The U.S. and China are set to resume trade negotiations in London on Monday in a bid to further defuse tensions over rare-earth minerals and advanced technology following a phone call between leaders Donald Trump and Xi Jinping last week…Both sides have accused the other of reneging on a deal in Geneva in May, when they reached an agreement to at least temporarily lower tariffs that had climbed to more than 100 per cent. After reaching an understanding with Xi on resuming flows of critical minerals, Trump said he expected the London meeting to go “very well.”…China said Saturday it approved some applications for rare-earth exports, without specifying which countries or industries were involved…“We want the rare earths, the magnets that are crucial for cell phones and everything else to flow just as they did before the beginning of April, and we don’t want any technical details slowing that down,” Kevin Hassett, head of the National Economic Council at the White House, said Sunday on CBS’s Face the Nation. “And that’s clear to them.”…U.S.-China trade tensions escalated this year as Trump hiked duties on Chinese goods, prompting retaliation from Beijing. While the Geneva deal was meant to pave the way for a broader de-escalation, subsequent talks quickly stalled amid mutual recriminations…The U.S. complained about a decline in shipments of rare-earth magnets essential for American electric vehicles and defence systems. China bristled at US restrictions on artificial intelligence chips from Huawei Technologies Co., software for designing chips, plane engines and visas for upwards of 280,000 Chinese students…

Comment: China controls ~80% of global cobalt refinery production and ~90% of global refined bismuth supply.

China has a virtual monopoly on those 17 metallic elements, which are critical components to everyday products from cars to jet engines to electronics like smartphones and flat-screen TVs. They’re even crucial for the contrast dye used in MRI machines and some cancer drugs…And, recently, China made it even harder to get them: The country introduced a new licensing requirement on the export of the elements in April, effectively slowing the flow of outbound shipments to most of the world, including the United States…Delegations from the US and China are meeting in London this week to talk about a new trade deal, and rare earths are almost certainly a major part of those discussions…Right now, US companies have only about two or three months’ worth of supply, according to Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies. After that, “industry simply could not manufacture” unless an agreement is reached between the US and China, she told CNN…One auto industry expert, who asked not to be identified because they aren’t authorized to speak publicly, told CNN it is becoming apparent that the auto industry is prepping for widespread shutdowns in the coming months due to rare earth shortages…It’s something the expert has heard described by people in the industry as “the chip shortage on steroids.”…“People think that it’s only EVs (electric vehicles), but it’s not,” the expert told CNN. “It’s in everything in every car. It’s in the motors that run windshield wipers. One supplier I’m talking to said there are sensors in seat belts. I think there’s going to be production disruptions all over the place. China really has our balls in a vise.”…He said that the only hope to avoid significant disruptions is that the China and US reach an agreement that will restore the normal flow of rare earths…“Of course we should have seen this coming,” she said. “We should have started this 15 years ago.”

Cobalt is similarly struggling with excess inventory and policy uncertainty, Fastmarkets says. Despite speculation over potential changes to cobalt hydroxide export rules in the Democratic Republic of Congo (DRC), no formal announcements emerged from industry meetings in Singapore. Prices weakened across all cobalt products in May, even as China’s trade data showed strong flows: imports of cobalt metal surged 60% month-over-month in April, while exports jumped 202% year-over-year. The glut has depressed seaborne prices, with refiners sitting on large stockpiles…Rob Searle, a senior analyst at Fastmarkets, warned that the lack of clarity around DRC policy is exacerbating supply anxiety. “Chinese refiners face the prospect of a 60,000-tonne cobalt unit shortfall heading into Q3,” he said. “Prices remain soft, but a bullish turn may come if inventories start to draw down meaningfully.”…Cobalt producers, traders and recyclers seem to have higher hopes for the metals. A recent report published by The Cobalt Institute forecasts demand to rise faster than supply over the next decade, pushing the sector into deficit by the early 2030s.

POSCO Future M Co., South Korea’s leading battery materials maker, has secured a China-free cathode material supply chain after completing a new precursor plant in the southern port city of Gwangyang, the company said on Tuesday…The plant, with an annual capacity of 45,000 tons – enough to power approximately 500,000 electric vehicles – marks a key milestone in the company’s efforts to reduce reliance on Chinese suppliers and fortify its position in the global electric-vehicle battery market...The facility sits on a land of 22,400 square meters within the company’s existing cathode production campus in the seaside city in South Jeolla Province. It will produce precursors for high-nickel cathodes to be exported to Ultium Cells LLC, a US battery manufacturing joint venture between General Motors Co. and LG Energy Solution Ltd...Precursors – chemical compounds containing key metals such as nickel, cobalt and manganese – are essential materials used in producing cathodes, making up nearly 70% of cathode's raw material costs…With this new plant, POSCO Future M expects it will be able to significantly reduce its reliance on Chinese suppliers and improve its global competitiveness…The move is also expected to enhance POSCO Future M's eligibility for US tax credits under the Inflation Reduction Act (IRA), which excludes battery materials sourced from "Foreign Entities of Concern" (FEOCs), including China.

Chinese electric-vehicle makers led by BYD beat Tesla in the competition to produce affordable electric vehicles. Now, many of those same fierce competitors are pulling into the passing lane in the global race to produce self-driving cars…BYD shook up China’s smart-EV industry earlier this year by offering its “God’s Eye” driver-assistance package for free, undercutting the technology Tesla sells for nearly $9,000 in China…It’s not just BYD. Other Chinese auto and tech companies are offering affordable EVs with FSD-like technology for a relative pittance. China’s Leapmotor and Xpeng, for instance, offer systems capable of highway and urban driving in $20,000 vehicles. A slew of Chinese firms are chasing the same technology, an industry push backed by China’s government…Previously, Musk has described Chinese car companies as the most competitive in the world…Chinese competition was one factor driving Tesla’s strategic pivot away from mass-market EVs last year, when Reuters reported it had killed plans to build an all-new EV expected to cost $25,000…Now Tesla faces the same stiff competition on vehicle autonomy from many of the same Chinese automakers who undercut its affordable-EV plans…Tesla's competitors in China do benefit from subsidies and other forms of policy support from Beijing for advanced assisted driving technology. Their advantages also stem from another consequential factor: cut-throat smart-EV competition that has characterized their industry over the past decade. The resulting EV boom created economies of scale and the industry's tendency to forgo some profit margins to expand new technologies' market penetration quickly, leading to lower manufacturing costs.