China has the largest reserves of one group of these critical materials, known as rare earths. In turn, that has allowed its large state-owned miners to recover and return to profit. Beijing’s ongoing and planned export restrictions are sure to push prices for these strategic minerals even higher. Consequently, we are now experiencing a remarkable revival in their prestige.
China’s control of the rare earths market has made the country a major player on the global stage. China’s Inner Mongolia Autonomous Region hosts one of the most important rare-earth mines, contributing to the nation’s substantial output. Beijing’s recent targeted export curbs on gallium and germanium have sent prices skyrocketing. As a result, state-owned enterprises are raking in record profits.
The cumulative effect of the export restrictions has been to pour jet fuel on demand and profitability for China’s rare earths miners. Consequently, firms that were once on the verge of bankruptcy have witnessed a financial reversal as severe as their prior crisis. Profits at these firms have skyrocketed to unprecedented levels. This trend points to a structural market change that further benefits local miners as geopolitical pressures build.
Even with this good news, there is a dark and indeed nefarious cloud on the horizon over China’s rare earths industry. The continuing US trade war and growing competition from other countries threaten the sector’s longer-term prospects. These factors create uncertainty for China’s state-owned enterprises, which are integral to the country’s rare earths market.
Recent export restrictions have increased economic fortunes for China’s rare earths miners. Despite these possibilities, industry insiders have cautioned that the shifting geopolitical space might make things more complicated down the line. As other countries seek to establish their own rare earth supply chains, China’s control over this critical resource may face challenges that could impact its market position.