Doubts Grow Over Turkey's Discovery of Huge Rare Earths Deposits

US Treasury Secretary Janet Yellen this week said Washington was keen to reduce its “undue dependence” on Chinese rare earths, accusing Beijing of using “coercion to pressure a number of countries whose behavior they have disapproved of.”

Two years ago, the EU created the European Raw Materials Alliance to encourage member states to diversify sources of primary raw materials, including rare earth metals, from third countries. Efforts to strengthen regional supply chains are being stepped up in the wake of disruptions caused by the COVID-19 pandemic.

Turkey needs economic lift

If the deposit is as valuable as Ankara claims, it would give Turkish President Recep Tayyip Erdogan further leverage over his NATO allies and help boost the ailing Turkish economy, which has limped from one currency crisis to another since 2018.

However, it is not the first time one of Erdogan’s proclamations has been met with skepticism. Two years ago, Ankara announced a huge natural gas discovery in the Black Sea, which the Turkish leader said would reduce the country’s huge energy import bill.

Analysts doubt whether the reserve, some 320 billion cubic meters (11.3 trillion cubic feet), will be as large as initially predicted, or whether the gas field will come online by 2023 as promised.

Such is the strategic importance to the West that many other potential rare earth projects have overhyped their potential in recent years to try to boost investor interest.

Eccelstone noted that during the last rare earth boom a decade ago “many of the big deposits discovered were too low grade, too isolated or the metallurgy was wrong and that’s why they stayed in the ground.”

Merriman said Wood Mackensie was currently tracking about 150 rare earth projects around the world which are at the mining stage. Out of those, 100 are at the refining stage.

There is no shortage of rare earth projects,” he told DW. “But those that are able to be developed commercially is a different story.”

Europe currently has just one rare earth processing facility in Estonia and a very limited number of magnet makers, the largest of which is Germany’s Vacuumschmelze.

The market is changing fast, however, and within a decade, China may not have the same stranglehold, Ecclestone predicted.

China has already lost the advantage in heavy rare earths [which make up nearly half of the 17 rare earth metals], it now has to import those,” he said.

Meanwhile, the country’s biggest rare earth mine, Bayan Obo, in Inner Mongolia, may struggle to produce at today’s level going forward.

Merriman said despite efforts by the US, UK and Australia to bolster their investments in rare earth materials, China’s dominance would likely remain because it has sewn up the extraction, processing and manufacturing of rare earth products like magnets.

If you look at the magnet elements, you need to turn the raw earths into metal, then into magnet alloys and then into finished magnets. There’s a huge number of points in the supply chain that need to be supported along that route, and there’s still very limited capacity outside of China,” he told DW.

Nik Martin is freelance journalist. Insa Wrede is economic editor at DW. This article, edited by Uwe Hessler, is  published courtesy of Deutsche Welle (DW).