The lead-up to China’s rare earth control

China nearly monopolizes the mining and processing of heavy rare earths used in missiles, radars, and stealth fighters.

HAN WOO-DUKThe author is a senior reporter of the China Lab. In 1992, China suffered from “American fear.” The U.S. was pressuring China over the military suppression of the Tiananmen Sqaure protests in June 1989. The move towards reform and opening stopped due to the blockade by the West.

In January 1992, Chinese leader Deng Xiaoping made a sudden media appearance and changed the atmosphere. He toured the cities in the south and advocated reform and opening. He said, “If the Middle East has oil, China has rare earth elements.” That was the signal for small and large companies in China to begin rare earth element production.

In 2002, Mountain Pass, a notable rare earth mine in America, shut down. It could not compete against cheap Chinese products. The rhetoric for the closure was to have China engage in the polluting industry and the U.S. produce high added value products such as semiconductors.

At that time, the West’s rare earth companies had two options — go bankrupt or go to China with its technologies. China started to accumulate rare earth separation and smelting technologies.

In 2012, a major rare earth mine was discovered in Mozambique and major Western countries rushed in. Japan was desperate to secure the mining rights as China’s rare earth offensive caused it to give up during the Senkaku Island (Diaoyudao in Chinese) dispute two years before. But Mozambique chose China. It was a victory for Chinese diplomacy that has been hard at work in Africa since the early 2000s.

China has also reached out to rare earth mines in Latin America, Central Asia, and Australia. It even acquired a 7.7% stake in Mountain Pass. This is why China dominates the global rare earth supply chain.

On February 22, 2022, U.S. President Joe Biden announced a strategy to promote the rare earth industry. “We can’t build a future that’s made in America if we ourselves are dependent on China for the materials that power the products of today and tomorrow,” he said. The context has shifted, but it is the same message that Deng Xiaoping gave 30 years ago.

The U.S. has started reviving the mine by allocating a large budget to develop Mountain Pass’ smelting technology. But it is not optimistic. Most of the minerals from the mine have to be sent to China for processing. The U.S. does not have the technology to increase alloy purity.

China nearly monopolizes the mining and processing of heavy rare earths used in missiles, radars, and stealth fighters. China’s export curb on gallium and magnesium is considered to be just a “taste.” Dead Deng is gripping on living Biden.