Will Turkiye Break China’s Dominance of the Alternative Energy Industry?

Turkiye recently announced a discovery that would end the dependence of the renewable industry on China, specifically electric vehicle manufacturers, The Times reported on July 11, 2022.

It is said that the newly discovered reserves of rare earth elements, a group of vital minerals that are used to store alternative energy, are the second largest reserve in the world after China, which dominates global production.

New supplies of these minerals were found near the city of Eskisehir in the Central Anatolian Plain in Turkiye—a NATO member state—and this is news of great importance to Western industries.

 

Huge Find

A report by The Times's Middle East correspondent, Richard Spencer, stated that Turkiye is proud of ending China's grip on the stockpile of rare earth elements that are used to store alternative energy, from which Europe and the United States largely import.

"Turkiye recently discovered huge reserves of rare earth elements, such as cerium, dysprosium, lithium, neodymium, and samarium," the report pointed out.

This would provide a solution to a major problem that is delaying the world's attempts to shift towards environmentally friendly industries and reduce the production of greenhouse gasses, according to the report's author.

But skeptics pointed out that many details are still vague, the mentioned estimates indicate the amount of ore discovered, and the amount of rare earths that would actually be produced would depend—as in all mining operations—on the purity of the ore.

On its part, the popular newspaper Global Times, which the ruling Communist Party of China runs, quoted well-informed sources in the industry as saying that "China will maintain its technological and industrial progress in the global rare earth minerals industry in the future."

"The discovery of rare earth minerals in Turkiye will not have a clear impact on China's global position," it added.

However, the state-backed Bao Gang United Steel Group of China, in turn, criticized the Turkish Energy Minister's allegations about the recently discovered reserves.

According to the Turkish Ministry of Energy and Natural Resources, the country has found 694 million tons of deposits containing rare earth elements in Eskisehir, which are enough to supply the world for a thousand years.

This find makes Turkiye the second largest reserve of rare earth elements in the world after China, which has 800 million tons, according to AA Energy.

According to a report published July 06 by The Drive, the deposit discovered in Turkiye contains 11 of the 17 rare earth elements, and they are relatively close to the surface, meaning they are cheaper and easier to extract.

Fatih Donmez, Turkiye's Minister of Energy and Natural Resources, was quoted by Turkish media as saying: "The construction of the processing infrastructure will start later this year. When things are ready, we expect Turkiye to have the capacity to process 570,000 metric tons of rare earths annually."

Some experts estimate the total annual production of Turkish sites to double the estimated global demand in 2030 nearly.

Rare earth elements are commonly used in consumer electronics such as televisions, tablet computers, cameras, cell phones, automobile catalytic converters, and rechargeable batteries, as well as in wind turbines, missile guidance systems, telescopes, and X-ray machines.

For example, dysprosium, neodymium, and samarium are used to make the engines of some electric vehicles, while gadolinium is used in both engines and batteries, and cerium is used in catalytic converters.

Lithium-ion batteries are currently the gold standard for the electric vehicle industry; lanthanum and yttrium are also used in alternative battery chemistry.

Because rare earth elements are used in many important products, they are of strategic importance to the economic and military security of the West, according to a research paper published by the German Federal Academy for Security Policy.

 

High Hopes

Nevertheless, the Turkish discovery should at least present a less bleak picture to the West about rare earth elements than the pessimistic perceptions of recent years.

"I wouldn't say this discovery is a lifesaver for the European market, but it's good news," Ryan Castillo, managing director of consultancy Adamas Intelligence, told The Times.

He continued, "The problem is so big, and the demand is growing so fast that we need many discoveries like the Turkish one."

According to The Times, in order to reduce greenhouse gas emissions in the next few years, high hopes are pinned on the rapid replacement of the internal combustion engine with battery electric vehicles.

Therefore, the author recalled the pledges of both the United States and Britain to ban sales of new cars that run on gasoline and diesel by 2045.

But he added that making the batteries that power electric cars requires a group of minerals, including the so-called rare earth elements, which China leads in production and provides between 80-90% of global supplies.

He noted that, amid the geopolitical meltdown pitting the United States and the West against Russia and China, this dependence appears increasingly unsustainable.

Last month, Britain, the United States, and other Western allies announced the formation of the Minerals Security Partnership in an effort to make the supply chain more secure.

On its part, China imposed restrictions on exports of rare earth elements in December 2020 as a way to preserve its stocks.

The European Commission noted last year that 98 percent of the rare earth elements in the European Union are imported from China, while the proportion of US imports is about 80 percent.

The Times reported that last year, China's exports reached just under 49,000 tons, making Turkiye's outline figures look attractive.

Castillo also pointed out that it is estimated that the purity of rare earths in Turkiye is 2%, which will provide enough processed ores to satisfy the global market for 40 to 50 years, but only at current levels of demand, noting that this is increasing exponentially, as the world's population increases.

According to figures released by the United Nations recently, the world population is expected to reach eight billion in November.

"Converting Turkiye's new discovery into usable exports also depends on building the necessary processing plants. It is a very complex process, taking an average of ten years to start production," Spencer added.

"Although the Turkish deposits are large, they can be compared to other deposits recently discovered in the United States, Canada, and Australia, not to mention ancient reserves in Brazil, Russia, and Vietnam," he noted.

"It takes a significant amount of time for a Turkish discovery to have a significant impact," emphasized Simon Morris, CEO of Benchmark Mineral Intelligence.

"The rest of the world will remain completely dependent on China until there is an active supply chain for rare earth elements outside China, from the mine to the final product," he added.

 

Growing Demand

Recently, automakers have begun racing to build battery factories in many countries of the world in order to supply the growing demand for electric vehicles as the world moves away from internal combustion engines.

While the electric car battery market is witnessing a special kind of competition between Chinese companies, which dominate the sector, followed by Korean and Japanese companies, this prompted many car manufacturers to enter into alliances with major companies to set up factories in Europe and North America to secure their growing needs.

In this context, an alliance of 3 companies announced the establishment of a plant for electric car batteries in Turkiye to provide for the increasing needs of vehicles in the coming years, with plans to switch from petrol and diesel cars to electric cars, Reuters reported in its March 14, 2022, report.

The three companies are South Korean electric car battery maker SK Innovation Co, US Ford Motor Company, and Turkish Koc Holding AS.

The plant, the first of its kind in Turkiye, is part of Ford's plan to produce two million electric cars annually by 2026.

The new plant in Ankara is scheduled to start production by 2025 and aims to have an annual production capacity of 30-45 GWh.

Statistics from Bloomberg New Finance indicate that electric cars are expected to account for 60% of all new sales globally by 2030 if there is a real desire to reach carbon neutrality.

Bloomberg expects battery manufacturing costs to drop to less than $100 per kilowatt-hour by 2024, but there is a challenge for this to happen: the price of minerals for electric car batteries will rise as demand increases.