The United States is partnering with Australia and Japan to reduce China's near monopoly on the mining and processing of heavy minerals, better known as rare earths. The partnership includes the setting up of a separation facility in the U.S.

The Australia-based corporation Lynas, which is the world's only major rare earth producer outside China, has joined hands with Texas-based Blue Line to set up the facility in Texas. Operations are expected to begin in 2021.

China currently dominates the production of rare earths, which although not rare as their name suggests, are an important component in electronics manufacturing.  They are also an important component in the manufacture of batteries for electric vehicles, and demand is expected to rise significantly as electric vehicle production ramps up. 

There were fears China would restrict their supply as a way of punishing the United States with which it is now engaged in a trade war. China had once earlier restricted exports of rare earths to Japan when a Chinese fishing boat captain was arrested by the Japanese coast guard near the Senkaku islands in September, 2010.

Japan ultimately broke that blockade by appealing to the World Trade Organization, which rejected China's "environmental pollution" defense. 

Rare Earth Miner A laborer works at the site of a rare earth metals mine in China. Photo: Reuters/Stringer

According to a report by the Nikkei Asian Review, Lynas has also been extended support by Japan. The report also cites an industry source who has said that this alliance creates "a three-nation alliance in the sector that parallels the Asia-Pacific region's security landscape, where the U.S., Japan and Australia are allied to confront China's military expansion."

Japan has been Lynas' largest customer since 2010, accounting for about 30 per cent of its total rare earth imports.

According to a report by The Edge Markets, China accounts for 85 per cent of the global rare earth minerals market. Lynas accounts for 15 per cent.

In an interview with Nikkei, Lynas CEO Amanda Lacaze said, "The only heavy rare earth separating plants in the world are located in China. But heavy rare earths are essential."

Not surprisingly, companies that are trying to profit from Lunar exploration have their eyes set on rare earths on the Moon. NASA chief Jim Bridenstine recently said the mining of rare earths on the Moon can happen this century.