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China's near-monopoly of rare earth metals gives it a trump card in its rivalry with the US for global dominance and it has shown a willingness to weaponize the trade, analysts said.
Last week, China announced plans to merge three of its main rare earth metal companies, Minmetals Rare Earth, Chinalco Rare Earth & Metals Co, and China Southern Rare Earth Group Co into a yet-to-be-named company, Asia Times reported. Rare earth metals are elements that are critical for the manufacture of electronic components and high-tech alloys necessary for civilian and defence applications. Further, the new firm may be announced this month and will be headquartered in China's southerly Jiangxi province where there is an abundance of natural resources. Also, China Minmetals Corporation, Aluminum Corporation of China, and Ganzhou Rare Earth Group Company will all be subsumed into the new group. The move to centralize Beijing's control over the pricing will keep Chinese firms from breaking ranks as competition with western companies increases, according to Taiwan news. The US and its allies are increasingly concerned China may choke off access to the metals, which are vital to the functioning of a variety of cutting-edge technologies, from fighter jets to wireless headphones and wind turbines and touch screens, the Taiwan news added. Writing in Asia Times, Gabriel Honrada, a Moscow-based Russian scholar, said that China can choose to ban the export of rare earth metals to countries or companies it deems a threat to its interests. "Analysts believe that China's near-monopoly of rare earth metals gives it a trump card in its rivalry with the US for global dominance, and it has shown a willingness to weaponize the trade," she wrote. China's approach to rare earths is largely driven by domestic factors. It aims to develop green technologies and renewable energy to compensate for environmental damage from rare earth mining, she said. Further, China's economic strategy to become a technological leader gives it an incentive to dominate the rare earths trade, thereby influencing downstream industries, and in the process strengthening the economic credentials and legitimacy of the ruling Communist Party, she added. However, she highlighted that China's rare earth reserves are not infinite and Chinese rare earth companies are finding alternative sources. "However, China's rare earth reserves are not infinite. Environmental pollution and increasingly scarce reserves are pushing Chinese rare earth companies to find alternative sources abroad. To that end, China has been increasing its geopolitical footprint for rare earths in Asia, Africa, and Latin America," she said. (ANI)
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