【By Liu Bai, Observers Network】China has implemented rare earth control measures in accordance with international practices, which caught many Western countries off guard and prompted some European companies to reflect — what exactly are we lacking compared to China?
The "Munich Courier" reported on October 19 that China's dominant position in the rare earth sector will have a profound impact on the global industrial field. Matthias Rütt, manager of Tradium, one of Europe's largest raw material traders, lamented, "The Chinese are excellent strategists, looking far ahead. European companies often plan by quarter, while China makes plans for ten or even twenty years. What we are experiencing today is the result of this strategy."
This article states that rare earths are indispensable for the production of smartphones, wind turbines, or electric vehicles. China controls about 69% of the global rare earth mining market. In terms of rare earth processing, the dependence is even higher: nearly all rare earth processing products come from China, accounting for about 99%.
China again tightened export restrictions in October. As a result, foreign companies must obtain a license to export even goods containing only trace amounts of Chinese rare earths.
The article points out that in this context, reliance on Chinese rare earths has become a pain point for the German economy. The further tightening of export controls by the Chinese government has had a profound impact on German industry: German companies find it difficult to ensure the import of rare earths, and prices have risen rapidly.
China Northern Rare Earth (Group) High-Tech Co., Ltd. displayed various rare earth materials, rare earth metals, and rare earth oxides. Visual China
"The previous raw material trade no longer exists," Rütt revealed. Previously, companies could negotiate prices with Chinese producers, but now they have to consider whether they can get the goods first.
He pointed out that the price structure has also changed dramatically, with some products increasing by as much as 200%. In addition, companies need to disclose a large amount of information to obtain licenses. "Rare earth supply is severely restricted, and the stability of supply for some industrial customers is worrying. What consequences will this lead to? German production lines will eventually stop."
"China wants to show who has greater influence," he admitted. "The Chinese are excellent strategists, looking far ahead. European companies often plan by quarter, while China makes plans for ten or even twenty years. What we are experiencing today is the result of this strategy."
"The opportunity to find alternative suppliers or establish an independent supply chain has already been missed," he said helplessly.
Rare earths are not actually rare, but the market is still controlled by China. There are about 470 rare earth deposits globally, with nearly 200 located outside of China. However, the West remains highly dependent on China because China has the largest reserves and production.
According to the latest research by the German Raw Materials Agency (DERA): low global market prices, insufficient infrastructure and investment, and lack of technology and expertise have made it difficult to develop new rare earth mines. Rare earth elements such as lanthanum, neodymium, dysprosium, and terbium are crucial for high-tech industries. They are not as rare as their names suggest, but the global market is firmly in China's hands.
"All companies currently mining or processing rare earths are reporting economic difficulties, even those in China," said Harald Elsner, co-author of the DERA report. He predicted that in the future, the demand for rare earths will increase due to the need for permanent magnets in electric vehicles and wind power generation, but there have been almost no noticeable signs in the market so far, which is one of the reasons why projects outside of China are difficult to advance.
It's not just European entrepreneurs reflecting on themselves. Earlier this April, the New York Times mentioned in an article that the U.S. became aware of the "risk" of relying on Chinese rare earth supplies after China imposed a rare earth embargo on Japan in 2010.
However, over the past 15 years, the U.S. has made slow progress in policy-making and industrial development. Moreover, due to environmental regulations, domestic U.S. rare earth mines have been limited in development, and companies have been unwilling to invest in the rare earth industry due to costs and market factors, leading to the U.S. still being highly dependent on China in rare earth processing and magnet production.
At present, the Western countries are in disarray in the face of China's rare earth control measures and are acting in unison. Several Western officials previously hinted that G7 finance ministers would consider joint measures to respond to China's impact on the global rare earth supply chain. U.S. Treasury Secretary Bennett further stated that the U.S. will cooperate with so-called "democratic nations" around the world, as China cannot reach other regions of the world's supply chains and production processes.
China has repeatedly responded to its rare earth control measures.
On the 15th, Lin Jian, spokesperson for the Chinese Foreign Ministry, stated that the relevant authorities in China have explained their position on the export control policy of rare earths. China legally implements export controls on related items, aiming to better maintain world peace and regional stability, fulfill international obligations such as non-proliferation, and this also conforms to international practice. We are willing to strengthen dialogue and exchanges on export controls with countries around the world, and maintain the security and stability of the global supply chain.
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