China’s new rare earth merger hands it ‘trump card’ in global fight for resources
- Merger of some of China’s top rare earth producers into a new company under the state assets regulator gives it a strategic advantage, experts say
- Some hardliners have urged Beijing to weaponise its dominance in rare earth production after the Trump administration started a trade war in 2018
China’s move to set up a global force in the strategic rare earth sector could help it pre-empt and respond to future external challenges, including trade tensions with the United States, analysts say.
Analysts believe the consolidation will help maintain the country’s global competitiveness and give it a trump card to play in conflict with the US, though many warned it should be careful not to overplay its hand.
Rare earth is composed of 15 elements and are vital components in smart electronic devices, wind turbines, electric cars and military equipment.
The merger is the largest of its kind in the world. Based on 2021 data, the group will have 52,719 metric tonnes of mining quota, or 31 per cent of the national total, and 47,129 metric tonnes of smelting quota, or 29 per cent of China’s total. It accounts for about 62 per cent of heavy rare earth supplies nationally.