U.S. and Canada Discuss Supply of Rare Earths as China Dominates

(Bloomberg) -- U.S. President Donald Trump and Canada Prime Minister Justin Trudeau have discussed the need to ensure reliable supplies of rare earths and critical minerals, a market currently dominated by China.

The two leaders spoke about the issue during their last meeting, Trudeau said in a press conference Monday, confirming a report by The Globe and Mail. A joint action plan being drafted by senior officials in the two countries will be presented to the political party that forms the next government after the Oct. 21 election, the newspaper reported, citing a federal briefing document it had obtained.

Rare earths -- a group of 17 vital elements used in missile systems, electric vehicles, computer screens and other tech devices -- have been thrown into the spotlight after China signaled earlier this year that it may restrict shipments to the U.S. Mining companies in the U.S. have been hesitant to wade back into rare earths after a 2011 price collapse, compounding the challenge of cutting the nation’s reliance on China.

“It is in our interests to ensure that we have reliable supplies of these important minerals for technology, and it’s a conversation that our government is leading on,” Trudeau told journalists at the press conference. “Canada has many of the rare earth minerals that are so necessary for modern technologies.”

The joint plan outlined in the document obtained by The Globe and Mail contemplates including defense funding for critical minerals projects, and strategic investments in North American processing facilities, according to the newspaper. Senior Canadian officials have held meetings since July to discuss ways for the two countries to secure access minerals including uranium, lithium, cesium and cobalt.

On May 2, U.S. officials and mining executives discussed the issue at a closed-doors meeting in Washington D.C. Among the speakers was Tesla global supply manager of battery metals Sarah Maryssael, who said booming demand for electric vehicles and insufficient investment in mines could result in a global shortage of minerals needed to manufacture rechargeable batteries in a few years’ time.

About half of the world’s electric vehicles are sold in China, and most components of the rechargeable batteries are manufactured there. The Asian nation controls about two-thirds of that industry, with Bloomberg NEF forecasting it could grow to about 73% by 2021. The U.S. controls only about 13% of the global lithium cell production capacity, with no growth expected, according to BNEF.

©2019 Bloomberg L.P.

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