Coronavirus Update: COVID-19 Threatening EV, Computer Production

Companies may be able to plug holes in supply chains disrupted by the new coronavirus infections paralyzing Chinese production, but there are some commodities virtually only China can supply: rare earths, which are critical to future decarbonization methods, and, along with their alloys, are used in such devices as computer memory, DVDs, rechargeable batteries, cellphones, catalytic converters, magnets, fluorescent lighting and even cancer treatments.

Though rare earths are as plentiful in the Earth’s crust as other metals like copper, they cannot be mined in the same way, making recovery much more expensive since they’re generally mixed together and difficult to separate.

China produces about 85% of rare earths and has dominated the market since the 1990s, but with half of China’s 1.3 billion population subject to travel restrictions or other quarantine measures, production is suffering. And as COVID-19 continues to spread around the globe, and manufacturers begin running out of components, the search for alternative supplies is intensifying.

“I don’t think that it is as simple as finding alternatives to rare earths, in many cases, were firms to switch to technologies that didn’t require critical materials, the alternative technologies have poorer performance, and that must be compensated for in some other way,” said Gavin Harper, a research fellow at the University of Birmingham.

One such rare earth is neodymium, a slightly malleable silvery metal used to make specialized goggles for glass blowers, in a spark-producing alloy for cigarette lighter flints and to color glasses and enamels. It’s produced mainly in China with an additional fraction coming from western Australia.

“Critical materials like neodymium are so crucial [because] they impart performance criteria that are difficult to achieve any other way,” Harper said. “Rare earths are tricky to replace. It is their unique magnetic properties that make them essential in some applications.”

Recycling could recover rare earths but current recycling technology is not geared to extracting materials finely dispersed through a product and mixed with other materials.

“In many cases, where rare earth magnets make their way into conventional recycling processes, they present a challenge for recyclers. Imagine shredding devices that contain rare earth magnets – the rare earth material, being magnetic, sticks to ferrous components, for example the shredding blades. It forms an abrasive that causes premature failure of recycling equipment,” Harper said.

COVID-19 also has disrupted mining operations for critical materials to battery production like cobalt and nickel, making them subject to wild price swings. China manufactures 60% of lithium ion batteries, with production centered in Wuhan and surrounding Hubei province, the epicenter of the outbreak. A disruption in that supply chain means production delays for such products as computers and electric vehicles.

The outbreak is expected to send China’s manufacturing purchasing managers’ index down, with exports falling as much as 30%, said Liu Xuezhi, an economist at the Bank of Communications, told the Global Times.