Rare Earth Elements (REEs) are a set of 17 chemical elements in the periodic table, and in fact are relatively abundant in the Earth's crust. What makes them "rare" is finding them in quantities significant enough to support economic mineral development, in addition to the fact that they are not consumable from an economic viability point of view, primarily since they are not concentrated enough. REEs are essential for consumer electronics, including cell phones, laptops and green energy technologies. But perhaps the most significant end-use of REEs is that in defence-related applications such as jet fighter engines, missile guidance systems, anti-missile defence, and satellite and communication systems. More specifically, permanent (NdFeB) magnets are best suited for military technologies, especially precision-guided missiles.
With these sorts of dependencies, nations are fast becoming more and more contingent to import rare earth elements from China, primarily owing to two reasons: 1) almost 75% of the permanent NdFeB magnet production is concentrated in China; and 2) lower-cost operations. The nearly one-sided Chinese dominance in world's rare earth production is astonishing and has driven Beijing to employ the most restrictive export policies over these elements. Besides, China holds 50% of the world's rare earth reserves (55 million metric tons out of 110 million metric tons) and a reserves base of 89 million metric tons.
Producing almost 95% of the world's rare earth elements until 2011, China continues to restrict exports by means of quotas and export tariffs. Chinese policies seemingly aim at lowering prices for Chinese firms through which they can obtain an unfair competitive advantage. To counter this trend, in March 2012, the Obama administration announced the joint filing of a case with Japan and the European Union (EU) against China at the World Trade Organisation, citing unfair trade practices in rare earths and limiting rare earth exports. Surely, in a setback for Beijing, the WTO found China violating global trade rules and it lost an appeal in August 2014 with the Appellate Body ruling, "China has not demonstrated that the export quotas that China applies to various forms of rare earths ... by virtue of the series of measures at issue, are justified." The WTO said China's export duties on rare-earth metals are inconsistent with its obligations.
The Industrial Minerals Company of Australia (IMCOA) has estimated China's REEs output at around 130,000 tons per year in 2016 (up from 105,000 tons in 2011), thus implying that in the eventual possibility of nations ramping up rare earth production/seeking alternative sources of rare earth materials, a major part of the processing, alloying and metal fabrication would still occur in China — concentrated largely in the Chinese provinces of Baotao (Inner Mongolia), Shangdong, Jiangxi, Guangdong, Hunan, Guangxi, Fujian, and Sichuan.
Despite this, China has continued expansion of seabed mineral explorations in southwest of the Indian Ocean Region — facilitated following an approval of China's bid by the International Seabed Authority to mine for polymetallic sulphide ore. China's Ocean Mineral Resources R&D Association signed a 15-year exploration contract with the International Seabed Authority that shall grant pre-emptive rights for it to develop the ore deposit in future. Significantly, Beijing released a guideline on the oceanic science and technology development from 2011-2015 — a key pronouncement of which was promoting investments to boost China's maritime economy. The guideline, prepared jointly by China's State Oceanic Administration, the Ministry of Science and Technology and the Ministry of Education and the National Natural Science Foundation, underscores the growing emphasis on innovation for breakthroughs in key technologies that would stimulate the development of emerging oceanic industries.
In January 2015, China's manned deep-sea submersible vessel, Jiaolong carried out its first dive on a mission to research polymetallic sulphides, hydrothermal microbes and genetic resources during the four-month long expedition. Following a total of 13 dives, Jiaolong successfully discovered active hydrothermal "chimney vents" in southwestern Indian Ocean in March 2015 and is now docked at the Qingdao port in eastern China's Shandong Province.
However, by means of securing the approval for seabed exploration, Beijing now has acquired access to explore a 10,000 sq km seabed area in southwest Indian Ocean — making for strategic concerns for regional players including India.
Apparently, China is offering India to participate in joint seabed mining in the Indian Ocean, given that both are contractors with the International Seabed Authority. Chen Lianzeng of China's State Oceanic Administration made the offer for joint seabed exploration in May this year. Nonetheless, reports suggest that India's Directorate of Naval Intelligence has concerns of China operating warships for area familiarisation purposes, besides compiling data on vast mineral resources in the Indian Ocean Region.