Today I came across an article that instantly clarified why it is so difficult for the United States to rebuild its rare earth industry.

Taking gallium required for phased array radar in military manufacturing as an example, suppose you want to produce 100 tons of gallium. This would make you a significant supplier, accounting for 10-20% of the global gallium supply chain. But what does that actually require?

According to annual reports, China Aluminum extracts 146 tons of gallium from 20 million tons of alumina. To do that, you first need to invest 150 billion yuan to build a plant capable of smelting 15 million tons of alumina annually. After producing alumina, it can't just be discarded. Based on a ratio of approximately 1 ton of electrolytic aluminum per 2 tons of alumina, you also need to build a superfactory producing 7.5 million tons of electrolytic aluminum—roughly comparable to a large Chinese aluminum company like China Aluminum or slightly bigger than Weiqiao.

Producing one ton of alumina requires 2 tons of bauxite, 0.25 tons of lime, and 0.5 tons of standard coal. To produce one ton of electrolytic aluminum, you also need about 13,000 kWh of electricity. Therefore, 7.5 million tons of electrolytic aluminum would require roughly 1 trillion kWh of electricity annually, comparable to the annual power generation of the Three Gorges Dam.

For example, the leading nuclear power technology in the U.S. produces about 10 billion kWh per reactor per year, so you'd need to build 10 reactors.

Since the Three Mile Island incident, the U.S. has not built any new nuclear power plants for nearly 40 years, and since 1996, only 3 new reactors have come into operation.

Once the alumina plant, electrolytic aluminum plant, and power plants are built, you also need supporting infrastructure such as ports and roads to transport soda ash (which the U.S. is a net exporter of), lime (probably not in short supply), and other materials to the factories.

Oh, and then there are industrial workers. Weiqiao has about 100,000 employees. Assuming Americans have high automation and production efficiency, with management, logistics, and other departments fully automated, and based on managing 20 electrolytic cells per person, a project producing 500,000 tons annually would need about 600 skilled workers. For 7.5 million tons, roughly 10,000 skilled workers are needed. Including the alumina plant, power plants, and supporting facilities, an additional 30,000 to 50,000 skilled industrial workers would be required. U.S. manufacturing employment has fallen from 20 million in 1979 to about 12 million now, losing roughly 8 million jobs over 45 years, at a rate of about a few hundred thousand per year.

Now you see that producing 100 tons of gallium metal requires power plants, roads, electrical grids, coal mines, soda ash plants, bauxite mines, alumina plants, electrolytic aluminum plants, a complete downstream electrolytic aluminum production and sales network, and tens of thousands of skilled industrial workers. The technology isn't the hard part—it's doable.

Let's assume Americans overcome these design, construction, and production challenges, and in order to produce this 100 tons of gallium, they manage to assemble the entire 7.5 million tons of electrolytic aluminum. But then they face a bigger problem: electrolytic aluminum is a heavily oversupplied capacity. China produces 45 million tons of electrolytic aluminum, all struggling to find buyers. This is a standard, highly traded metal. Do you really think your 7.5 million tons of electrolytic aluminum, with gilded edges, is something buyers must have? If they can't sell it or have to sell at a loss, will the hundreds of billions of dollars invested in this project, the supporting infrastructure, and the training and recruitment of tens of thousands of workers, just rely on continuous injections of capital from the U.S. government to keep it afloat?

This is just one issue faced by the rare metal gallium. Indium, which is a byproduct of copper mining, faces similar problems. To break the indium blockade, you'd need to repeat the entire copper industry chain as described above...

Original author: destiny2020