New China doctrine: Valuable rare earths belong to the state

The international battle for critical raw materials, which are needed for the energy transition and digital transformation, among other things, is intensifying. On Saturday, Chinese Prime Minister Li Qiang signed a State Council decree introducing a series of regulations on the management of rare earths. In doing so, the Chinese government wants to secure access to these natural resources, which are crucial for the manufacture of high-tech products such as batteries, semiconductors, magnets for electric motors and components for solar and wind power plants. A list issued by the State Council states that rare earths are the property of the state. It also includes the warning: "No organization or person may interfere with or destroy rare earth resources."

The regulations are to come into force on October 1, the State Council announced in a report published by the state news agency Xinhua. According to other reports, the government in Beijing wants to set up a database for the traceability of rare earths by then to be able to control the extraction, use and export of these metals. Officials have also stated: China will "pay equal attention to resource protection and the development and utilization" of these raw materials "while adhering to the principles of comprehensive planning, ensuring safety and promoting technological innovation and green development".

The State Council also wants to promote the high-quality development of the rare earth mining industry and support the research, development and application of new technologies, new materials and new equipment in accordance with the new rules. These also stipulate penalties for "illegal activities" in areas such as mining, smelting and extraction, the sale of products and illegal imports and exports of the relevant 17 elements. China currently produces around 60 percent of the world's rare earths and is the country of origin of around 90 percent of the corresponding metals processed for the market. In 2022, Germany imported 66% of imported rare earths from China. The shares were even higher for individual raw materials such as scandium, yttrium, lanthanum, neodymium, praseodymium and samarium.

Search for alternative suppliers in full swing

Last year, the Chinese government announced that it would introduce export barriers for gallium and germanium, both of which are in high demand in the chip industry. Fears that China could gain control of the rare earths market and disrupt supply chains for critical technologies, automobiles and renewable energy have triggered a race to source alternative suppliers in the West. The US and EU in particular have made efforts to source such metals at home and abroad. They are relying on Vietnam, Brazil and Australia, for example. No rare earth mines are yet in operation in Europe itself. At the beginning of June, the mining company Rare Earths Norway announced that it had discovered a large deposit in southern Norway.

The EU legislative bodies agreed on a regulation on critical raw materials in November. The aim is to ensure a secure and sustainable supply of lithium, silicon, cobalt, rare earths and the like. The aim is to make the EU less dependent on third countries such as China and Russia to reduce the risk of supply chain disruptions and dependencies. According to the law, in addition to the extraction, refining and processing of critical raw materials in the member states, more recycling will also contribute to this. Ten percent of the materials included are to be promoted within the EU in the future. A year ago, the President of the EU Commission, Ursula von der Leyen (CDU), announced the construction of the first large refinery for rare earths outside of Asia in Estonia.

(nie)