprosium, which make the neodymium magnets resistant to extremely high heat . And that was the beginning of China's hammer lock . China became the world's biggest producer of rare earth in the late nineteen eighties, surpassing mountain Pass , and then it gained essentially a monopoly by the end of the nineteen nineties. This wasn't just about geopolitics or the military . Even more, it was about economics . China saw this econom ic opportunity to dominate an obscure supply chain , and for a long time , they won't really pay that much attention . Then came twenty ten and everything changed. Is this the moment of maritime drama which sparked the worst political row in years between China and Japan? It was a territorial dispute in which a Chinese fishing boat tried to fish next to a Japanese controlled island that China claims . And a Japanese coast guard vessel tried to wave him away. A Chinese marked fishing vessel is ordered to stop by Japanese sailors. The Japanese voices apparently warn that the Chinese captain is turning towards them and they brace for impact . And he persisted in fishing and there ended up being coll ision between the two vessels, which made the Japanese very unhappy. Japan arrested the Chinese fishermen, and in retaliation , the Chinese government halted exports of rare earths to Japan without announcing it . I heard that there was an export halt and raced my office and managed to get it into the last edition of the New York Times by calling a friend of mine, the editor was on duty , and so we had it. The Ministry of Commerce spokesman denied my story. They have never acknowledged that it was an embargo. They've said that it was a spontaneous decision by customs officers all over the country that they did not like Japan and therefore were not going to allow any more rare earths to go to Japan, which is very implausible . The reason why they've never admitted that it was an embargo was that that would be a violation of the World Trade Organization . This was a big problem for Japan. Think back to how much of our modern technology, tiny speakers, motors, super alloys, as well as simple things like flints, and lighters , all of that is totally dependent on rare earths . So Japan starts stockpiling rare earths to future proof themselves. But nobody else really did so. Everybody else talked about concern about it and then did nothing. And twenty ten, that fishing dispute was, in hindsight a watershed moment , because China was using rare earths as a form of leverage . By cutting off supplies , China realised it could strangle the economies of its rivals. That, once again, brings us to twenty twenty five. go to China. The authorities there are further tightening export rules for crucial rare earths. The Chinese Ministry of Commerce releasing a couple of announcements this Thursday outlining new rules. In addition to always requiring government permission to export rare earths and rare earth technologies, overseas exporters using Chinese rare earth tech or products will also need to obtain a license from the commerce ministry. In the face of Donald Trump's tariffs, China pushed the rare earths button again, imposing restrictions on what could leave the country . Across the world, production at car plants which need rare earths for everything from their electric circuitry to the motors powering electric windows , they were frozen . Rare earths, that obscure topic no one was very obsessed with apart from Keith and a few other people, myself included , were suddenly front page news . And for good reason . What would you say is at stake if we don't have easy access to rare earth? The West has to have rare earths. We can't function without them . No . There are so many products that require them . This is why the IMF found that you would there would be a real hit to the entire global economy if there were a sudden cutoff. And it would in some ways even ripple back to China because there are some things that China imports that need heavy rare earths in the components. For example, if it were a very abrupt cutoff, you would shut down the global auto industry totally , except for cars made in China. That is cataclysmic for basically all manufacturing. I guess what's fascinating about this is just the way that we've arranged the world is such that we have assumed in the U. S. and Europe that it's okay to offshore everything because you'll be able to get stuff in future and probably it'll be cheaper. And part of that is we've had this windfall of disinflation for decades and decades that's benefited us . But maybe we're just in this different paradigm now, where stuff comes from actually matters once again. For a long time , we ran the world focused mostly on keeping prices low. We offshored loads of our industrial production, especially the really dirty stuff like making steel or refining rare earths . Sometimes the way this saga is depicted , you might have thought it was all about China stealing the rare earth market from the West , but actually , might that be getting it all upside down ? What if in practice were just as much a willing party in what happens. I think the history would surprise a lot of people because the US did kind of invent this industry, but also around the seventies, the U. S. and a lot of the world started the environmental movement. And so the US was kind of looking at their mini years or like, do we really need to be doing this domestically? And China was kind of really excited to take up that mantle. I think a lot of Eastern Asia did, right? They started taking up a lot of the industries with the US and a lot of other countries were trying to shed as they move more towards tech . We offshored manufacturing, we offshored rare earth production , and we offshored all the pollution that went alongside them . And since all this stuff was happening on the other side of the planet , we didn't have to be confronted by the consequences and the compromises, the pollution, the radioactive waste . We gave up making rare earths in return for cheap products , cheap magnets , cheap earbuds . It was a Faustian packed . It doesn't have to be dirty , but it's not cheap to make it clean . So to the extent that the West has strict environmental standards , that's more expensive . And for a long time , the West's solution was go buy cheap rare earth from China and pretend not to know about the environmental consequences instead of spending the money to do it in a cleaner way in the West. But perhaps the biggest challenge here is that even if the West wanted to rebuild its rare earth supply chain, the chances are it would struggle to make its money back . Partly because China is so hard to compete with , but partly because of something even simpler. The market's hugely smaller than most people realize . Just think back to the amount of scandium Tim says he was trading. fifty percent of the global supply, which sounds like a lot, doesn't it? But the annual global production of scandium , it's only about ninety tonnes , which to give you an idea, is about naught four percent the size of say the copper market . Now, admittedly, scandium is one of the used less rare earths . But the point is for most companies, it's simply not worth the investment. China does have a big advantage . Just consider the scale of Chinese university programs focused on rare earths and compare it to the top schools in the West like the Colorado School of Mines where Jordan Calderon works. We do have professors, mining professors here, metallurgy professor, a lot of the very famous professors. And they go to China because they like partnership with Chinese universities and like they tour universities. Most of them that I've spoken to have been very explicit that we're getting blown out of the water, that they have thousands of students studying this excited about this. Even our Mini Department is kind of just a couple floors. Maybe we have a couple hundred grad students researching areas tangential to this, but China potentially has thousands and tens of thousands of students studying specifically metallurgical processing, mineral processing, mining exca,v ation technologies . In pretty much every dimension, China holds basically all of the cards, and they're not afraid to play their hands, all of which is why rare earths, they're not just a powerful tool upgrading our technology , they've also helped usher in an era of economic war . That's coming up in a bit . 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To join the club you can go to skynews dot com slash stuff matters. If you use the code stuff three , so stuff thirty three , you can get a third off your first yearly subscription. Included in that are also our sister podcasts electoral dysfunction with Beth Rigby and our US politics podcast Trump one hundred . Terms and conditions apply. You can only become a sky news insider if you're over the age of eighteen and you're in the UK. Subscription, auto renews at a regular price unless canceled via my account. You can cancel any time effective at the end of the billing period. Right, that's enough of me, back to Ed. After two days of trade talks in London, President Trump says the US and China have reached the framework of a deal. The full details aren't out, but at its core, expanded U. S. access to China's rare earth minerals and a possible rollback of some restrictions on tech exports to China. It might just go down as the most important moment in the great trade war of Donald Trump's second presidency . In the face of a Chinese threat to restrict many of its rare earth exports, in june twenty twenty five , the White House made a deal with China to cap its tariffs . Though the President didn't put it this way , it was a climb down . For Henry Farrell, it was also something else , a glimpse of the future . We're in a genuinely new world in which everybody is circling werily around each other and nobody's quite sure what to do, how to go further . Henry is a political scientist at Johns Hopkins University in America, and together with Abe Newman, the author of an excellent book underground Empire , Amer howica Weapon ized the world economy. Available at Hollywood bookstores. That'd be clear. That roller coaster with China and America over rare earths was sort of an early test case for this new imperial age they were writing about. I think that the China deal was the first moment at which the United States recognized that it was not the only game in town that other actors could use these tools against it , and that sometimes perhaps these tools might be used in ways which could not be anticipated in advance. The point being that sometimes things like rare earths and other exports as well, they can be used as a tool , or to put it another way, a sort of economic weapon . Bring our tariffs down or we'll starve you of the rare earths you need . And Henry's point is that this isn't just an aberration This might just be the way diplomacy works in the future, a kind of template . And that's because the quid pro quo of globalisation, where most of the stuff you buy comes from the other side of the world is interdependence. The grand era of globalization from the late nineteen nineties through the two thousands, this was a highly interdependent world in which everybody thought that interdependence was awesome. So you had people like Thomas Friedman, for example, an American journalist who wrote a famous book about all of this called The World is Flat making the argument that if you're Germany and you have machin ery tools that you're getting from Italy, you do not want to invade Italy because effectively you're cutting off your own nose to spite your face . You are effectively damaging your own economy by so doing. And so really what Abe Newman and I did was we tried to start talking about how all of these really boring seeming systems of the world systems like the ways in which money goes from point A to point B, the technical details of the Internet, supply chains for semiconductors , all of these really boring systems turned out to be easily weaponizable , which is that they were made up of networks where there were key nodes in the networks and if you took control of those nodes you could turn them into choke points . In other words, places or supply chains could literally choke the global economy . A little like the Strait of Hormuz made famous during the war in Iran just this year, twenty twenty six . By controlling those chokepoints, says Henry, you can turn economic relationships into weapons . And so years ago, long before the Strait of Homers was closed, long before Russia invaded Ukraine, Henry and Abe started talking about this notion that they called weaponized interdependence. It was utterly un fashionable. I won't say that we were the only people to see this , but it went radically against the conventional mythologies of the time. That mythology being the kind of thing that Tom Friedman wrote about in the world is flat , that the more interdependent we all were, the less likely we were to go to war with each other. They didn't really realise that geopolitics was sneaking in through the back door. So take something very few people spent much time thinking about the plumbing of the global financial system . We really got interested in Swift, which is an incredibly dull saming system that allows for financial messaging to pass backwards and forth between banks about which payments have been made . We started realizing that this provided this chokepoint and then we came up with this catchy term weaponized interdependence. Now I realize this probably doesn't sound like it has much to do with AirPods . But this is the key thing . Swift was another chokepoint. It's an economic service that pretty much everyone needs. And so if you can control Swift, you can potentially weaponize it. And that's precisely what America started to do in the war on terror , using SWIFT to tackle terrorists . And then a few years later they used it to clamp down on Iran and to try to stop them from developing a nuclear weapon . The point being , when times are good , globalization, interdependence, whatever you want to call it, it helps lift all boats. Everyone gets cheaper stuff, whether it's financial services or rare earth magnets . But when times are bad then well , the tools of economic prosperity can get turned into the tools of economic war . That's exactly right. The more that you're connected into these global networks that underpin your prosperity, the more that you are at risk of really terrible things happening to your economy is these networks suddenly become choked up. But here's where things get a bit curious because while Henry and Abe think they're just making this chewy academic point, a warning about the future , there are some people in the Trump administration, the first one , who see it as something . In twenty twenty two, Henry opens a book by Chris Miller called Chip War about semiconductors. And I get to this place where he describes Henry Farrell and Abraham Newman, and I'm thinking, Where in the name of God is this actually going ? And it turns out he has a conversation with a senior Trump administration policymaker who he does not name who has read this and who has decided quote that weaponized interdependence is beautiful unquote , and has taken this as part of the manual which they use to try and go after Huawei in more effective ways than they had in the past. Huawei being the Chinese tech manufacturer accused by the U. S. of spying and sanctioned in the first Trump presidency. Was it like that make you think? It made me feel very nervous . The reason that ideas take off is because people find them useful for their own purposes and sometimes it turns out that these purposes are not the purposes that you yourself had envisaged We're thinking about rare earths and the fact that they are, you know, in a lot of people's lives without them even knowing that they're there in your kind of airpods or maybe in your smart phone , and they could be used as a tool of weaponized dependence. We're in a world where these are absolutely essential to all sorts of parts of our lives . So it is again , it's a little bit like the financial system , it's something you don't pay attention to because it seems so boring , so mundane, so completely to be taken for granted until suddenly you realise you can't take it for granted anymore. And that probably is the moment at which it is too late and all hell has already broken out . All of which brings us back for the final time now to june twenty twenty five and the rare earth standoff . When China weaponised its economic dominance to achieve geopolitical goals against the United States. The United States had effectively given China a kind of a playbook . And the slightly scary thing here is that this wasn't a spur of the moment decision. China had seen this coming. As they built up their grip over rare earths, they were also preparing administrative tools to weaponize them . The legal tools that China developed so that they were able to apply this chokehold systematically , they really copy very, very closely the architecture of the US legal tools that the US had developed, including of course,, this tool that had been developed against Huawei by my unknown friend in the first Trump administration who thought that weaponized interdependence was a beautiful thing. Suddenly, it turns out maybe if being applied to you rather than vice versa, it may not be quite as attractive and as delicious. So the weapon , you know, this this tool, this dangerous tool that you to some extent helped at least define , maybe invent was used by the Trump administration and then the Chinese used precisely the same tool on the Trump administration. Precisely. And so we have seen a kind of a proliferation of use of chokeholes very often in ways that are built upon the U. S. model or, that are perhaps also inspired by U. S. overreach in one way or another . As everyone knows now, we're all living in a world of chokepoints. Chief among them, as we record this in may twenty twenty sixth The Strait of Homuz , weaponized by Iran after it was attacked by Israel and the US , closed . And having embraced Henry's theories, using them as the justification for tariffs in the first term , the Trump White House suddenly finds itself having to defend itself against them. I think this is the real downside of the weaponized interdependence as an approach. It assumes that the world is going to stay static in response to increased U. S. use of imperial power. And of course the world is not going to stay static. Other countries are going to respond, they're going to respond to U . S. military adventures like in Iran, and they're also going to respond to U. S. economic pressure as with many other tools that the United States is using. Rare Earths. They're just the tip of an iceberg of weaponized interdependence . There's a lot of talk these days, lots of paranoia about Chinese interference , spyware and our devices, surveillance tools . But maybe the real threat in the fut ure is the way countries can use their control of these minerals and services and choke points to hold the rest of the world hostage . How do we confront this moment ? Do countries try to bring back manufacturing, even if it means everything cars to services to our earbuds are going to get more expensive ? Or do we hope that we can squeeze this economic pandora back inside the box . The short answer is no one really knows . Only one thing is for sure . Rare earths are only going to become more and more important . What are we expecting? I mean, this is, are we still in the kind of early stages when it comes to rare earths? Is that are we expecting more demand in the coming years? The way you kind of figure out mineral demand for a lot of these is you look out to twenty fifty and you look at what technologies we might be using. So particularly for energy , you know, most combustion vehicles got replaced by EVs and thirty percent of the global energy comes from wind turbines and eighty percent of those used rare with magnets . You kind of back calculates. You start with kind of energy and future uses and you back calculate. Yeah, we're very early on, I think, in the demand of what we could actually potentially need thousands of percent, increases in demand, potentially from thousands . Yeah, it depends on who you ask and what technologies they like, and how much do you believe EV's are going to take over, right? It's all predictions . Almost all demand estimates agree it's going to rocket. But peak demand usually is about twenty fifty from most critical minerals that we look at. And that's just from growing energy demand in particular. So not only is demand for minerals going to increase, it increases because we potentially double the amount of energy we need as a planet . So it depends. Yeah, how much do you believe that we're going to decarbonize? How much do you believe that people are going to pick up EV's? And how much are these different industries going to grow ? And the more of these minerals we need , either the more reliant we'll be on China or the more we'll have to pay to rebuild our own supply chain s. In fact , our subscriber exclusive bonus episode is all about what the West can do in the future, including a fresh interview with leading critical minerals expert Grace Lynn Basquaran. Anyway, as part of this shift, in order to create more processing capacity in the West, that shuttered mine in California, Mountain Pass , it's gone bankrupt, I think, five times from five different companies. It's now back , under new ownership, and in twenty twenty five, it secured a deal from the US government, which, a bit like China, is now keeping its rare earth sector in business. They're doing great now. I think their stock's kind of like six hundred percent or something, insane. But even so , it's still entirely plausible that after this latest flurry of excitement about rare earths , eventually it just dies down. And as Jordan hints , we just sort of forget about it all over again. The US is and I sorry I keep talking about the U. S. I write so much about US policy, but have one foot and one foot out half the time, you know, we're going to commit to mining and then we're just like, oh, okay, well maybe not. We're going to commit to processing, but nevermind it's too dirty now. And we love EVs, we hate EV's. We love renewables, we hate renewables. Like we actually we're going all in on oil again and we want to revive the coal industry. And it's that back and forth makes it really difficult for investors . We're stuttering a little bit. I think we're still trying to figure out the U. S and. UK and Europe are interesting this, but they don't know how to do it cleanly or well responsibly. We have a lot of work to do. And I think yeah, the more people realize how important this is and how important these technologies are. And that minnows can be done responsibly, that they don't have to be this technologically enhanced, naturally occurring radioactive material. Technologically enhanced radioactive waste is terrifying. None of us wants that, right? We do love air pods, so we need to figure this out. Can I do it one more time? Just one more . On the next episode of Stuff Matters, we dive head first into the world of bananas . You might think the world's favorite fruit is funny , but no . Beneath that yellow skin lurk intensely serious stories of politics, global trade, and the perversity and wonder of the way the modern world works. It was picked weeks ago on the other side of the world and it arrives into your supermarkets in perfect condition , just going