How China Took Over the World's Rare-Earths Industry

[Zorro]

Beijing used bare-knuckle tactics in multidecade effort to consolidate control over supplies

When China tightened restrictions on rare-earth exports this month, stunning the White House, it was the latest reminder of Beijing’s control over an industry vital to the world economy.

Its dominance was decades in the making.

Since the 1990s, China has used aggressive tactics to build up and maintain its lock over rare-earth minerals, which are essential to making magnets needed for cars, wind turbines, jet fighters and other products.

Beijing provided financial support to the country’s leading companies, encouraged them to snap up rare-earth assets abroad, and passed laws preventing foreign companies from buying rare-earth mines in China. It eventually consolidated its domestic industry from hundreds of businesses into a few giant players, giving it further leverage over prices.

When the U.S. tried to engineer a revival of its domestic industry a few years ago, China flooded the market with supply, throwing Western producers into a tailspin. As Western rare-earth companies’ valuations collapsed from the low prices caused by soaring Chinese production, they were forced to slow their expansions, and in some cases, sell their mines to Chinese buyers.

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