China's Rare Earth Metals Consolidation and Market Power - Foreign Policy Research Institute
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Rare earth metals or "rare earths," a collection of 17 elements that are valued for their conductive and magnetic properties, have made headlines again. Over
Rare earth metals or "rare earths," a collection of 17 elements[1] that are valued for their conductive and magnetic properties, have made headlines again. Over the past year and a half, their prices have risen to levels not seen since their peak in 2011. What's more, in December 2021, Beijing approved the merger of three of China's biggest rare earth metals state-owned enterprises (SOEs)—China Minmetals Rare Earth, Chinalco Rare Earth & Metals, and China Southern Rare Earth Group—along with two other companies—Ganzhou Zhonglan Rare Earth New Material Technology and Jiangxi Ganzhou Rare Metal Exchange. The merger created the world's second largest rare earths producer, accounting for 30 percent of China's total rare earth metals production and 60-70 percent of its heavy rare earth metals production. The new company, reportedly named China Rare Earth Group, is the latest product of a decade-long effort by Beijing to consolidate China's rare earths industry. The effort is one of several that Beijing has pursued to gain greater control over industries that it sees as having strategic importance, from defense and energy to technology and telecommunications. And certainly, Beijing views its rare earths industry as being strategically important, as Chinese General Secretary Xi Jinping himself noted in 2019. Echoing that view, China's state-run media has repeatedly lauded the usefulness of the industry as leverage in China's disputes with Western countries, particularly the United States. Bigger Is Better Yet, China's official framing of the rare earths industry consolidation sounds innocuous: to assure "the stability of production and supply chains"—a goal that Beijing seems to have long since achieved given Chinese dominance over worldwide rare earths production since the 1990s. But for Beijing, assurance of "the stability of production and supply chains" amounts to more than control over the physical production of rare earth metals; it also means the ability to…