China and Vietnam weigh rail link through rare earths heartland

Subject : IR

Section: Places in news

Context:

China and Vietnam are working on a possible significant upgrade of their underdeveloped rail links to boost a line that crosses Vietnam’s rare earths heartland and reaches the country’s top port in the north.

More about News:

The upgraded railway would pass through the region where Vietnam has its largest deposits of rare earths, of which China is by far the world’s biggest refiner.

Vietnam is trying to build its own industry in what is seen as a possible challenge to China’s dominance, but what appear as internal fights have cast a shadow over these efforts.
Chinese and Vietnamese rare earths industry experts last week discussed stronger cooperation on processing the minerals.
It is unclear how much China would contribute to the upgraded railway track in Vietnam and whether Hanoi would accept sizeable financing from Beijing on this.
The line could be seen as part of China’s flagship Belt and Road Initiative (BRI) which is supporting infrastructure investment across the world, but is not clear whether it would be labelled as a BRI project.
A strengthened railway link could also boost Vietnam’s export to China, mostly of agriculture products, boost Chinese tourism to northern Vietnam and further integrate the two countries’ manufacturing industries, which experts already consider as symbiotic, with factories in Vietnam largely assembling components produced in China.
China is Vietnam’s largest trading partner and so far this year is also the main investor, taking into account investment from Hong Kong, as many Chinese companies move south some of their operations amid trade tensions between Beijing and Washington.
Despite the booming economic links, the two communist nations are embroiled in a years-long maritime dispute in the South China Sea and fought a brief war in the late 70s, China’s latest.

What are Rare Earth Metals?

They are a set of seventeen metallic elements. These include the fifteen lanthanides on the periodic table in addition to scandium and yttrium that show similar physical and chemical properties to the lanthanides.
The 17 Rare Earths are cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La), lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (Tb), thulium (Tm), ytterbium (Yb), and yttrium (Y).
These minerals have unique magnetic, luminescent, and electrochemical properties and thus are used in many modern technologies, including consumer electronics, computers and networks, communications, health care, national defense, clean energy technologies etc.
Even futuristic technologies need these REEs.
For example, high-temperature superconductivity, safe storage and transport of hydrogen for a post-hydrocarbon economy etc.
They are called ‘rare earth’ because earlier it was difficult to extract them from their oxides forms technologically.
They occur in many minerals but typically in low concentrations to be refined in an economical manner.

How China Monopolised Rare Earths?

China has over time acquired global domination of rare earths, even at one point, it produced 90% of the rare earths the world needs.
Today, however, it has come down to 60% and the remaining is produced by other countries, including the Quad (Australia, India, Japan and United States).
Since 2010, when China curbed shipments of Rare Earths to Japan, the US, and Europe, production units have come up in Australia, and the US along with smaller units in Asia, Africa, and Latin America.
Even so, the dominant share of processed Rare Earths lies with China.

What is India’s Current Policy on Rare Earths?

Exploration in India has been conducted by the Bureau of Mines and the Department of Atomic Energy. Mining and processing has been performed by some minor private players in the past, but is today concentrated in the hands of IREL (India) Limited (formerly Indian Rare Earths Limited), a Public Sector Undertaking under the Department of Atomic Energy.
India has granted government corporations such as IREL a monopoly over the primary mineral that contains REEs: monazite beach sand, found in many coastal states.
IREL produces rare earth oxides (low-cost, low-reward “upstream processes”), selling these to foreign firms that extract the metals and manufacture end products (high-cost, high-reward “downstream processes”) elsewhere.
IREL’s focus is to provide thorium — extracted from monazite — to the Department of Atomic Energy.

What are the Related Steps taken?

Globally:

The Multilateral Minerals Security Partnership (MSP) was announced in June 2022, with the goal of bringing together countries to build robust critical minerals supply chains needed for climate objectives.
Involved in this partnership are the United States (US), Canada, Australia, Republic of Korea, Japan, and various European countries.
India is not included in the partnership.

By India:

Ministry of Mines has amended Mines and Minerals (Development and Regulation) (MMDR) Act, 1957 through the Mines and Minerals (Development and Regulation) Amendment Act, 2021 for giving boost to mineral production, improving ease of doing business in the country and increasing contribution of mineral production to Gross Domestic Product (GDP).
The amendment act provides that no mine will be reserved for particular end-use.

What is the Belt and Road Initiative?

The BRI, represents a multifaceted development strategy aimed at enhancing global connectivity and cooperation.
It was launched in 2013 and aims to link Southeast Asia, Central Asia, the Gulf region, Africa and Europe with a network of land and sea routes.
The project was first named the ‘One Belt, One Road’ but renamed as the BRI to convey a more open and inclusive initiative as opposed to a Chinese-dominated one.
The initiative includes two principal components: the Silk Road Economic Belt and the Maritime Silk Road.

Routes of BRI:

Silk Road Economic Belt:

This segment of the BRI is dedicated to improving connectivity, infrastructure, and trade links across Eurasia through a network of overland transportation routes.

Maritime Silk Road:

This component emphasizes maritime connections and cooperation in the form of ports, shipping routes, and maritime infrastructure projects.
It begins via the South China Sea going towards Indo-China, South-East Asia and then around the Indian Ocean thus reaching Africa and Europe.

Objective:

The primary goal of the BRI is to boost international connectivity by enhancing infrastructure, trade, and economic cooperation.
The initiative encompasses a wide range of projects, including railways, ports, highways, and energy infrastructure.