An agreement with the United States on the joint development of a rare earth minerals supply chain could put Thailand at risk of straining its diplomatic ties with China, warns the Federation of Thai Industries (FTI).
Though the agreement is seen by Finance Minister Ekniti Nitithanprapas as a way of enhancing Thailand’s opportunity to negotiate on tariffs with the US, it raises concerns over the impact on geopolitics as well as the threat to the environment, say some critics.
‘Like many Thais, we never knew this deal was considered a priority,’ said Kriengkrai Thiennukul, the chairman of the FTI.
Thailand and the US on Oct 26 signed a memorandum of understanding (MoU) on cooperation to ‘diversify the global critical minerals supply chain’ and promote investments, during the Asean summit in Kuala Lumpur.
Rare earth elements are crucial for manufacturing advanced technologies such as smartphones, electric vehicles and military equipment.
Mr Kriengkrai said he is worried the pact may drag Thailand into a trade war between the US and China, negatively affecting the Thai economy as the nation struggles to balance its diplomatic relationships with the two powers.
The signing comes as Washington remains at odds with Beijing over restrictions on rare earth exports, triggering trade tensions as the US defence sector depends on rare earth magnets for systems such as F-35 jets, according to media reports.
The deal with Thailand could pave the way for more critical mineral exports to serve US defence, automotive and high-tech industries.
The agreement follows an $8.5-billion agreement that America made with Australia to increase supplies of rare earths and other critical minerals, seen as a counter to China’s dominance of the market.
China accounts for about 80% of global mining for rare earth metals, a subcategory of critical minerals, and 90% of processing output.
Processing skills
Thailand is adept at processing minerals, mainly operated by three companies in Phangnga, Samut Sakhon and Prachuap Khiri Khan, said Aditad Vasinonta, director-general of the Department of Primary Industries and Mines.
Australia sends minerals to Thailand for processing, before exporting them to third countries.
According to World Bank/Comtrade data for 2023, Thailand exported 1,060 tonnes of processed scandium and yttrium worth $102 million.
As for rare earth minerals, the department has granted licences to seven companies to explore in provinces including Tak, Kanchanaburi and Nakhon Si Thammarat, said Mr Aditad, though many of the licences are expired.
‘The companies have not applied for permission to mine rare earths because it is not economically viable,’ he said.
Two types of rare earths – monazite and xenotime – were previously found in the northern, western and southern regions of the country.