China tightens control over rare earth metals

Politico carries an article about China which has announced a series of new regulations to assert greater control over its rare earth metals, crucial resources used in various high-tech industries, including electric vehicles and wind turbines, Caliber.Az reprints the article.

The Chinese government has unveiled a series of stringent new regulations aimed at tightening its control over the valuable natural resources integral to industries ranging from electric vehicles to wind turbines. The State Council's announcement declared that rare earth metals are state property and warned that "no organisation or person may encroach on or destroy rare-earth resources."

Starting October 1, these new rules will be enforced, with the government operating a rare earth traceability database to monitor and regulate the extraction, use, and export of these metals. China currently produces approximately 60 per cent of the world's rare earth metals and is responsible for around 90 per cent of refined rare earths available on the market.

In addition to these measures, Beijing has already banned the export of rare earth refining and magnet manufacturing technologies. Earlier this year, the export of gallium and germanium—critical to the computer-chip industry—was also prohibited.

The fear that China is seeking to monopolize the rare earth industry and potentially disrupt critical technology, automotive, and renewable energy supply chains has spurred efforts by the US and the EU to secure alternative sources. Both regions are actively pursuing rare earths from suppliers in Vietnam, Brazil, and Australia.

European Commission President Ursula von der Leyen announced last year the construction of the first large-scale rare earth refinery outside of Asia, located in Estonia. This move aims to "bolster European resilience and security of supply."

A 2022 analysis from the European Parliament highlighted the risks of dependence on monopolistic suppliers. The report noted that the EU imports 93 per cent of its magnesium from China, 98 per cent of its borate from Türkiye, and 85 per cent of its niobium from Brazil. Additionally, Russia produces 40 per cent of the world's palladium, underlining the strategic risks posed by geopolitical tensions, such as the Russian invasion of Ukraine.

In response to these vulnerabilities, the EU has initiated a probe into anti-competitive practices within the Chinese electric vehicle market, which benefits from substantial government subsidies and preferential access to essential rare earth metals. Both parties have agreed to hold consultations to address these concerns.

As the new regulations come into force, the global market braces for potential disruptions, emphasizing the urgent need for diversified supply chains and increased investment in alternative sources of rare earth metals.