Russia Ukraine Conflict and Chain Effect of Rare Earth Supply

On the one hand, the West sanctioned the Russian economy, on the other hand, it provided military materials to directly or indirectly continue the Russian Ukrainian conflict. Energy supply crisis, food security... The supply chain is frequently hit. The supply and demand of rare earths will also be directly or indirectly affected by the chain reaction, and the West's own concerns about the scientific and technological revolution and the source of key materials of the "Star Trek" have increased.

The attention of rare earths is particularly high. These 17 specific elements are not "rare" in themselves, and the current dominance of China is a problem that policy makers in western countries cannot sleep at night. As the military conflict between Russia and Ukraine continues, the supply and demand of rare earth elements are undermined.

The application of rare earth elements is very extensive, ranging from the smart phone in your pocket to the satellite in space; Semiconductors, which are now competing with the future king of science and technology, are all inclusive - they are used to establish guidance and control systems, lasers, radars and sonar; It is the core element of stealth and night vision technology, and the application of new energy under the current carbon neutral background can not be separated from rare earth elements.

It is noteworthy that rare earth metals are the key "gentlemen" of high-tech components in the aerospace field, and are used in various fields, from launch vehicles to national defense, commercial communications, various satellites, China's space station, etc.

It is no exaggeration to say that we cannot build a lunar base without rare earth elements in the future.

Now, it is common for China to launch satellites, which is as simple as buying steamed buns downstairs. Why can we see the live broadcast so comprehensively and clearly? High speed communication and advanced cameras are guarantees. There are also batteries, various chips, optical glasses, special coatings on thermal control systems, optical fibers or temperature sensors. Rare earth elements play an indispensable role in them, and can also make hardware system solutions smaller, lighter and more efficient.

The problem is that whether China or other countries dominate the supply of rare earth, as long as the global supply chain in a region (whether Russia or Ukraine) is interrupted, it may have an impact on the global economy, and ultimately may indirectly affect the rare earth supply chain, or even a vicious circle.

The shift in LNG supply clearly shows that things are not always the same. Reliable and stable access to rare earth resources may also be affected by the same competitive market forces and political instability, or even the delay of commodity delivery.

Russia and Ukraine also have unique and rich resources, whose export is now restricted due to conflicts and sanctions.

As we all know, Russia is rich in mineral resources; Ukraine, which has long been regarded as the "granary" of agriculture, is also increasingly recognized for its rich mineral resources. For example, Ukraine is estimated to have more than 500000 tons of lithium oxide, as well as important energy reserves and precious metals such as titanium.

Some foreign media reported that before Russia invaded Ukraine, market analysts had warned about the potential impact of the war on the global semiconductor market, suggesting that chip prices might soar hundreds of times due to the source of rare earth resources; The market research institute pointed out that 35% of palladium sold to the United States came from Russia, while Ukraine provided the United States with most semiconductor neon lights.

The conflict has intensified the confrontation between the West and Russia, and the direct and indirect impact on the supply of rare earth and other mineral resources, until the global economy, will be lasting and far-reaching.

What about the direct impact on rare earth supply? Russia and Ukraine supply 2700 tons of rare earth, accounting for 1% of the global supply. In other words, at most 1% of the world's rare earth supply will be directly affected.

The general consensus in the industry is that Ukraine does not supply rare earth elements. According to the latest USGS report, Russia will produce 2700 tons of rare earth in 2021, the same level as the previous three years, accounting for 1% of the global supply.

In the future, it is reported that Russia has reduced mining tax and provided discount loans to investors of nearly 12 projects, aiming to increase the country's share of global rare earth production from 1.3% to 10% by 2030.

To sum up, conflicts have an impact on the industrial chain, supply chain and even the economy. It also directly and indirectly affects the supply chain of rare earths, and affects the development and progress of defense and military equipment, aerospace technology.