Beijing says state owns China's rare earth metals

Better management of critical materials or retaliation for sanctions?

Beijing has decreed that rare earth metals belong to the state under new regulations said to be aimed at protecting supplies in the name of national security, but which will be seen as another shot in the ongoing tech wars with the US.

The Chinese government has approved new regulations governing the mining, smelting, and trade in so-called rare earth elements, which include critical minerals used in cutting-edge semiconductors, electric vehicles, and wind turbines.

According to reports, the regulations define rare earths – a group of 17 minerals – as the property of the Chinese state, and insist that no organization or individual is allowed to claim them.

Official state news outlet the Xinhua News Agency said that Premier Li Qiang of the State Council signed the order on June 29, which will come into effect on October 1.

Xinhua reports (Google translation) that the state will implement a unified plan for the development of the rare earth industry. The aim is to encourage and support the research and development of new technologies, processes, products, and new materials and equipment, it says.

Regulations will be implemented to control the total amount of rare earth mining and smelting. Additionally, Beijing intends to introduce a product traceability system to "strictly manage circulation" of rare earths.

According to Nikkei Asia, underground resources in China already belong to the state, but illegal mining and smelting of rare earth elements is known to happen in the private sector, and it seems that Beijing is keen to tighten its control over them.

The regulations are also understood to stipulate new legal penalties covering illegal activities around rare earth mining and smelting.

While the Chinese authorities are pitching these new controls as simply better management of rare earths, talking of "safety, scientific and technological innovation, and green development," the move is likely to be seen in Washington and elsewhere as Beijing tightening its grip on key resources in retaliation for sanctions imposed by the Biden administration.

China is said to be the largest source of rare earth elements and critical minerals. According to the Center for Strategic and International Studies, the country produces 60 percent of the world's rare earths, but is responsible for processing nearly 90 percent, importing rare earths from other countries and processing them, which gives China "a near monopoly."

Late last year, China imposed a ban on the export of rare earth extraction and separation technologies, as The Register reported at the time.

Also last year, Beijing imposed restrictions on exports of two elements used in semiconductors, gallium and germanium, as well as many compounds containing these elements, such as indium gallium arsenide. Anyone wishing to ship those materials outside of China now has to apply for a permit from the country's Ministry of Commerce.

Those measures were also claimed by China as necessary to safeguard national security, but were widely viewed as retaliation for blocks on technology exports to China by the US and other countries. One Chinese official warned at the time that "this is just the beginning of China's countermeasures."

A recent Insider report claimed that Congress is aware that US stockpile levels of critical minerals deemed essential for its national security are insufficient, but official figures aren't available to the public.

It warned that the US was depending heavily on Japan and South Korea as alternate sources for supplies of rare earth minerals, but that such supply lines could not be relied upon should relations with China deteriorate to the point where armed conflict breaks out. ®

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