Rare earth metals are not really scarce, but are so called because the minerals are scattered in soil layers and therefore difficult to extract. The seventeen chemical compounds are indispensable in the manufacture of a large number of products, such as semiconductors, wind turbines, mobile telephones, lenses and batteries. China has about two-thirds of the known reserves of these metals in the ground and dominates the global market for 85 percent.
The China Rare Earth Group, founded on Thursday, focuses mainly on heavy earth metals, a raw material for telescopes and colored lenses. After the merger, there are only four earth metal producers in China.
Beijing is strengthening its grip on domestic extraction, sales and exports with the earth metals group launched Thursday, by placing the new conglomerate under the direct supervision of the Chinese government. Beijing wants to curb the chaotic price development of the metals. In the past, they were cheaply marketed by short-term profit-oriented state and private companies.
The merger also offers the government more options to determine which end customers the earth metals end up with, so that, for example, high-tech factories that are important in China’s industrial policy have enough raw materials.
Strategic
Above all, the state-owned conglomerate, which Chinese analysts describe as a “super aircraft carrier,” serves a strategic interest. During the trade war with the United States, Chinese President Xi Jinping already hinted in 2019 of the possibility of using the Chinese monopoly in the earth metal sector to lower the US by a symbolic visit to the earth metal industry in the southern China mining area. Ganzhou. The headquarters of the new superconglomerate will now be located in the same place.
China curbed earth metal exports in 2010, and even temporarily halted exports to Japan after a dispute over a disputed archipelago. The official reason, according to China, was to clean up the unregulated sector, where earth metals were soaked from the soil layers using highly toxic chemicals, which are very harmful to the environment.
After the shock of China’s export quotas in 2010, other countries have begun to reduce their dependence on China by mining elsewhere, for example in California and Australia. This mainly concerns lighter earth metals. China remains dominant in medium and heavy earths.
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