On maintaining Chinese leadership in rare earth industry – a view from Beijing

The Secretariat of the China Rare Earth Industry Association organized a meeting in Beijing on May 20th 2020 to review and understand the instructions of General Secretary Xi Jinping on the R&D of the rare earth industry in Ganzhou, Jiangxi . At the meeting, delegates said that General Secretary Xi Jinping pointed out the direction of the green, efficient development and utilization of China’s rare earth resources and the high-quality development of China’s rare earth industry from a strategic perspective.

China’s rare earth industry is significantly competitive in both mining and production areas as well as export volume. In recent years, the state has paid more attention to the standardized management of this strategic resource of rare earths, and has implemented a series of measures to promote industrial development. China has formed a complete rare earth industrial ecosystem. It has a complete mining, smelting, separation technology, equipment manufacturing and material processing capacities.

At the same time, rare earth has very important strategic significance. There is a belief in Western world that “China threatens” to use its monopoly status in the rare earth industry as a weapon of trade war, or it may cause American manufacturers to face rare earth supply cuts, which will have a major impact on American industry. 

Indeed, in the military application, rare earths are the “core.” At present, almost all high-tech weapons have rare earth elements. For example, the American Patriot missile uses more than 3 kg of samarium, cobalt, neodymium and iron boron in its guidance system. Magnets are used for electron beam focusing to accurately intercept incoming missiles. The laser rangefinder of the M1 tank, the engine of the F-22 fighter jet and is light and sturdy fuselages depend on the rare earths.

Key point remains that China is not only a mining power that accounts for more than 70% of global rare earth output, but also the world’s largest rare earth processing plant. It would be already very difficult for the United States to catch up, especially since China completely controls one of the most critical processes in rare earth processing, that is, converting rare earth oxides into metals. And because of the low cost and large production capacities, companies in other places do not want to invest in their own processing plants.

Objectively speaking, China is not the only country in the world that has a large amount of rare earth reserves, nor it is the only country in the world that is mining rare earths – even the United States itself is mining rare earths, but China is the world’s largest mining country and processing plant. Especially in terms of medium-heavy rare earth elements, China dominance is clear. So even the rare earth raw materials mined from American rare earth mines must be sent to China for processing.

Although China’s rare earth reserves are very rich, rare earth is still a non-renewable resource. At present, China’s economic and social development has entered a new normal, innovation has become a new driving force, and the development of the rare earth industry has also ushered in new opportunities. More importantly, maintaining the global strategic position of Chinese rare earth is an important mission before the Chinese rare earth industry. Rare-earth enterprises should implement national strategic guidance, focus on key targets, and plan for major issues related to the development of the rare-earth industry, as a whole.

RR’s Beijing based analyst