China’s recent actions tightening controls on rare-earth exports and processing are part of a larger plan to gain influence over critical-mineral supply chains, leading to future economic and military power, according to a report. The measures, including export licensing and stricter oversight, are aimed at securing advantages in sectors like semiconductors, artificial intelligence, electric vehicles, aerospace, and defense technologies. China’s dominance in rare earths is not just due to abundant reserves but also its strong presence in processing and manufacturing, crucial for various industries.
The report highlights that China’s control over processing capacity gives it significant influence in key industries like electric vehicles, wind turbines, robotics, electronics, and weapons. By restricting access to critical inputs, China has shown its ability to regulate supply chains based on geopolitical conditions. This has prompted countries like the US, Australia, Canada, and European nations to invest in diversifying their supply chains and exploring alternative sources like Vietnam and Malaysia.
While efforts to reduce reliance on Chinese refining capacity are underway, the report warns that establishing competitive refining and processing industries outside China poses challenges. Expanding mining capacity in different regions is feasible, but developing refining capabilities requires substantial investment, technical expertise, and environmental management that competitors currently lack.
