China is further tightening its control over the mining, smelting and export of rare earth minerals in an effort to consolidate its dominance in the global rare earth market. These rare earth minerals are key elements of modern cutting-edge technology, from smartphones and electric vehicles to defense systems and clean energy equipment. Recently, a series of new measures by the Chinese government have shaken the global rare earth market, especially affecting foreign companies that rely on rare earths, such as semiconductor manufacturers.

Rare earth resources are monopolized worldwide, and export restrictions are tightened

Currently, China is the main supplier of almost all rare earth products in the world. Since October 1 this year, China has required exporters of rare earth products to provide specific uses in Western supply chains, a regulation that further deepens the government's control over rare earth exports. The Chinese government can not only control the destination of exports, but also track the use of rare earth resources, thereby strengthening its control over the use and export of rare earths. This control means that China's acquisition of foreign-funded rare earth mining and smelting companies in the country is being further strengthened. Recently, two foreign-funded rare earth smelters operating in China have been taken over by Chinese state-owned enterprises. This transaction has attracted great attention internationally.

Inside a rare earth smelter, workers operate high-temperature flame furnaces to process rare earth minerals into fine chemical components. This smelting process is extremely time-consuming and complex, usually taking more than 20 hours. By strictly controlling the rare earth industry, China has further consolidated its supply chain dominance in many important fields such as semiconductors, military industry and new energy.

National security policies are strengthened, and information flow is restricted

The Chinese government has begun to tighten management of information flow in the rare earth industry for national security reasons. On September 15, China's Ministry of Commerce issued new regulations to restrict the export of metal antimony used in semiconductor manufacturing and weapons industry. It has also previously imposed export restrictions on rare earth elements such as gallium and germanium. In August this year, two rare earth industry executives were sentenced to heavy penalties for leaking information to foreign companies. These measures have made rare earth resources more closely linked to national security.

In the technological confrontation between China and the United States, rare earths have become one of the key points of the game. Both sides have strengthened export controls on key components and actively established reliable supply chains at home and among allies to reduce dependence on Chinese rare earths. The US government emphasizes that China's monopoly in the rare earth field poses a potential threat to the global economy and national security.

The "Sword of Damocles" in the International Market

Dan de Young (from Benchmark Mining Intelligence) pointed out that the global market's concerns about the supply of rare earths are like a sword of Damocles hanging over their heads. The criticality of rare earths makes them a must-win for all countries. In 2010, China shocked the world by banning rare earths for two months in a territorial dispute with Japan. Today's restrictions are more complex and involve a wider range of rare earth resources.

Domestic and foreign companies actively respond and expand their supply chain layout

Faced with China's resource monopoly, the United States, Australia and European countries have stepped up their efforts to diversify the rare earth supply chain. For example, Australia's Lynas Corporation is planning to build a new smelter in Malaysia, and Belgium's Solvay is also actively expanding its dysprosium refining capacity in France. Construction of a new rare earth smelter in Texas, the United States, has begun, and these new projects are expected to be put into production in the next few years. However, due to the geographical distribution of high-content rare earth ores concentrated in China, mining and refining in other countries face huge challenges.

Dysprosium and the key role of rare earth technology

Dysprosium has excellent stability at high temperatures and is widely used in high-performance magnets for electric vehicles and advanced semiconductor manufacturing. Due to its heat resistance, dysprosium is in growing demand in cutting-edge technology. A smelter in Wuxi, China, produces 99.9% of the world's dysprosium, providing ultra-high purity dysprosium products, especially ultra-pure dysprosium for chip manufacturing, meeting the needs of artificial intelligence and high-performance computing. Canada's Neo Performance Materials' smelter in Wuxi is world-renowned for its advanced smelting technology, but the company recently sold most of its shares in the Wuxi plant to a Chinese state-owned enterprise.

The gap in technology and education in the international rare earth industry

Compared with the West, China has obvious advantages in chemical technology and talent training in the rare earth industry. China has 39 universities offering rare earth smelting-related majors, training a large number of rare earth engineers and researchers, while courses in this field in European and American universities are relatively scarce. Michael Silver, CEO of chemical manufacturing company American Elements, pointed out that the solvent extraction system of Chinese smelters is one generation more advanced than that of foreign countries, forming a clear technical barrier.

In summary, China's dominant position in the rare earth market is having a profound impact on the global supply chain and technological competition among countries. Faced with global competition in the rare earth supply chain, governments and companies around the world are striving to find alternative paths while gradually realizing that establishing an independent rare earth supply chain outside of China requires long-term and huge investment costs.