China Centralizes Overseas Mining Investments to Secure Critical Minerals
CNBC reported that the state-led push could give Beijing greater control over global supplies of critical minerals and who gets access to them.
State-Coordinated Strategy Replaces Firm-Level Decisions
Several government agencies, ministries, and policy banks were subsequently mobilized to steer overseas mining deals.
Dan Wang, China director at Eurasia, said China is rolling out a state-coordinated global mining strategy to replace firm-level decision-making. Wang noted that the model allows for larger, better-aligned global mining investments, curbing disorderly competition among Chinese firms and strengthening their hand against Western competitors and newer entrants such as Saudi Arabia and India. However, she added that a longer review and approval process could also raise corruption risks and weigh on investment returns.
Outbound Investment Targets Import Dependence Red Lines
Armand Meyer, senior research analyst at Rhodium, said acquisitions have mostly been concentrated in minerals that China lacks domestically, naming lithium, nickel, and cobalt during the electric-vehicle boom in the mid-2010s, alongside gold in recent years.
Outbound investment in upstream critical minerals will roughly double from the 2021-2025 period, according to Eurasia. Beijing treats 70% import dependence as an implicit red line, putting copper, lithium, cobalt, nickel, bauxite, and iron ore under a hard national security constraint to expand supply abroad, according to Wang.
Processing Monopoly and Export Controls on Rare Earths
China produces about 92% of the world’s refined rare earths, according to the International Energy Agency. Brad Handler, director of the Energy Finance Lab at the Payne Institute, said that if a rival builds a new mineral refinery, China can produce more, oversupply the market, and push prices below economic levels.
Japan has been among the hardest hit, reportedly coming within months of running out of yttrium, an element used for screen displays and semiconductors that is produced as a byproduct during the extraction of other rare earth metals. Rhodium noted that Chinese companies have adapted in recent years by ramping up greenfield investment and setting up processing capacity near mines rather than relying on outright acquisitions, most visibly in Indonesia following that country’s ban on nickel ore exports.
Frequently Asked Questions About China’s Mining Strategy
How much did Chinese overseas mineral acquisitions reach this year?
Chinese mineral acquisitions abroad reached $8.8 billion in the first three quarters of the year, marking the highest annual total since at least 2018 according to a Rhodium Group report released Wednesday.
What percentage of the world’s refined rare earths does China produce?
China produces approximately 92% of the world’s refined rare earths, according to data from the International Energy Agency cited in the reports.
What import dependence threshold does Beijing treat as a red line?
Beijing treats a 70% import dependence level as an implicit red line, placing commodities like copper, lithium, cobalt, nickel, bauxite, and iron ore under hard national security constraints to expand supply abroad.
Worth a look