New Delhi, June 24 (IANS) China’s tightening controls over rare‑earth exports and processing are part of a broader strategy to convert dominance in critical‑mineral supply chains into long‑term leverage over technologies dominating future economic and military power, a new report has said.

The report from South Africa-based IOL mentioned China’s moves are not primarily intended to inflict immediate economic pain on the United States.

Measures such as export licensing, stricter shipment oversight and limits on magnet exports aims to secure strategic advantage in sectors such as semiconductors, artificial intelligence, electric vehicles, aerospace and defence technologies.

China’s dominance in the rare earth industry is not due to just large domestic reserves; Chinese firms have established a dominant presence in the processing, refining and manufacturing stages that transform raw minerals into usable industrial components.

Such activities require specialised expertise, heavy infrastructure and carry high environmental costs and such factors left Western economies dependent on Chinese facilities to turn raw ore into industrial inputs.

“The consequences of this dominance extend across numerous sectors. Permanent magnets produced from rare earth elements are essential for electric vehicles, wind turbines, robotics, advanced electronics and precision-guided weapons,” the report said.

“The concentration of processing capacity within China, therefore, provides Beijing with influence not merely over commodity markets but over industries that are increasingly viewed as critical to national competitiveness,” it added.

As Washington sought to restrict Chinese access to cutting-edge semiconductors and chipmaking equipment, Beijing increasingly recognised the strategic value of the supply chains it controlled.

China’s recent moves proved its ability to monitor, regulate and potentially restrict access to critical inputs when broader geopolitical conditions warrant.

The report also noted that China using supply chain dependence excessively creates incentives for diversification.

“The United States, Australia, Canada and several European countries have all invested heavily in expanding domestic production and processing capabilities. Countries such as Vietnam and Malaysia have also emerged as potential alternatives for portions of the supply chain,” it noted.

The report, however, warned that reversing dependence on Chinese refining capacity will be difficult.

Mining capacity can be expanded in multiple jurisdictions, but establishing competitive refining and processing industries requires sustained investment, technical know‑how and environmental management which competitors lack.

–IANS

aar/na