Investment manager Louis O'Connor safeguards a vault containing rare earth elements, which are essential in electronics and defense systems. China dominates the refinement of these elements, creating a significant global dependency. A recent export cut by China prompted immediate responses from investors eager to secure supplies. This control over rare earths has proven vital in the U.S.-China trade relationship, impacting production for American and European companies. Historically, the U.S. led the rare earth industry, but China's strategic development altered this landscape over decades.
"Make no mistake about it, there's three and a half meter walls and doors and armed security," says O'Connor, the CEO of Strategic Metals Invest, a firm that lets individual investors buy into stockpiles of rare earths.
Many so-called rare earth elements are actually quite common, and they are mined globally, but China has a near-monopoly on refining them for use in everyday electronics, like speakers, as well as for crucial defense systems, like fighter jets.
When China decided to substantially cut off exports of seven types of rare earths this spring, O'Connor says he felt the pinch immediately.
That supply chain chokehold has given China a powerful tool it has wielded in a trade war with the U.S.
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