The Chinese government has recently implemented new measures to strengthen its control over valuable natural resources, such as rare earth metals, which are crucial components in various industries including electric cars and wind turbines. In a significant move, Beijing declared that rare earth metals are state property, emphasizing that no entity or individual should infringe upon or deplete these resources.
Starting from October 1, the government will establish a rare earth traceability database to oversee the extraction, utilization, and export of these metals. China currently dominates the global rare earth market, producing approximately 60 percent of the world’s supply and refining around 90 percent of the refined rare earths available.
Moreover, Beijing has already enforced restrictions on the export of rare earth refining and magnet manufacturing technologies. Earlier this year, exports of gallium and germanium, essential for the computer-chip sector, were also banned. Concerns have arisen regarding China’s potential to manipulate the industry and disrupt critical technology, automotive, and renewable energy supply chains, prompting efforts by the U.S. and the EU to secure alternative supply sources.
European Commission President Ursula von der Leyen announced plans for the construction of a large-scale rare earth refinery in Estonia, marking a significant step towards enhancing European resilience and supply security. A report from the European Parliament highlighted the risks of over-reliance on monopolistic suppliers, citing statistics that show the EU heavily depends on imports for various minerals from countries like China, Turkey, and Brazil.
Recognizing the strategic implications of geopolitical events, such as the Russian invasion of Ukraine, the EU is taking steps to diversify its supply chains and reduce vulnerability to external disruptions. In response to concerns about anti-competitive practices in the Chinese electric vehicle market, the EU has initiated investigations and consultations to address the issue and ensure fair trade practices.
