by GABRIEL HONRADA
Last week, China announced plans to merge three of its main rare earth metal companies, Minmetals Rare Earth, Chinalco Rare Earth & Metals Co, and China Southern Rare Earth Group Co into a yet-to-be-named company.
Rare earths are elements which are critical for the manufacture of electronic components and high-tech alloys necessary for civilian and defence applications. They are not rare per se, but they are often found in combination with other elements, with the extraction process being expensive and polluting.
Presently, China enjoys a near-monopoly of rare earths, as in 2019 it produced 90% of the world’s rare earths, alloys, and permanent magnets. Also, it has an estimated 36 million tonnes of rare earth reserves, which is around 30% of global reserves. In comparison, the US has estimated 13 million tonnes of rare earths reserves, which is 13% of the global total. Other countries such as Australia, Russia, India, and Brazil also have substantial reserves.
China was not always the world’s leading rare earths producer. Up until the 1980s, 99% of the world’s rare earths supply was provided by the US as a by-product of its mining operations for titanium, zircon, and phosphate. However, due to changes in US regulations, voluntary transfer of intellectual property, and absence of industrial policy, China was able to capture the rare earths market for itself.
Analysts believe that China’s near-monopoly of rare earth metals gives it a trump card in its rivalry with the US for global dominance, and it has shown a willingness to weaponize the trade. China can choose to ban the export of rare earth metals to countries or companies it deems a threat to its interests.
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