The Wall Street Journal reported that China pushed its rare earth strategy 30 years ago, and American smelters and technologies gradually moved to China in the 1990s. After Chinese companies acquired General Motors' rare earth magnet business, they closed all U.S. factories; over the past 20 years, the U.S. has tried to restore production, but it has been difficult to compete with Chinese prices.
The Wall Street Journal reported that China spent several decades to achieve its strategic goal of dominating the global rare earth industry. Since the 1990s, China actively controlled the upstream resources for rare earth magnets used in cars, wind turbines, and fighter jets, provided financial support to encourage companies to acquire overseas assets, but imposed regulations to restrict foreign companies from entering the Chinese market. After Chinese companies formed several large companies, they gained control over pricing.
In recent years, the U.S. has made efforts to revive the rare earth industry, but China has flooded the international market with supply, making it difficult for the West to cope. Companies have progressed slowly in expanding their factories, and even some plants have been sold to Chinese buyers. Compared to the uncertainty of U.S. policies, China's direction in leading the international rare earth industry is clear, and it now accounts for nearly 90% of global rare earth refining. Now, Washington is spending billions of dollars to invest in and purchase rare earths from U.S. companies, but China will also work hard to maintain its leading position.
As of 1991, the U.S. was the world's largest supplier of rare earths, with California's Mountain Pass as the main mining area. At that time, Deng Xiaoping had already declared, "The Middle East has oil, and China has rare earths," with a clear policy.
Recalling his time as a uranium trader, Preznic said that although Chinese state-owned enterprises offered investment opportunities in China's rare earth industry, the procedures were very difficult. Chinese laws restricted foreign investment and local companies from joint development, while local companies could obtain tax reductions for exports, encouraging increased production. Foreigners without permission could not enter the mining areas.
To control rare earths, the industrial chain must be upgraded. In addition to securing sources, China also needed to obtain the technology for refining rare earth magnets from abroad.
Chinese companies obtained U.S. government approval in 1995 to acquire General Motors' Magnequench rare earth magnet business. A few years later, they closed all U.S. factories and moved them to China, with engineers transferring to the Chinese factories. Engineer Spencer said that at the time, he agreed to set up a factory in Tianjin to assist the Indiana plant, and he was confused about the need to double the size of the Tianjin plant. Soon after, the Indiana plant was closed.
The U.S. rare earth industry, including the rare earth magnet plant at Mountain Pass, nearly completely closed by the mid-2000s, at which point China accounted for 97% of global rare earth supply. Starting in 2005, China imposed taxes on rare earth exports, causing other countries' companies to find it difficult to compete on a large scale due to increased costs. China became almost the sole supplier of rare earth magnets globally, and the U.S. automotive industry relied on previously relocated U.S. companies to produce cheaper rare earth magnets in China.
Original: www.toutiao.com/article/1846564609034506/
Statement: This article represents the views of the author.