Chinese authorities are concentrating control over the export of rare earth minerals.

According to The New York Times, Chinese authorities are making every effort to increase the concentration of controlled resources for the extraction and export of rare earth minerals needed for the production of advanced electronic components. This industry can become for China a lever of influence on unfriendly countries that will allow it to respond to sanctions against China.

Image source: Unsplash, Dominik Vanyi

Chinese authorities, according to sources, are consistently taking more and more steps aimed at complicating the purchase of rare earth minerals by foreign companies. In particular, by the end of this year, the last two bases for the production of dysprosium, a chemical element that can be used in the production of magnets and high-performance chips resistant to high temperatures, should come under the control of government structures in China. Outside of China, almost no one can mine and purify dysprosium to the required level and on a scale sufficient for industrial needs.

This is largely due to the efforts of Chinese companies to gain control of raw material deposits around the planet. In addition, Chinese scientists have made great progress in improving the technical processes for purifying raw materials, making it possible to obtain the sought-after minerals of a high degree of purification with lower material costs. In China, by the end of this year, the last two dysprosium mining sites will come under the control of a local company, although they are now owned by Canadian investors. Thus, China will achieve a monopoly on the supply of this mineral, since it already controls more than 99% of the world market. However, Canadian business owners claim that the deal with Chinese competitors will retain their right to supply dysprosium outside China for the next five years.

Since October 1, Chinese regulators have complicated the export control procedure for rare earth minerals. These steps are aimed at accurately tracking the entire supply chain and preventing individual unfriendly countries from gaining access to Chinese raw materials. Since mid-September, Chinese authorities have also limited the export of antimony, and gallium and germanium have been under special control since last year. Legislation is changing in such a way that many information related to the extraction and processing of rare earth minerals falls under the category of state secrets. Last month, two defendants in a relevant criminal case were sentenced in China to 11 years in prison.

Alternative channels for the supply of the same dysprosium could be Malaysia, Australia, France or even the USA, but the cost of production of the corresponding Western companies will be significantly higher, and supply volumes are noticeably lower than those of Chinese competitors. Moreover, outside of China there are not many deposits of this mineral available to Western investors. Chinese industry has an advantage not only in price, but also in the scale of supplies, and the country’s authorities are ready to use this argument in the foreign policy struggle.