HomeUncategorizedChina's Tightened Grip on Rare Earth Minerals: A Strategic Move

China’s Tightened Grip on Rare Earth Minerals: A Strategic Move

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In a bold and potentially destabilizing move, China has declared that all rare earth metals within its borders are state property. This declaration is part of a series of new measures aimed at tightening Beijing’s control over these crucial resources, which are indispensable for various high-tech and clean energy applications. From electric vehicles to wind turbines, rare earth metals are the backbone of modern technology and key in military production.

Beijing’s Strategic Play

The Chinese government, through its State Council, unveiled new regulations set to take effect on October 1. These regulations assert state ownership over rare earth metals and introduce strict controls over their mining, smelting, and distribution. A rare earth traceability database will be established to monitor the extraction, use, and export of these metals, ensuring that Beijing retains tight control over the entire supply chain. “No organization or person may encroach on or destroy rare-earth resources,” the State Council warned.

China currently produces about 60% of the world’s rare earth metals and refines approximately 90% of these materials, giving it a near-monopoly status.

Implications for the U.S. and the West

China’s assertion of control over rare earth minerals is seen by many as a strategic maneuver in the ongoing tech and trade wars with the United States. By tightening its grip on these resources, China is likely to disrupt supply chains critical to the U.S. and other Western economies. The move has already spurred efforts in the U.S. and Europe to secure alternative sources of rare earths. Countries like Vietnam, Brazil, and Australia are being considered as potential suppliers.

While China frames these measures as necessary for “safety, scientific and technological innovation, and green development,” they are likely to be seen in Washington and elsewhere as a tightening of China’s grip on key resources in retaliation for sanctions imposed by the Biden administration. The new regulations also include legal penalties for illegal mining and smelting activities, underscoring Beijing’s determination to maintain strict control over these valuable resources.

The Global Race for Rare Earths

The U.S. and the EU are not sitting idle in the face of China’s tightening control. Both have launched initiatives to secure rare earth supplies from other regions. The European Commission has set ambitious targets for domestic production of critical minerals by 2030, anticipating a significant increase in demand driven by the green transition.

A 2022 analysis from the European Parliament warned that over-reliance on monopolistic suppliers was a major risk for Europe. “The EU imports 93 percent of its magnesium from China, 98 percent of its borate from Turkey, and 85 percent of its niobium from Brazil. Russia produces 40 percent of the world’s palladium,” it stated. This over-dependence highlights the vulnerability of Western nations to supply disruptions and geopolitical tensions.

The European Union, recognizing the strategic risk of over-reliance on China, has initiated several projects to diversify its rare earth supplies. One notable development is the construction of a large-scale rare earth refinery in Estonia, the first of its kind outside of Asia. This project aims to bolster European resilience and reduce dependency on Chinese supplies. European Commission President Ursula von der Leyen said the move would “bolster European resilience and security of supply.”

The U.S. Congress is aware of the insufficient stockpile levels of critical minerals deemed essential for national security. Dependence on Japan and South Korea for these supplies is risky, especially if relations with China deteriorate to the point of armed conflict. An Insider report claimed that the U.S. is heavily reliant on these countries, but such supply lines could not be relied upon in a crisis.

China’s move to nationalize its rare earth industry is not just about securing resources; it is a strategic power play that will have far-reaching consequences. The world is now in a high-stakes game of resource control, with China holding a significant advantage.

This new declaration merely codifies what we have known about Chinese Communist Party (CCP), control of any strategic resource that can be used against the West. Whether it is profitable, or whether it hurts foreign or Chinese business people is irrelevant. This is not an internal change of policy, it is an external presentation of CCP control and belligerence.

But Chinese interests own mineral mines and other properties around the world (including a great deal of U.S. farmland). This may prove to be a shortsighted measure that could work against China.

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