China's Rare Earth Dominance: A Threat to Global Defense Industry

Strategic Insights -

China's dominance over the global supply of rare earth elements has left the defense industry in Germany and beyond in a precarious position. These essential metals, which are used in the production of fighter jets, submarines, and other weapons, are heavily reliant on China, which controls around 80% of global production and over 90% of rare earth refining. The country's recent tightening of export rules has sparked concern that its control over the supply chain could be used as a strategic lever in trade disputes. As a result, Germany is facing a significant challenge in its efforts to equip its military with modern weapons.

Key Takeaways:

  • Over 400 kilos of rare earths are used in one F-35 stealth bomber.
  • The lion's share of the rare earths processed in Germany comes from China, which controls around 80% of global production and over 90% of rare earth refining.
  • China's recent tightening of export rules has sparked concern that its control over the supply chain could be used as a strategic lever in trade disputes.
  • The German defense industry is reliant on imports of rare earths, but the government and industry are divided on who should take responsibility for securing alternative sources.
  • Alternative sources of rare earths, such as mines in the US, Australia, and Greenland, are scarce and expensive to develop.
  • Establishing a European capacity to process rare earths could take years, if not decades.
  • China's quasi-monopoly on rare earths gives it a "perfect geo-economic bargaining chip" that could be used to complicate or delay the German military's efforts to equip itself with modern weapons.

Statistics:

  • 80% of global production of rare earths is controlled by China.
  • Over 90% of rare earth refining is done in China.
  • 400 kilos of rare earths are used in each F-35 stealth bomber.
  • China's refining capacity for rare earths is around 140,000 tons per year.

Sources:

  • Jakob Kullik, political scientist at the Chemnitz University of Technology
  • Hans Christoph Atzpodien, CEO of the German Security and Defense Industry Association (BDSV)
  • The Federation of German Industries (BDI)
  • German government documents
  • International news outlets, including DW and the Deutsche Welle