Bangalore — quad countries — the United States, India, Japan and Australia — have recently sought to address their dependence on China-dominated critical technology supply chains.
QUAD has virtually met at its first Leadership Summit on March 12 and decided to convene a coordinating group of key technologies. It is essentially included Artificial intelligence (AI), cloud computing, quantum, robotics, and blockchain.
QUAD’s Key and Emerging Technology Working Group convenes dialogue on the key technology supply chains currently dominated by the Chinese. In an exclusive interview, the Epoch Times, a prominent scientist and key technology expert, said it was important for QUAD countries to understand the subtle differences. The supply chain of critical technologies is very complex.
These important technologies rely on important or rare earth (RE) elements, which are the mainstream processing in China. Even the manufacture of key intermediate products essential to these high-tech growth industries is controlled by China.
The important nature of these technologies and their growing importance to the global economy create vulnerabilities for developed countries, and on September 30, 2020, President Donald Trump said the United States relies on China for rare earth metals. I declared. National emergency.
The Biden administration also decided to consider an important supply chain to reduce its dependence on China, signed by the president. February 24 Executive Order For “a resilient, diverse and secure supply chain to ensure our economic prosperity and national security”.
The importance of China’s supply chain management of key technologies can be further assessed by the economic importance of key technologies such as artificial intelligence. Artificial intelligence could boost GDP in the local economy by 26% by 2030 and contribute $ 15.7 trillion to the global economy.To Report by PWC, Global professional services network.
S. Chandrashekar, a world authority on key technologies and a former scientist at the Indian Space Research Organization (ISRO), told the Epoch Times that key technologies permeate every aspect of life. Much from “electric vehicles” to “green energy” to “big economies” has strategic importance, and if QUAD countries decide to coordinate their critical technology supply chains, they will do so. It needs to be understood in detail.
“We need to understand how this transition period can be used. During this transition period, all countries will coordinate in common to contain and deal with controlling China. Will be done. [over these supply chains]”It’s an opportunity to actually develop a strategy for an alternative RE industrial ecosystem,” said Chandra Shekar. “So there are some finer nuances that you have to pay attention to.”
China’s important technology supply chain
In a paper co-authored by Lalitha Sundaresan and Nabeel, Chandrashekhar said China has established global dominance in the rare earth industry, from mining to the production of important intermediate products, which are important inputs to high-growth industries. He states that he manages the entire supply chain. Mancheri is published by the National Institute of Advanced Studies (NIAS) in India and is also a professor.
These high-growth industries include hybrid vehicles, windmills, and lighting, which China is trying to scale up for future dominance.
According to a NIAS treatise, China’s impetus to achieve global dominance in the rare earth industry was approved under Program 863, which is part of the Strategic Nuclear Program. The purpose is to:
“Build a foothold on the world stage. Strive to achieve breakthroughs in key technological areas related to national economic lifelines and national security.”
Areas identified as priority areas by Program 863 include biotechnology, space technology, information technology, laser technology, automation, and energy, many of which require rare earth materials. Program 863 was approved by Supreme Leader Deng Xiaoping in 1986. It was boosted through Program 973 in 1997.
According to a NIAS treatise, China’s leader Jiang Zemin said, “Improving the development and application of rare earths and turning resource dominance into economic dominance.”
Two years earlier, China was able to conditionally acquire Magnequench, a subsidiary of General Motors in the United States, with the goal of catching up with permanent magnet technology.
All Magnequench assets were moved to China in 2002 after the curb was removed by the United States. This has given China a global dominance in the powerful magnet industry. This is important for the manufacture of wind turbines, electric vehicles, satellites, rockets and robots.
“After purchasing Magnaquench, they also integrated their business with the Canadian company Neo Materials, which is involved in RE. Neo Materials partnered with a US mining and processing company to purchase basic RE materials. “These will be sent to China for separation,” said Chandrashekhar.
Since then, Chinese have purchased major shares in various RE mining companies, including Lynas, an Australian RE mining company, according to a NIAS treatise. Even less than 50% stakes give China access to information and influence, according to Chandra Shekar.
Today, China has already gained global dominance and is now focusing on building a domestic RE industry ecosystem focused on mining and processing, manufacturing and application, and research and development.
Chandrashekhar said the United States initially played a pioneering role in many “breakthrough discoveries” of rare earth materials, but worsened its former dominant position.
“Currently, ensuring that sufficient RE materials and intermediates are available depends on large Chinese companies. [U.S.] use. In the United States today, RE has no industrial capacity and global market dynamics can move them all to China, “says Chandrashekhar, Sundaresan, and Mancheri.
In an announcement after Biden signed an executive order for a secure supply chain, the White House said the Secretary of Defense would also be a Defense Reserve Manager and would submit a report identifying risks in the supply chain of important minerals, including rare earths. Minerals and policy recommendations to address these risks.
Complex supply chain
The rare earth supply chain is complex because each final product, such as a car or mobile phone, contains thousands of intermediate products. Each may require different rare earth elements. Therefore, creating an alternative supply chain requires a high degree of strategic input and coordination. ..
“Car windshield wipers may require small motors that require magnets. To reduce size and power requirements, RE magnets may be required. The same car may require a display. You may need a TV-like display unit that uses a phosphorescent coating to provide lighting. The car can be a hybrid car or an all-electric car that requires a motor to convert battery power to mechanical power. Hmm, this may include other types of rare earth magnets, “says Chandra Shekar.
“The car may have a battery made of nickel metal hydride batteries, which may require electrodes to supply the lantern. [one of the 17 RE materials] Is added. Catalytic converters installed in the exhaust of gasoline vehicles use metals such as platinum, palladium and rhodium. These are not REs, but some RE materials have been added to reduce costs and improve their ability to treat pollutants such as carbon dioxide and nitrous oxide. The music system in the car may require speakers that also require RE magnets. The list can contain many other items that require an RE element, “he said.
A typical mobile phone also has several parts, many of which require rare earth minerals, and many other important technologies whose intermediate products and assemblies require one or more of the 17 rare earth minerals. There is.
“The use of RE can be visualized as a complex network of connections between RE elements, parts, subassemblies, and products. This network can be represented by a so-called I / O matrix. This is ours. Our report was that all 92 nodes were connected, “said Chandra Shekar, who could hurt supply chain disruption from this complex matrix. I added that I can visualize if there is.
“China has not only raw materials, but also many intermediates such as magnets, phosphorescent materials, catalytic converters, batteries, etc., which could seriously endanger the production chains of developed countries. The turmoil affects many interrelated products and industries, “he said.
More than 10 years ago, China stopped supplying RE to Japan for two months after the tiff. Recently passed the law It requires a case-by-case scrutiny of exports.
“Since China’s embargo in 2010, Japan has been worried about RE vulnerabilities long before the United States. I am confident that there are mechanisms in place to reduce the vulnerabilities,” said Chandra Shekar. He added that for that reason RE was considered strategic and was included on the QUAD agenda.
He said that while some countries like India may be in a better position to supply rare earths, other countries like the United States and Japan need to define a supply chain of important technologies for mineral processing. Said he would have intermediate product technology.
After the 2010 embargo, Japan is ready to deal with a similar situation. Australia has a good trade relationship with China, especially in the mining industry, which has recently become “tough” and strategies are being implemented.
Chandrashekar said the United States under the Trump administration has taken strong steps to prepare for a threat to the country’s high-tech economy.
“They are implementing a strong and fairly integrated program for alternative supply in the case of national and international alliances. This program reduces RE content and uses alternative materials and designs. We also want to completely bypass the RE material, “he said. As part of this effort, Trump wanted to buy Greenland because of the large RE resources in Greenland.
“The United States is on track to scale up and reduce the impact of China’s threat. Xi has visited the RE Center to send a threat to Trump, according to news media,” Chandrashekhar said. Stated.
India, which was primarily a supplier of raw materials, was also forced to develop its own technology for magnets when faced with an embargo, and the country used them in polar satellite launch vehicles. “Recently, there are facilities that manufacture magnets to meet important security needs,” said Chandrashekhar.
“The search for cooperation and coordination can still be useful,” Chandrashekhar said, as each of the four QUAD countries has RE strategies of varying sizes.
He first identifies technology needs for each QUAD country to coordinate critical and sustainable technology supply chains, who can provide rare earth minerals, who can provide intermediate technologies, and who can manufacture them. He said it was important to confirm.
In the process, Chandra Shekar said it is important for countries to build assurance and long-term trust, as coordination, collaborative research and innovation can take time.