China Tightening Its Grip On Leaky Rare Earth Supplies

“The importance of rare earths to China is similar to that of crude oil to the Middle East,” a columnist wrote in a commentary published on a social media account“Shumiyuan No.10” operated by the state-owned Global Times.“China must have a say in its rare earth resources, which are essential to the development of the world's strategic emerging industries.”

“The implementation of the new regulations will deepen supply-side reform, ensure the safety and stability of the strategic resource industry chain supply chain, allowing China to gain bargaining power in the unfair international high-tech competition,” the writer said, referring to US sanctions and export controls against Chinese technology firms.

He wrote the new rules will help China crack down on illegal mining and smuggling of rare earths, upgrade its rare earth sector and stop overseas intelligence agencies from obtaining its technologies.

In February 2022, the Chinese Ministry of Commerce accused Lockheed Martin, the maker of America's F-35 fighter jets, and Raytheon Technologies Corp, the world's largest producer of guided missiles, of selling arms to Taiwan and banned them from buying China's rare earths.

On April 14 this year, China Central TV reported that a man surnamed Ye, who worked for a foreign non-ferrous metal firm's Shanghai unit, was sent to jail for 11 years for bribing a Chinese rare earth company's manager for information related to the nation's rare earth reserves.

Last month, Chinese media said some sanctioned foreign defense contractors had smuggled a large amount of rare earths out of the country by bribing executives of Chinese suppliers. They also said some Western spies had tried to steal China's rare earth processing technologies.

They said the Ministry of State Security briefed them about the situation without naming any company but they believed it was referring to US firms such as Lockheed Martin.

In recent years, the US has increased its efforts to diversify its rare earth imports from China to other countries such as Australia and Brazil.

New developments in the sector have included the discovery of an estimated 2.34 billion metric ton deposit in the US state of Wyoming and an estimated 8.8 million metric tons of rare earths in Norway last month.

The Biden administration has said it wants to establish a new domestic rare earth supply chain. On April 1, MP Materials, a California-based rare earth mining and processing firm, said it received a $58.5 million tax credit issued by the Internal Revenue Service to advance its construction of America's first fully integrated rare earth magnet manufacturing facility.

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“The proportion of China's rare earth production to the world's total output has decreased to about 70% now from 90% a decade ago as the US and Japan diversified their rare earth imports,” a postgraduate student using the pseudonym“Nick Wilde” said in an article published by Taiwan's Liberal Times on Monday.

“If the Chinese Communist Party cuts its rare earth exports, it will only create a limited impact on the West,” the writer says.“But at the same time, China will face more Western sanctions.”

China may refrain from initiating a rare earth battle amid an industry down cycle, other analysts said.

China Rare Earth Resources and Technology, the Shenzhen-listed unit of state conglomerate China Rare Earth Group, said Monday that it recorded a net loss of about 231 million to 251 million yuan in the six months ended June 30, compared with a net profit of 172 million yuan a year ago.

The company said it suffered from a significant drop in rare earth prices during the past year.

Read: China wants role in US-Vietnam rare earths plan

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