Commentary
Despite recent trade talks and a tentative agreement between the United States and China aimed at easing restrictions on rare earth exports, tensions remain high.
China’s export control has extended beyond rare earth and magnet products, which are on Beijing’s official control list, according to a
Financial Times report on June 30. Shipments are now being held at Chinese customs for additional inspections and third-party chemical testing and analysis if they contain any “sensitive” keywords (such as “magnet”), even if the products containing such materials are not on the control list.
The following day, U.S. Treasury Secretary
Scott Bessent urged Beijing to expedite the release of rare earth magnet exports, which have yet to return to early April levels.
It seems the Chinese Communist Party (CCP) is not giving up its rare earth leverage and intends to weaponize it to the fullest.
China’s Rare Earth Monopoly
Beijing has spent decades establishing its dominance over the rare earth supply chain. Today, China
leads the world in rare earth mining, production, exports, and expertise.
Ironically, the modern rare earth industry originated in the United States. In 1949, the
Mountain Pass mine in California was discovered and became the world’s leading source of rare earths through the mid-1980s. However, by 2002, environmental concerns and price pressure from China led to its closure.
Meanwhile, China began tapping its vast rare earth deposits in the mid-20th century, particularly in
Inner Mongolia. It wasn’t until the 1980s that the CCP saw rare earths as a strategic asset. In 1992, former CCP top leader Deng Xiaoping predicted that Inner Mongolia would take the lead in China’s economic growth because of its rare earth reserves.
Deng declared, “The Middle East has oil; China has rare earths.”
From 1985 to 1998, Beijing provided export tax rebates, which fueled unchecked growth in the sector and drew in local governments, private companies, and even criminal organizations.
China’s dominance in rare earths has led to three significant issues: environmental damage, market distortion, and global backlash.
Environmental Damage
In a rare admission, Beijing appeared to acknowledge the environmental damage caused by rare earth mining in its 2012
white paper.
“The outdated techniques used in rare earth mining, beneficiation, and separation have caused severe damage to surface vegetation, leading to soil erosion, contamination, and acidification—resulting in reduced agricultural yields and even total crop failure,” the document reads, according to translation of the original Chinese text.
Despite more advanced in-situ leaching techniques now in use, “they still inevitably release large amounts of ammonia nitrogen and heavy metal ... seriously polluting surface water, groundwater, and farmland,” the report states.
Some mining areas have experienced landslides, blocked rivers, and major pollution disasters, according to the report.
Thirteen years later, little has changed under the CCP. Restoring the environment is significantly more expensive than destroying it, making it an unfavorable trade-off. A small group of people gets rich, while the environmental damage they cause becomes a burden for the entire country.
Market Distortion
Although the CCP promoted so-called market reforms in 1978, in practice, it has always applied strict state control over strategic sectors. Rare earths are a prime example.Since 2006, the CCP has moved to tighten control over the rare earth industry, pushing for full state ownership and implementing a production quota system to enforce a state monopoly. Today, the total allowable quotas for rare earth mining, smelting, and separation are jointly issued each year by the Ministry of Industry and Information Technology (MIIT) and the Ministry of Natural Resources.
On Feb. 19, the MIIT released two draft regulations for public comment: the
Interim Measures for the Regulation of Total Quotas for Rare Earth Mining and Smelting & Separation, and the
Interim Measures for the Traceability Management of Rare Earth Products. Once implemented, the new rules will bring approximately 92 percent of the country’s rare earth supply under centralized control.
Only large state-backed rare earth groups and their affiliated mining and processing enterprises will be authorized to engage in these activities, with an official list being managed and updated by the MIIT. All other entities and individuals will be barred from obtaining production quotas or engaging in any rare earth mining or processing operations.
Global Backlash
The CCP’s use of rare earths as a geopolitical weapon—most notably in 2010 during the Senkaku Islands dispute with Japan—triggered a wave of countermeasures. The United States and its allies began searching for alternative supply chains. Although these efforts initially struggled—such as Hitachi Metals’ (now Proterial) failed U.S. magnet plant—rising tensions have forced Western nations to act.In response, the United States is now leading a broader effort to decouple critical mineral supplies from Beijing’s influence.
The U.S. government is
ramping up its production of rare earth elements, backing projects like the Mountain Pass mine through Pentagon contracts. Laws such as the Inflation Reduction Act and the Bipartisan Infrastructure Law also fund the development of domestic critical mineral supply chains.
Australia launched a Critical Minerals Strategic Reserve this year to boost domestic production and safeguard against global supply chain disruptions.
In June, the European Union
announced 13 new Strategic Projects on critical raw materials located outside the bloc, complementing 47 projects within the EU under the Critical Raw Materials Act. These 60 projects aim to strengthen supply chain security and industrial competitiveness in key sectors, including electric vehicles, renewable energy, defense, and aerospace.
The new projects span countries such as Canada, Brazil, and Ukraine, focusing on materials like lithium, nickel, cobalt, rare earths, copper, tungsten, and boron—crucial for batteries, magnets, and clean energy technologies—while also promoting local value creation in partner nations.
A Pyrrhic Victory
Despite its significant presence in the global market, China’s rare earth sector is not thriving. Prices are low, profits are minimal, and environmental costs continue to increase. While the CCP touts its control as a strategic asset, it may be digging itself into a deeper hole.By pursuing dominance at any cost—neglecting environmental sustainability, stifling competition, and alienating global partners—Beijing has jeopardized its advantage in rare earth minerals. What should have been a long-term national asset has been squandered for short-term geopolitical gains. The damage caused will now be a burden for future generations to bear.
In weaponizing rare earths, the CCP isn’t just challenging the West—it’s sacrificing China’s future.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.