Author: Alexandra Stevenson / Source: New York Times
KUANTAN, Malaysia — Amanda Lacaze grabbed her iPhone and rattled off the names of the special minerals needed to make it.
The screen was polished with lanthanum and cerium. The inside has a magnet made with neodymium and praseodymium.Those minerals almost certainly came from China. Ms. Lacaze’s job is to give the world an alternative source, in case a global trade war spirals out of control and China cuts off supply.
Right now, she can’t. Her company, Lynas Corporation, can provide only a fraction of the minerals — known as rare earths — that China produces. And even that source isn’t a sure thing: The work is so volatile, complex and expensive that Lynas once came close to collapsing.
“There were times where we were sitting there and I’m saying, ‘Can we really afford to put coffee into the staff rooms?’” Ms. Lacaze said.
The Trump administration amped up its trade fight with China on Tuesday when it threatened to impose tariffs on an additional $200 billion in Chinese goods, ranging from frozen catfish fillets to copper wires to piston engines. China has threatened to match them dollar for dollar.
But it has other ways to retaliate beyond tariffs. It could refuse to buy American products, like planes from Boeing. It could intensify regulation of American companies doing business on the mainland. It could threaten to offload a piece of its huge portfolio of Treasuries, which could rattle the bond market.
And in one of its more strategic weapons, Beijing could use its dominance to cut off key parts of the global supply chain. China is the major supplier of a number of mundane but crucial materials and components needed to keep the world’s factories humming. They include obscure materials like arsenic metals, used to make semiconductors; cadmium, found in rechargeable batteries; and tungsten, found in light bulbs and heating elements.
They also include rare earths. A trade war risks putting those minerals in the middle of the conflict, potentially giving China a way to get back at the United States by cutting off supplies to American companies. Already rare earths have become embroiled in the conflict — they were among the long list released on Tuesday of Chinese-made goods that the Trump administration wants to tax.
China has used its control of rare earths to try to get its way before. In 2010, it stopped exports to Japan for two months over a territorial dispute. Speculators hoarded rare earth minerals, sending prices soaring.
“There is a hole in the western supply chain,” said Ryan Castilloux, the founder of Adamas Intelligence, a research firm.
It is hard to go a day without using rare earths. They are found in personal electronics like…
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