Inner Mongolia Aims to Earn 5 Times More from Rare Earths by 2025

The Inner Mongolia region in northern China aims to quintuple the value of rare earths production by 2025. This comes as China's near-absolute dominance of global supply has raised concerns that it could be used as a bargaining chip.

"Inner Mongolia's rare earth industry is in a unique position to integrate the three elements of resources, manufacturing and R&D," said Wu Suhai, vice minister of industry and information technology, in a call for the integration of the industry chain.

He said Sunday that the region aims to reach a rare earth output of 100 billion yuan ($15.7 billion) by 2025, an increase of about five times the 2020 figure.

Rare earths are a group of 17 metals that are essential to the manufacture of everyday electronics from refrigerators to cell phones, as well as the circuitry found in military vehicles. For example, the F-35 fighter jet contains 417 kilograms (919 pounds) of rare earths, or about 3 percent of its mass. These metals are also used in green technologies, such as electric car batteries, wind turbines and solar panels.

China supplies more than 85 percent of the world's rare earth elements, raising concerns that it could use supply restrictions as a geopolitical bargaining chip to disrupt the chain and hit key industries in countries such as the United States, with which it is engaged in a trade war.

Baotou, known as the rare earth capital of China, is home to the vast majority of the region's rare earth mining and processing facilities, with a value of 21.9 billion yuan last year.

The mayor of Baotou noted that to reach the goal of 100 billion yuan by 2025, the output value would need to grow by at least 30 percent annually. Baotou's Bayan Obo mine holds nearly 84% of China's rare earth deposits and about 38% of global reserves.

Inner Mongolia's 14th Five-Year Technology Plan calls for further integration of Baotou's rare earth industry with the high-tech industrial parks in neighboring Ordos and Hohhot. Baotou needs to become the world's 'magnetic valley'.

The region needs to vigorously develop its permanent magnet machinery industry, with a focus on new energy vehicles and rare earth permanent magnets for wind turbines. The region's plans to become the world's largest rare earth trading center and to promote the Baotou Rare Earth Products Exchange as the tenth "national exchange" in China.

Inner Mongolia is home to some of China's most valuable natural resources, such as coal, but has been embroiled in a series of corruption cases in recent years.

A Beijing-led campaign against coal-related graft has uncovered 676 corruption cases involving 960 cadres and officials since 2018, with some investigations dating back 20 years. Inner Mongolia is China's second-largest coal producer, with production of more than 1 billion tons in 2020.

The region's other major export, rare earth elements, is abundant but expensive to mine and the process is highly polluting. According to the United Nations Comtrade data, China exported $80.8 million worth of rare earths in 2020. In 2019, before the coronavirus pandemic, China's exports of the metal totaled $116 million.

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