By Matt Oliver, December 23, 2021
China has tightened its grip on the rare earth metals needed to make cars and gadgets after combining three companies into one giant business.
The new entity, called China Rare Earths, will report directly to the Communist government in Beijing and have considerable global clout.
It will control more than a third of the country’s rare earth mineral operations and about 70pc of production, prompting state media to describe it as an “aircraft carrier”.
Analysts said the move would allow China to strengthen its market dominance at a time when other countries are trying to become less reliant on it.
A British foreign policy think tank warned on Thursday that Beijing could turn its stranglehold on rare earths into a “geopolitical weapon”.
The merger will combine three of China’s “big six” rare earth mineral miners, Aluminium Corporation of China, China Minmetals Corporation and Ganzhou Rare Earth Group, along with the research firms China Iron & Steel Research Institute and Grinm Group Corporation.
Daan de Jonge, a consultant at CRU Group, said: “This will mean that the pricing power of key rare earths, such as dysprosium and terbium, will be in the hands of one super group.”
There are abundant deposits of rare earths globally but they are difficult to process.
Heavy rare earths such as dysprosium and terbium are used in defence, technology and electric vehicles, while light ones such as neodymium and praseodymium are critical for motors, turbines and medical devices.
China controls around 90pc the global rare earths processing sector, resulting in an uneasy reliance on its services by countries such as the US, UK and Australia.
That has prompted Washington to seek to develop its own supply chains but experts say the effort could take years and may not succeed.
The Global Times newspaper, a mouthpiece for the Chinese Communist Party, quoted an expert saying China would not weaponise its mineral resources “unless it is forced to”.
However, the paper noted they would give the country greater clout in showdowns with “bullying” western countries.
Sam Armstrong of the Henry Jackson Society said: “China has never hidden its ambition to dominate the rare earth metals industries and any doubt about its objectives is evaporating.
“China aims to develop a stranglehold over the resources of the future which it can use in much the same way Russia uses its control of European gas supplies: a geopolitical weapon.”