S2 E67: Understanding China’s Rare Earth Strategy: The Power of Information

Dustin Olsen (00:40)
Hey everyone, welcome to the Rare Earth Exchanges podcast. I'm Dustin, course, joined by my cohost Daniel. And today our special guest is Dwayne Woods, who is a professor emeritus of political science at Purdue University. And Dwayne has published several remarkable body of peer-reviewed work in the last year and a half applying some formal game theory.

Daniel (00:49)
Okay. .

Dustin Olsen (01:04)
and signaling models and political economy frameworks to China's rare earth strategy. So I think today we're in for a treat to kind of see how this is applied and definitely is in line with the conversation we've had at rare earth exchanges. So Dwayne, welcome to the show. We're excited to dive in. How are you doing?

Dwayne Woods (01:22)
Good, thanks for having me.

Daniel (01:22)
Okay.

Dustin Olsen (01:24)
Awesome. So Dwayne, your background is in political science and formal modeling, not in mining, not in metallurgy, but how did you end up in publishing these peer reviews

Daniel (01:38)
.

Dustin Olsen (01:38)
against China's rare earth strategy?

Dwayne Woods (01:40)
Yeah, I came to the rare earths largely through political economy, because it's an issue that intersects with economics, with international relations, with political science in terms of power elements. And so that's what drew my attention. And then there was also this emergent, or re-emergent field in economics known as geo-economics and some…

the people in that area were looking at rare earth. So that kind of caught my eye. And so I kind of asked the question, you know, what is the sin about? And then also it fits into the whole framework of, you guys might have heard, there was several years ago, there was this concept thrown out there called weaponized interdependence that created a buzz in which, you know, these authors pointed out that countries use

Daniel (02:05)
.

Dwayne Woods (02:27)
certain types of commodities or other types of things as choke points to gain leverage. And so in political science and political economy more broadly, the issue of commodities or technology used in a kind of course of a power relationship isn't new. So the fact that rare earths became prominent

Daniel (02:32)
Okay.

Dwayne Woods (02:50)
would obviously attract the attention of political scientists.

Dustin Olsen (02:53)
Yeah, very interesting. So your core argument is pretty striking. So China's most powerful tool right now isn't cutting supply, it's silence. Can you walk us through what it means by the informational statecraft and why withholding quota data is actually more effective than an embargo?

Dwayne Woods (03:11)
Well, I think it's kind of an evolution to this with China. They learned a lot of different things from when they used rare earths against Japan. That led to the fact that it wasn't that effective led to a shift in the way the Chinese start thinking about what rare earths could do in terms of its relationship with other countries.

Daniel (03:19)
. you

Dwayne Woods (03:33)
And so there was an effect in terms of China streamlining the rare earth production process in China and actually ⁓ gaining not only, and gaining more market share, but also integrating it across different sectors. And then the other aspect was the external part, and that was rare earth is used to convey what about China's capacity

Daniel (03:42)
You You

Dwayne Woods (03:57)
not only in terms of processing rivers, but also in terms of its technological capacity with the use of patents and other types of innovations. And then also the third factor is to try to basically learn from the US. I so the US had imposed sanctions on China, especially in relation to technology. And China over the last decade has kind of groped its way towards what's the best

Daniel (04:09)
.

Dwayne Woods (04:23)
strategic way to convey China's interests and to put pressure on other countries. And so the rare thing basically entered into a of strategic logic in which information becomes paramount.

Dustin Olsen (04:37)
which is really interesting. Cause I know here on the show we've talked about how China is trying to control the supply chain, but you're saying they're trying to control the information.

Daniel (04:42)
you

Dwayne Woods (04:49)
Yeah, I don't really think China's trying to control the supply chain in the sense that they already had a dominant position. And so what China is increasingly trying to do is trying to control the information about what their dominant position is. And so this is this control over disclosure, when to use opacity, when to generate uncertainty. mean, because everybody knows that certain rare earths China already has 70, 90 % in terms of processing.

So that information is not new. But what is new is the extent to which China is able to ⁓ say when it will make rare earths available, what the pricing structure is. And so information is used in that sense. Information is used to convey China's capacity to basically to determine

Daniel (05:31)
.

Dwayne Woods (05:40)
rare earths, when they're exported to whom and under what conditions.

Daniel (05:45)
So, Dwayne, we've sort of coined a term called ⁓ Great Powers Era 2.0. And we call it that because, you know, during the buildup of World War I,

there was these great powers that were competing, England, United States, Germany, France. We think we've moved out of the post-World War II slash Cold War slash US as sort of a hegemonic top to something different, and that supply chains become true instruments of power.

Dwayne Woods (06:23)
Yeah, well, I agree with that to certain extent. mean, that's part of the literature that I referred to earlier that was coined around the term weaponized interdependence. And so weaponized interdependence essentially kind of made that argument that choke points become paramount in this new international context. And then also reemerging field in economics, geo-economics kind of focus on that as well.

Daniel (06:24)
Think about that.

Dwayne Woods (06:50)
I think that's probably true to a large extent, but in relationship to China, I think China's whole thing in terms of rare earths and other things is largely reactive. In other words, been a learning curve for China and it's reactive to the US. mean, in the past, China used commodities or other types of goods that it traded or had.

or access to its market largely in a way in which China thought that some aspect of its national interests or honor had been harmed. And so when it imposed or used embargo on rare earths with Japan, it was haphazard. It wasn't part of some kind of strategic framework. Oftentimes when China imposed sanctions on other countries, it was done in a haphazard way, usually in relation to

how they perceive the issue over Taiwan. The US, with its use of sanctions and embargoes and choke points and other things, actually forced China over the last decade or so, especially going back maybe a decade and a half, going back to Huawei and other types of things, to essentially become much more strategic in identifying what choke points it has some leverage over.

Daniel (07:44)
Yeah, right

Dwayne Woods (08:07)
and when and how to use that level.

Daniel (08:10)
So on that note, I I agree with you that ⁓ China adapts and they react and the US has been a proactive leader in many respects over the last decades. But one thing we've learned studying all of this and launching this show and the rare earth exchanges

is that China's been planning for some decades now around the periodic table. And at some point they understood that all the high tech development was going to be dependent upon these elements. And in fact, we interviewed a guy here who ran ⁓ the trading desk for a large global investment bank and he was on top of mining metals and

He observed that around 2015, he was in several countries in Africa doing business and he noticed that in just about every case, the Chinese were trying to figure out how to separate process to the extent possible in a country where they were mining, it was just cheaper that way. But in the case of rare earths, he noticed they were bagging stuff up and taking it back to China.

Dwayne Woods (09:18)
Thank

They weren't back.

Daniel (09:23)
And what we found, some planning that, you know, the first step is monopolize, you know, these elements and some critical minerals, the processing, and then convert that into downstream industry monetization. So whether that's electric vehicles or solar, we're seeing some planning. The questions from your standpoint,

Dwayne Woods (09:26)
I see.

Daniel (09:44)
Do you look at that as planning? Do you believe that they've been planning for this or do you believe it's more just opportunistic, you know, things unfold a certain way and it's more of a market reaction?

Dwayne Woods (09:55)
No, I think they were been planning in the use of rare earths as it integrates into other types of things. mean, they've pulled, you know, with building out of the electric vehicle sector, the solar sector. mean, you know, people in China knew that rare earths played an integral part in that. And so it's not by accident 2015 onwards that China essentially went into streamlining the way rare earths were processed in China.

getting rid of the kind of wild-cating aspect that had dominated much of the industry up to that point, and also urging universities and other research institutions to focus on increasing patents in terms of the processing of rare earths, the recycling of rare earths, and the reduction of the side effects in terms of pollution of rare earths.

Daniel (10:47)
Right.

Dwayne Woods (10:48)
And so there's

no two ways about it. China integrated the rare earth elements into its overall industrial modernization strategy. But it didn't initially think of rare earths in the context of a kind of strategic gamut in the international context, or as a choke point. That, I would argue, emerged as a reaction to the US.

Daniel (11:13)
So when you say in reaction to the US, I can say, I I think I'll bring a more tangible example. Like I think that this latest trade spat back and forth, I mean, it's been building under Biden, you know, we had the

I forget which act, but there was a industrial policy that we started to see with semiconductors. And we started to see some discussion about rare earths under Biden. But when President Trump launched, remember Liberation Day, I guess that was April, I think 2025, that clearly intensified the…

Dwayne Woods (11:41)
launched remember liberation day. guess that was.

Daniel (11:48)
the back and forth, where China thereafter implemented more controls, export controls, more licenses. They started to require buyers to submit specifications of what they were doing with the product, so actually trade secret and IP. So to your point, Dwayne, information is power, right? They're accumulated.

Dwayne Woods (12:11)
Thanks.

Daniel (12:13)
They're going deeper into the west customer base to extract proprietary information about what they were doing with those rare earth magnets, for example. So is that?

Dwayne Woods (12:18)
Yeah,

well, yeah, that mean but I mean the the issue about the the China releasing the restrictions and providing some information about the the content of what people could if they were using rare, etc. That was manifested after the April liberation stuff ⁓ by the US, but China.

Daniel (12:42)
Yep. Yep.

Dwayne Woods (12:44)
already been framing that. ⁓ this, so the China's framing in terms of informational statecraft, how do we use rare earths as a leverage? The emergence of that goes back to Trump 1 and the terror and trade issues that China confronted with the US, and it also partly goes back to the issue with Huawei. And so it was in that period that China essentially

Daniel (12:46)
Yeah, I agree.

Dwayne Woods (13:09)
looked not only at rare earths, but at other areas as well, and said, can we, we have the upper hand in processing of rare earths, but how can we keep the upper hand in using this as a leverage in any kind of international encounter? And so those announcements that were made by China had been in the works for several years. And some of them were tailored

Daniel (13:30)
Right.

Dwayne Woods (13:32)
after their understanding of how the US use these things. And so, for example, if you go back to the Biden administration, one of the elements about the use of semiconductors was that they could have non-civilian use. And so, in China, it released the document about the use of rare earths, they basically made a statement, which obviously there's no way they could have…

fight whether this was happening or not, that rare earths, that they had to, I don't know if the word is legal or whatever, but they had to prerogative to determine whether rare earths were used in ways beyond civilian use. Okay.

Daniel (14:12)
Right, right, that's right. And I agree with you. Yeah, this has been building. I just felt like this latest ⁓ last year, it really intensified. And remember, they announced far more onerous controls and licenses, but then they dialed it back to a previous. It's been very complicated. What do you think?

⁓ You know, when you're a political scientist, and by the way, I think it's totally relevant, and I can totally see how your work as a political economy, political scientist could fall into this because it's just, it's part of politics. It's fascinating. What do you think?

What do you think the aim is here? mean, because we're doing the way we analyze a lot of the projects that have been funded by our government. And we're huge fans and advocates of trying to accelerate the ex-China supply chain. That's a big reason why we started this to try to learn and educate people about this very important topic. But what does it look like?

know, increasingly we're two to three years away from being able to even claim that we have a little resilience. You know, with things heating up in the world, would China just shut it off to us? What's your thoughts on that?

Dwayne Woods (15:14)
They worked through this three years of waiting for me to really explain.

No, I don't think China will shut off rare earths. I think that's the whole thing about the ⁓ use of information in statecraft is that China's basically saying that here are some, let's use the metaphor, here are some red lines. And if these red lines are crossed, we have a very powerful weapon in rare earths. And so China knows that this is gonna provoke two types of reactions.

Daniel (15:42)
Right.

Right.

Dwayne Woods (15:53)
And we've actually seen, observing both. One reaction will be that countries will be reluctant to cross the red lines. We saw that with the kind of shifts in ⁓ aspects of the US and the use of tariffs on China. mean, the way that this has been framed, China won that round and they won that round by very effectively using rare earth.

Daniel (16:14)
Right.

Dwayne Woods (16:16)
The other reaction that China is fully aware of as well is that it will provoke countries to say, we need to increase our capacity, resilience, if you will, in production and processing of rare earth. So this is where China also uses information. China basically now has provided much less information about its technological advances in processing and recycling rare earth.

Daniel (16:42)
Right.

Dwayne Woods (16:44)
And so China has become much much more obscure in the type of patents that are filed around rare earths. Certain rare earth metatologists can't travel abroad anymore. Okay. All right. So what China is doing here is China is using ambiguity to essentially

Daniel (17:02)
Yeah, that's right. Yep. Yep.

Dwayne Woods (17:11)
And other countries, not knowing entirely sure how they should react. That was what the article was trying to get at when it talked about it creates what's known as a kind of pooling equilibrium where you're not exactly sure what the other type is doing. So do you ramp up and expend a lot? Do you allow market forces to try to respond, et cetera?

Daniel (17:30)
So.

Dustin Olsen (17:31)
Sorry, so really quick on the pooling equilibrium. I find it really interesting where one can't really distinguish a strong China from a weak one, right? That's essentially what that means, right? So what does that look like in practice for a procurement officer or a defense contractor? How do they navigate that?

Dwayne Woods (17:49)
Well, they navigated in the way that we've seen in that is that the military officers let the administration know that at least in the short and medium term on these other issues, we have to make some concessions because we still rely on China. And then on the other aspect of this is that China basically

know, creates an ambiguity as to exactly where it is in its own advance on rare earths, especially in terms of recycling.

Daniel (18:16)
Mm.

Dustin Olsen (18:18)
Interesting. Does the US do that as well? Do they obscure where they're at or is everyone just an open book and China's trying to play close to the chess?

Dwayne Woods (18:27)
No, actually on this, the US tended not to be used signally in the same kind of way. It actually tended to be much more blunt. mean, so eventually said that these sectors that we consider to be of national security and that China, we don't want them to gain a dominant position in, we're gonna block them. Whereas China is essential on rare earths. Well, we're be much, much more ambiguous about that. We're gonna stop releasing information

Daniel (18:41)
.

Dwayne Woods (18:55)
about production quotas, which China used to make on a regular basis public. They don't anymore. ⁓ In terms of advances of rare earths and synthetics and other types of things, that kind of information is no longer available from China. So China is using rare earths as part of a broader

Daniel (19:04)
.

Dwayne Woods (19:16)
kind of strategic logic of saying that we know we have a dominant position. How long we can keep this dominant position,

we're not gonna let that be self-evident.

Daniel (19:26)
So ⁓ what question on that, know, on information, asymmetric information and generally doing on this market, it is opaque. There's not transparency. You know, the way rare earth elements get purchased in the United States is through network.

Dustin Olsen (19:26)
Very interesting.

Dwayne Woods (19:41)
just in the United States.

Daniel (19:44)
of brokers and traders.

And something we grapple with is, so we have, we look at China pricing, okay, and they publish pricing almost every day, but it's not true market pricing as we know, it's influenced by state ownership or state partial ownership quotas and all sorts of activity that aren't necessarily part of a typical Western market as we know it.

Now take the ex-China market, which is everything outside of China. Some consultancies are publishing prices, but it's all based on anecdotal, you know, little surveys where they can get some information. Everything's quite confidential. Like, how do you look at information and pricing? Like, are there even markets here? There's no real free market.

and there's no real government market. Like what would you call the Chinese side? Is that a market? And over here, what would we call it over here?

Dwayne Woods (20:37)
Yeah, and one thing I'm sure me economists who have worked on this actually tend to act as if there is a price signal and so some of the studies I've read that by some economists is they actually You know argue that it is a part the way in our argument They assume that there is a price signal in that price signal they can integrate it within a kind of model and tell us something

I have found those studies to be less than convincing because even leaving aside China's control over the amount of rare earths that it exports or what it restricts, even before any of that, the rare earths market in terms of pricing was always very, very dubious. Not because of any nefarious reasons, it's just simply the rare earths in terms of its overall market capitalization is just simply not that important.

And so it was always kind of niche aspects of this notion and it mattered more in terms of as you guys know it matters more for what it does in other things than it does by itself. Okay. ⁓ And so in that sense I don't think pricing really tells us that much. I think the main thing that matters is the issue about supply and processing. Now pricing then comes into play

Daniel (21:29)
Yeah. 100%. Yeah.

Dwayne Woods (21:51)
in terms of supply and processing, because basically if China controls rare earths in the export, then prices in some ways will have to go up in that sense. And then other issue about pricing, and we see this in the US and in other countries in terms of reaction about pricing, is that whatever the real price of rare earths are,

In terms of producing and processing, one thing that's clear is that it's not going to take place in any kind of traditional market sense without government support.

Daniel (22:22)
Well, could you follow on just break that down for more of a lay audience like what you just said

kind of break it down a little bit more to its basic components. What are you really saying?

Dwayne Woods (22:34)
Well, in terms of pricing, pricing signals don't really tell us much about the supply or capacity in terms of rare earths, part because China has many rare earth elements have such a dominant position. So in that sense, it would be a price setter, but also rare earths for reasons that part because it's broad use, but limited market.

size is one of these things that there's really no tradable market in rare earths in the kind of competitive sense in which one might think about other commodities. ⁓ well, and then the other thing about pricing in terms of rare earths is that whatever the price of rare earths are is that China's monopoly is such that no other player can come in without its government subsidizing.

Daniel (23:06)
Right, absolutely.

Dwayne Woods (23:23)
⁓ the production of rare.

Daniel (23:25)
Right, right. that

Dwayne Woods (23:26)
So

say if there was a market for rare earths and the rarity of rare earths led to a huge spike in the price of a rare earth. China dominates supply and so it could easily bring those prices down or up.

Daniel (23:41)
Right. So, right. So on that note, in the United States, I mean, we, and you tell me if you think I'm wrong here, but it feels like they, it doesn't seem like we really have much of our own pricing. You know, the government has given some price floors to a couple of companies.

But we don't have any control of the process. It's all processed over there, 90%. 98 % of the heavy rears, 98%. So in those kind of situations, Dwayne, can you even, are you really even setting a price or are you, I mean, me, us in America, or are we, I mean, yes, there's the government floor price for at least some deals. What's your thought on that?

Dwayne Woods (24:04)
98 %

Yep.

Well, as I point out actually in one of my articles of rare, I basically say that the way others will react to China's dominant position in its control over information is that they're forced to over invest in rare. Because what really becomes the issue is supply. Because China has a dominant position, the markets price signaling doesn't really matter in this respect. It won't tell you whether tomorrow there'll be more or less supply.

China, the control over information in terms of how much it produces. It used to make that information public, it doesn't anymore. Or apparently it does, but in a very obscure way and very difficult to access. And so pricing only matters in the sense is that what is the price level that's needed to get other countries or companies into this in which they can increase domestically supply.

Daniel (25:14)
Right, right, yeah. Yeah.

Dustin Olsen (25:16)
⁓

So, you have something that's called the Monte Carlo simulation, correct? ⁓ Which the simulation has designed it, I guess predicts how countries can get more independent. Do I have the right understanding with what that simulation is doing?

Dwayne Woods (25:23)
Right.

Yeah, I mean, essentially, assimilation says that let us think of different scenarios. China has a position. China controls information. It creates a pooling dynamic. Other countries that we need to increase our independence become less dependent on China and rare earths. And so essentially what the simulation does is let's think of different types of scenarios and what the cost of that gaining less dependence on China would be. OK, and so China, one of the advantages it gets from

Daniel (25:52)
you you

Dwayne Woods (26:03)
from controlling information is that other actors don't exactly know what the cost is to them because they don't know what we'll try to reduce more or less, we'll control the

increases choke point use, et cetera. And so it leads to a situation where what's the exact investment level that's necessary.

And it shifts everything essentially to one of the assimilation predictions says that at least the situation in which you can only get out of this through over investment.

Dustin Olsen (26:31)
over investment from the government.

Dwayne Woods (26:34)
Well, from the government in combination with,

Daniel (26:34)
.

Dwayne Woods (26:36)
you know, the private players. I mean, the governments aren't going to produce rare earths, but they clearly are going to provide the subsidy in the price floor. I mean, we see this in the US, we see it in Europe. So that's what I mean by over investment, because you don't know exactly what the, if there was a price market signal in a classical sense, then private players would come in and say their rare earths, you know, are rare.

Daniel (26:59)
you

Dwayne Woods (27:00)
both in terms of quantity, but also in terms of supply. The price is high, we can make a profit over this time horizon. And so people come into the market. That's not gonna happen with rare earths with China's dominant position without other governments providing some support to increase their domestic supply. And so the Monte Carlo simulation was just simply a way to play out different

Daniel (27:04)
you

Dwayne Woods (27:25)
types of scenarios.

What's the best counter strategy? Is it to go alone? What's that likely cause? Is it to enter into alliances with ⁓ other countries, the US, Europe, or US, Australia, et cetera? And so the Monte Carlo simulation is just simply a way to kind of calibrate different types of counter strategic reactions to China. And not entirely having full information.

Daniel (27:47)
Dwayne, I had a

Dwayne Woods (27:49)
about China's rare earths capacity. The information we know is that China in many areas has a dominant position, but in terms of ⁓ other aspects, China has increasingly become somewhat ambiguous.

Daniel (28:03)
Dwayne on that note just a question and I understand Monte Carlo's simulations and it makes sense Game theory are there is there any overlap or is that a completely? separate statistic, you know quantitative tool to forecast like I I get the Monte Carlo because I saw with portfolio management and looking at different options and the cost how would you compare that to like game theory for

for the types of exercises that we're talking about here.

Dwayne Woods (28:35)
Well, the Monte Carlo that I did in the paper and the model that I built and used is essentially is taking things from the game theory and say, okay, if you're in a world of pooling, you know, what are the scenarios? If you're in a world of separate, where people have information about something, what is the scenario? So that's all the game theory thing does. The game theory is essentially gives you a kind of abstract theoretical way.

of thinking about how people engage strategically and what types of signals they send and how others respond to those signals. And all the multicolor simulation does is essentially try to calibrate the different types of possibilities. And so it's not an attempt to like be empirical. So it's not an attempt to like say, ⁓ here China has created a pooling

Daniel (29:13)
Got it.

Dwayne Woods (29:21)
dynamic. Let me test this empirically. What the simulation model is, China's critical pooling dynamic, let me essentially play out different types of predictive scenarios into how others will react or respond to this. And then ask the question, what's the most optimal response in this situation?

Daniel (29:24)
Mm.

Right, interesting.

Dwayne Woods (29:42)
And by the way, the most optimal response is the one that everybody would know is self-evident, and that is that basically countries should work together.

Daniel (29:50)
Well, you know, on that note, this is an important question though. So, you know, when we first started writing about this stuff, we took a very proactive industrial policy position. We were saying, look, and we're talking, Dwayne, not only price floors, but, you know, buying arrangements with multilateral ⁓ tight arrangements.

Dwayne Woods (29:57)
We took a very

Daniel (30:12)
talent development, working, you're at Purdue or Indian, know, working with different universities to have a policy. And kind of like what we saw during the Cold War and somewhat Reagan-esque. You remember the Star Wars and the buildup that Reagan did in the late 80s, which some argue led to, you know, the Soviet wall coming down. Okay. There's an argument that's made. Now, but we…

And we saw some policy, but what we've seen was different with President Trump at this time, this administration, again, is more of a transactional model in a way with different countries. It's sort of like it's a free for all. It feels that way. It's starting to come together like we see with the U.S. and Australia and U.S. Japan. I think some pretty solid partnerships are emerging.

But it's definitely different, would you say? mean, based on your experience studying political economy, you know, history, are we in a new period? I mean, is this a repeat of something from some decades ago? What's your sense of that?

Dwayne Woods (31:20)
Yeah, well terms of industrial policy, quite frankly, I think that in terms of rare earths, the US, like China reacted to the way the US imposed certain limitations on its access to technology. And so for example, in the semiconductor sector in China, this has led to a concentration of the mines. And so China always had a kind of industrial policy in semiconductors, but it was very fragmented in terms of the players, they had little interest.

and trying to create at least on the higher end ⁓ a market there. The US restrictions has changed that situation. And so, least in the context of China, its industrial policy and semiconductors has now translated into players on the ground having a common interest in trying to move forward. So the point I'm making here with rare earths in the US is that China's dominant position in the way it's used rare earths

is essentially forced the US into an industrial policy. And one of the things that I think that the use of the rare earth for a brief period of time by China has done with the ⁓ Trump administration is that it's shown it ⁓ that let's say quote unquote Trump's traditional kind of transactionalism won't work. And so is that the optimal scenario is clearly collaboration, but just simply for the reason

Daniel (32:34)
Hmm.

Dwayne Woods (32:42)
of production, location, and other types of things, there's no way the US can increase its supply of rare herbs without working with others.

Daniel (32:52)
Right.

Dwayne Woods (32:54)
And so it's forced, and I would argue, into an industrial policy, if you want to use that term, by default.

Daniel (32:59)
Okay. It seems to make sense. mean, it's sort of how we're observing things unfold. You know, I would have liked, I was a little critical, at least my opinion, I won't speak for Dustin, but I felt that like we shouldn't have been so hard with Canada and Greenland. And these are our allies, you know, we should have right from the start known that this was a very dire situation.

and had a unified front with US, Canada, Europe, Japan, South Korea, Australia. I feel the situation is that serious.

Dwayne Woods (33:29)
Here we go.

Well, I agree with you that it's serious, but under the Biden administration and the Trump administration is that people knew rare earths mattered, but they didn't know how much they mattered. China learned the rare earths mattered and that they learned also how much they mattered. Now, part of that was due to the fact that China development of its rare earths.

and its processing fed into other areas. you sort of have batteries and solar panels. And so China knew the rare earths were in the modern economy were much more ⁓ pervasive than others might have realized. And so I think this, so I'm one of these people, people like we should have known the rare earths were strategic and they matter here and there.

I'm like hmm to a certain extent but not but not really I mean we we we we knew when we when we learned that's what shocks do They let you know that things that you you know, so people knew rare earths mattered, but they didn't think they mattered in that kind of broad sense That they were that they were that they were a choke point in the way in which China showed, you know last year that they are

Daniel (34:27)
But.

Dwayne Woods (34:44)
or they could be used as a choke point in the way they're trying to show that they are.

Daniel (34:48)
Yeah, yeah, no,

that I mean, we saw there was a Japan conflict in 2010 and around 2013, there was a congressional report, Dwayne, declaring that this is a real problem. We need to do something about it. It was 2012, 2013 around there. And obviously nothing was ever done. But to your point, I mean, it's such a small market.

Dwayne Woods (35:11)
It is.

Daniel (35:14)
I could see how everybody would just sort of gloss over and just really not think about it that much. It's maybe what, $6 billion is the rare earth market itself, the oxide. You know, the magnets are maybe 30 million. It's just that, to your point, that downstream impact of trillions of dollars in the aggregate.

Dwayne Woods (35:33)
Well, even the batteries and other, just the rare earths themselves, the market is even smaller than that in terms of just the metals. Not the market, the, what's word, the value is even smaller than that. And so, as I just stated, the case of after China, after Japan, and then the 2013, people became aware that rare earths mattered, but…

You know, we were not yet in the age of solar panels and electric vehicles, and even in terms of military and then drones, et cetera. So the extent to which rare earths expanded out across multiple sectors was still relatively limited. So they became important in eyes of Congress because of what China was trying to do with rare earths.

Daniel (36:18)
Yeah.

Dwayne Woods (36:25)
vis-a-vis Japan. In China, like to say from the outset, China learned from that experience. China learned two things from that experience. One is that they didn't use it very effectively as a strategic tool. And secondly, that domestically, that their control and dominance over rare earths was not very full, if you will. And so ⁓ China, so it's always in that ironic sense,

China learned more from its misstep 2010 with Japan awareness than other countries did.

Daniel (36:56)
Interesting, interesting. I know we're getting close to the end. fascinating conversation? final thoughts?

Dustin Olsen (37:01)
Yeah,

yeah, this is, yeah, this has been really, really interesting for sure. But to end, one question for you, Dwayne, is if you had to give one piece of concrete advice to Washington based on everything that you've modeled and that you've researched, not about building mines or processing plants per se, but about the information dimension of this competition, what would it be?

Dwayne Woods (37:25)
About the information dimension is to for the US to actually in some ways make its information about what it's doing with its allies of transparency.

Now, so the US should play a game opposite of China. The US basically signal that, we recognize the importance of Earth. We recognize its ability to be used as a choke point in its ripple effect. And as such, we're galvanizing, both domestically as also with allies, to essentially

Daniel (37:57)
Okay. you

Dwayne Woods (38:03)
put into place a strategy to create an alternative to China's dominant position in rare earths. I think that strategy should be transparent. Yeah, is that we just, you know,

announced a grant of $100 million to universities to increase their research on rare earths. Or seed grants to universities to

get scientists who are working on rare earths to do more patenting. Some of this is happening, especially in terms of recycling. I saw one of you guys had a guest from the University of Texas, and she was talking about their use of recycling. So in the case of the US, I think that the best information strategy is actually transparency. Because the US has a weak hand, so there's no reason to be engaged in any kind of.

You know, obfuscation here. You want to be transparent. We have a weekend, but the US is a rich country. Its allies are rich. You know it has technological capabilities and so the best strategy is to basically. This is what we're doing. ⁓

Daniel (38:58)
. Okay.

Dustin Olsen (39:06)
I think that's great advice. And honestly, the big reason I think Rare Earth Exchanges exists is to promote the transparency. It's probably our best play in seeing that success that we're all truly hoping for.

Dwayne Woods (39:24)
Yeah, yeah. I mean, I think we're going to make progress on rare earths. I mean, like I said before, the paramount importance that it now has, I shocks have this way of doing this to countries. And so the shock of China limiting rare earths a year ago, and then automobile companies said we're going to have to close down shop, and the military said that we have issues here. I mean, this is enough of a shock that

that the response has moved beyond as Daniel was putting out that had initially been a kind of transactional way of approaching this. I think we see evidence the U.S. has moved beyond that.

Dustin Olsen (40:02)
That's great. Dwayne, thank you so much for being on the show with us. For anyone who's listening, you found this episode helpful, please give it a thumbs up. It'll help expose the show to others who might also find it helpful. If you do want to miss a future show, subscribe. Dwayne.

Dwayne Woods (40:18)
and read my articles

on Rare Earth.

Daniel (40:21)
So Dustin, can we just share with the audience where Dwayne can count?

Dustin Olsen (40:25)
Yeah,

absolutely. Yes, Dwayne, to your point, where can people find you to learn more?

Dwayne Woods (40:31)
Well, they can find me, they can find me, TweetWoods. All my articles are posted there. And they can also find articles on Google Scholar. All the articles are published there, posted there as well. Much less so at my university website since I'm a retired professor now. So I don't really post there that much. But Google Scholar and TweetWoods, they can find all the articles there.

Dustin Olsen (40:56)
Fantastic. Yes.

Dwayne Woods (40:57)
Yeah,

and I might even re-upload the link to the the multi-color simulation if people want to play around with that.

Daniel (41:05)
Yup.

Dustin Olsen (41:05)
That'd be great.

Dwayne, thanks so much for being here and we'll talk to you soon.

Dwayne Woods (41:10)
All right, thanks a lot. See you guys.