“The Middle East has Oil, China has Rare Earths”
This famous quote by Deng Xiaoping in 1992 signaled the start of a long-term strategy. While the West focused on cheap upstream mining, China focused on the difficult, dirty, and high-value downstream processing.
Vertical Integration
China does not just mine the rock. They control the entire chain:
- Mining: ~60% of global supply.
- Processing (Separation): ~85% of global capacity.
- Magnet Manufacturing: ~90% of global production.
The Consolidation
To control prices and reduce illegal mining, Beijing consolidated the industry into six state-owned giants (the “Big Six”), recently merging several into the massive “China Rare Earth Group.” This allows them to set quotas and control global pricing leverage.