Global game about uncommon earth metals: Why doesn't the West realize China's strategy?

chiny24.com 1 month ago

From geopolitics to interior necessity: China's fresh uncommon earth metallic policy

The dominant West narrative, which interprets Chinese restrictions on exports of uncommon earth metals (REE) as a purely geopolitical weapon in the commercial war with the US, turns out to be incomplete and mostly erroneous. Although geopolitical tensions surely play a role, a deeper analysis, based on quantitative data, points to a much more fundamental reason: China's increasing home demand, which is beginning to exceed available capacity. Export restrictions, which the West sees as an aggressive maneuver, are in fact a rational industrial policy designed to safe supplies for the dynamically developing Chinese high-tech industry.

Numbers do not lie: China's dominance in the value chain of uncommon earth metals

China dominated not only the extraction, but the full value chain of uncommon earth metals. Data from various sources, including the global Energy Agency (IEA) and the Center for strategical and global Studies (CSIS), paint an image of the nearly full dependence of the West. In 2024 China was liable for about 60% of the global REE mining, but their dominance is even more pronounced in the further stages of processing.

China controls around 91% of global production in separation and refining stages and as much as 94% of the production of sintered permanent magnets (neodymium), key components in electrical motors, wind turbines and advanced defence systems.

For the European Union these figures are even more alarming: 99% of supplies of 17 uncommon earth metals and 98% of permanent magnets come from China (!!!).

Dragon devours its own tail: China's increasing home request for uncommon earth metals

The key origin which the Western analysis seems to underestimate is the detonation of home request in China.

The Central State has become the world's largest maker and consumer of REE-dependent technologies. In 2024, China produced more than 12.4 million electrical vehicles, accounting for over 70% of global production. Each of these vehicles, filled with sensors, precision engines and AI systems, uses crucial amounts of neodymium and dysprosium.

In addition, renewable energy – wind and solar farms – is rapidly developing, as well as the construction of AI data centres and semiconductor factories. The interior request for uncommon earth metals is increasing at a rate that threatens China's export capacity.

In this context, export restrictions are no longer just a political tool but an economical necessity.

American shortsightedness: deficiency of quantitative analysis and misinterpretation of Chinese actions

The American consequence to Chinese dominance, mainly focused on geopolitical interpretations and attempts to build alternate supply chains, seems to ignore fundamental quantitative data.

The CSIS analysis indicates that by early 2024 the U.S. sent most of the country-extracted REEs to China for processing, showing a complete dependence in the key, central phase of the value chain.

Although the USA is the world's second largest maker of REE, the deficiency of national processing and separation capabilities, especially dense uncommon earth metals (HREE), where China controls 99% of the global marketIt makes an American strategy highly susceptible to Chinese decisions.

Western companies face a deficiency of skilled labour, R & D facilities and restrictive environmental regulations that hinder the improvement of competitive processing capacity.

European dilemma: How do we respond to Chinese dominance and safe the technological future?

Europe is faced with a serious dilemma. Initiatives specified as the Critical natural Materials Act (CRMA), aimed at expanding home extraction and processing and diversification of supplies, face immense obstacles. The main problem is the deficiency of funding. According to the analysis of Politico, the European manufacture is incapable to compete in price with Chinese producers and the construction of fresh mines and processing plants is a process lasting 10-15 years, with an additional hazard of social opposition for environmental reasons.

Europe must take decisive and multi-dimensional action to respond effectively to the Chinese strategy.

First,, it is essential to make financial mechanisms, in the form of investment funds, which will support strategical projects throughout the value chain – from extraction to processing to recycling.

SecondEurope needs to invest in investigation and improvement of REE processing and separation technologies to reduce dependence on Chinese know-how.

Third, It is crucial to make standards-based markets that advance liable and sustainable extraction and processing, even if this means higher costs.

Finally, Europe needs to step up cooperation with global partners specified as the US, Canada, Australia and another resource-rich countries to jointly build resilient and diversified supply chains.

Only in this way will Europe be able to safe its technological future and avoid repeating past mistakes erstwhile it became dependent on 1 supplier in the key energy sector.

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