China Creates New State-Owned Mining Giant To Tighten Control Of Rare Earth Supplies

Now that aggressive foreign policy toward China has attracted bipartisan consensus, evidenced by the fact that President Biden has opted to keep certain tariffs imposed by the Trump Administration in place, Beijing is looking for new ways to squeeze Washington. For years now, we have been warning about the risk of China cutting off supplies of 17 rare earth metals critical for the production of tech gadgets.

Earlier this year, we reported that Beijing was keeping a rare-earth export ban in its "back pocket". Now, it appears the CCP is moving to tighten state control over rare earth production so that they might more easily control who gets the metals.

Whereas rare earth metals were previously mined by six major Chinese firms, the CCP is merging assets from several state-owned firms to create China Rare Earth Group. The new mining giant will be based in resource-rich Jiangxi Province; it's expected to allow Beijing more leverage over the supply, and by extension, the price, of these incredibly valuable commodities that are essential for the production of chips and other components used in high-tech products from computers to weapons systems.

China is believed to control up to 90% of global supplies of rare earth metals. Only a small number of rare earth mining operations exist outside China. As for where the rest are mined, the chart below offers some insight.

Some say China's control over the global market for rare earths is diminishing, but the truth is this is only slightly true.

Infographic: China's Rare Earth Monopoly is Diminishing | Statista

You will find more infographics at Statista

Washington has long worried that Beijing might use its control over rare earth supplies toward "strategic ends", and WSJ reports that the this latest push to consolidate the industry comes at a time of "increased sensitivity" toward the West. Beijing has also cited environmental concerns, since opening new mines can irradiate entire neighborhoods.

The US has taken some steps to encourage more rare earth production in Australia, a staunch ally that has also recently curried Beijing's wrath. Back in February, the US Defense Department signed a technology investment agreement with Australia’s Lynas Rare Earths which the Pentagon called "the largest rare earth element mining and processing company outside of China." According to the terms of the deal, Lynas will establish a light rare-earth processing facility in Texas. President Biden has also issued an executive order naming rare-earth minerals as one of four key areas in need of more robust policy options to reduce supply-chain risks.

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