China's Rare Earth Strategy: Technology Means More Than Raw Materials - 1/2

China has looked to reform the rare earth strategy to enhance efficiency, better protect the environment, crackdown on illegal mining, and improve processing technology. Chinese reserves rank first in the world. Chinese media reported that 90% of the reserves are concentrated in the Bayan Obo rare earth mine in Inner Mongolia.

China has unveiled a draft bill designed to strengthen control of rare earth elements (REEs), vital to the production of high-tech goods such as hybrid cars and mobile phones, officials have said. The draft bill, released to the public on Friday, said the Chinese government will manage the process from mining to exports of REEs as a national strategy, as tensions with the United States have been escalating over state-of-the-art technologies.

In 1990, the Chinese government declared REEs to be protected and strategic minerals, which prohibited foreign firms from mining REEs and restricted foreign participation in rare earth processing projects, except in joint ventures with Chinese firms. This enabled Chinese companies to gain foreign know-how through these partnerships while steadily cutting out foreign competition from the supply chain.

On March 1, 2021, China's Minister of Industry and Information Technology Xiao Yaqing said this: Under vicious competition, Chinese rare earths are only sold at "metal" prices, but not at "rare" prices. As soon as this statement was made, the A-share concept stocks rose sharply.

Cheap domestic supplies of rare earths allowed Chinese manufacturers to scale up the production of key products like permanent magnets, which are integral to the functioning of wind turbines, hybrid vehicles, and other advanced technologies. Beijing's policies allowed the country to capture nearly all of the global market. As of 2019, China still produced roughly 85% of the world's rare-earth oxides and approximately 90% of rare-earth metals, alloys, and permanent magnets.

At a press conference held by the Information Office of the State Council in Beijing, Xiao Yaqing also said that REEs are a "strategic resource" and that the Ministry of Industry and Information Technology will "promote the further, healthy and sustainable development of the industry in response to some existing problems."

As the world's largest producer and exporter, China's every move in the field of REEs has attracted much attention. There have recently been reports that our country is reviewing its policy and may ban the export of rare earth technology on grounds of national security. The processing technology is more important than the raw materials themselves.

China's Rare Earth Strategy: Technology Means More Than Raw Materials - 2/2

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