Vital Western alliance countries' heavy dependence on China is a major problem: 'dangerously exposed'

A new report shows that countries within the Five Eyes intelligence partnership - the United States, the United Kingdom, Canada, Australia, and New Zealand - heavily rely on China for rare earth elements (REEs), a set of metallic elements that play a crucial role in the mineral supply chain market.

The Five Eyes alliance has become an integral part of global intelligence and security operations. The group collaborates on intelligence matters and shares sensitive information to ensure collective security and thwart global threats. 

Rare earth elements are necessary to produce military equipment, and the report notes that Western military supply chains are also highly vulnerable to Chinese decisions to limit REEs exports.

The report titled "Decreasing Rare Earths Dependency: How the Five Eyes Alliance can Minimize Rare Earths Trading Risk with China" argues that Five Eyes countries must diversify away from China for their supply of REEs. 

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The U.S. had once been a key player in the rare earth elements market. Now, the U.S. is very dependent on China, importing as much as 80% of its REEs from China, according to the report.

"The Five Eyes countries are dangerously exposed to China when it comes to rare earth minerals, as they are all over reliant on China for this critical resource," Helena Ivanov, associate fellow at the Henry Jackson Society and author of the report, told Fox News Digital.

The report highlights that rare earth elements are used for defense technologies like fighter jets and that China can leverage its dominance of the industry for political purposes, using this advantage to project its influence on the global stage.

Speaking on background, a spokesperson for the House Select Committee on the CCP told Fox News Digital that "the CCP increasingly leverages its markets, technology, and control over critical minerals to pressure the United States and its allies and partners. To counter these predatory practices, the United States must enhance U.S. trade and technology collaboration with its allies and partners while decreasing dependence on the PRC in critical supply chains."

China overwhelmingly dominates the industry’s supply chain, accounting for 60% of global production and almost 90% of processing in the market.

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In addition to being a valuable resource for military technology, rare earth elements are also critical in manufacturing smartphones, digital cameras, computer hard drives, fluorescent and LED lights, flat-screen TVs, computer monitors and electronic displays.

"If no alternatives are found, the report warns that North American producers of critical minerals estimate that should confrontation occur, China could cut short the supply of critical minerals to the U.S. in an event of war and exhaust the U.S. stock of minerals necessary for its defense apparatus in less than 90 days."

Admiral John Aquilino, leader of the Indo-Pacific Command, testified before the House Armed Services Committee in 2023 that China will meet President Xi’s goal to be ready to invade Taiwan by 2027. Given recent tensions over Taiwan, the group’s overreliance on an adversarial China is worrisome.

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China is not shy about its willingness to exploit its market dominance by restricting exports when it suits its interests and has used its monopoly over the industry for political purposes in the past. In 2023, the report points out, China explored limiting the export of rare earth minerals that are critical to the manufacturing of the F-35 fighter jets and other weaponry.

The U.S. is keenly aware of its vulnerabilities to China's dominance of the market and has taken some measures to reduce its dependence on Beijing. The Department of Defense and other agencies are building programs to strengthen the domestic supply chain of REEs. In April, the Department of Energy announced $17.5 million as part of President Biden's Bipartisan Infrastructure Law for four projects to help lower the cost and reduce the environmental impacts of extracting REEs.

Secretary of Energy Jennifer Granholm said in a statement at the time that the investments announced "will increase our national security while helping rebuild America’s manufacturing sector and revitalize energy and mining communities across the country." 

The vulnerabilities highlighted in the report shows the importance for the Western alliance to reduce its dependency on China overall. Without such risk reduction, the report argues that democratic countries may face a situation similar to Europe’s past reliance on Russian gas prior to Moscow’s invasion of Ukraine. 

The only way out of this situation, the report says, is collaboration within the Five Eyes Alliance, as countries like Canada, Australia and the U.S. can ramp up domestic production and decrease China’s influence in the market.

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"In the last few years, China has become a bad faith actor, and substantial issues and risks are involved with relying on China for REEs," the report said.