For those who missed last nights SO Angel John Myer newsletter...

For those who missed last nights SO Angel John Myer newsletter last night

China looks to flex its dominance on the rare earth industry

• A highly publicised visit by Chinese president Xi Jinping to rare earths magnet maker serves to highlight in the country’s escalating trade war with the US it still holds a few fundamental cards if things get worse.
• Last week the Global Times, a state-owned Chinese newspaper, published two articles that described the US reliance on rare earths as “an ace in China’s hand” that could be used to pressure President Donald Trump.
• Most importantly, the visit to magnet producer JL Mag Rare-Earth in Jiangxi province in south-eastern China demonstrates the nation is the major player in downstream industrial supply chains.
• The symbolic visit by Mr Xi follows the US decision last week to blacklist Chinese telecoms company Huawei, which threatened to send such shockwaves through the global tech industry that Washington was forced on Monday to allow a three-month grace period before the move takes full effect.
• “The weakness for the US is not the mined rare earths…but processed rare earths or the products like magnets and batteries further down the supply chain”, said David Abraham, author of ‘The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age’.
• Rare earths are fed into complex downstream components, such as magnets, sensors or instrument panels, with any new tussles centres on crucial technology products.
• Managing director at Adamas Intelligence adds the visit is “signalling they know its not only important to US high-tech industries – electric vehicles, wind – but also defence.”
• Years of industrial policies, including export quotas and investment incentives, enticed the rare earths downstream processing industry to relocate to China from a traditional base in Japan.
• The US is highly reliant on Chinese imports, sourcing 80% rare earth compounds and metals, worth $160m – up 17% from a year earlier, according to USGS data.
• Other major imports from Estonia, France and Japan (accounting for an additional 12%) were derived from mineral concentrates and chemical intermediates produced in China.
• Looking to capitalise on growing supply concerns in the US market, Lynas Corp is forming a joint venture with Blue Line Corp to build a rare earth separation facility in Hondo, Texas. The plant would be the only large-scale producer of separated medium and heavy rare earth products in the world outside of China, it said.
• Lynas’ future at its current Malaysian facility remains uncertain due to low-level radioactive waste.
• Demand for rare earths is expected to increase more than 8% through 2019 due to rising sales of electric cars, according to consultancy Roskill.
• Investors are following the developments, with VanEck Vectors Rare Earth/Strategic Metals ETF surging the most since 2011 on the growing risk Beijing will weaponise rare earths.