China currently claims to have the world’s largest reserves of critical materials. Recently, its rare earth miners have returned to profitability owing to a string of well-timed, strategic export restrictions on their product, issued by the Chinese government. These austerity measures have dramatically increased the profits of large, state-owned mining companies. They reaffirm China’s dominant role in the global rare earth market.
The nation has a long history of producing rare earth elements. All of these elements are essential components in a myriad of high-tech applications, from consumer electronics to renewable energy technologies to defense systems. By imposing these export curbs, Beijing has succeeded in raising prices, padding the pockets of domestic miners and strengthening their monopoly hold on the market.
State-owned China Northern Rare Earth Group and China Minmetals Corporation rank at the top of this class. In recent months, they’ve announced record profit margins. Soaring worldwide appetite for rare earths is powering the fiscal comeback. Industries are clamoring to ensure steady supplies, spurred on by longstanding geopolitical tensions and more recent supply chain disruptions.
The Inner Mongolia Autonomous Region is home to the largest rare earth deposits in the world. Its role has been indispensable in shaping China’s rare earth mining industry. This area contains some of the country’s biggest mines. These mines are very important for increasing the production capacity and international presence of Chinese rare earths.
With worldwide appetite for these materials only increasing, China’s government is still calculating and careful with the way it handles exports. The recent domestic measures continue to scope not only to bolster domestic profitability but to extend China’s grip on power in international markets. Analysts expect these steps to increase competition between countries seeking replacements for Chinese rare earths. Even if they don’t, this change has the potential to fundamentally upend the global supply chain.