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China's rare earth resources face "shrinkage"
China holds the world's largest proven reserves of rare earth minerals, but experts warn that these resources are being wasted and mismanaged, leading to a gradual loss of its competitive advantage. The country must urgently improve its protection and development strategies for rare earths to ensure sustainable use.
The global share of China’s rare earth reserves has been declining over time. While China still leads with about 52 million tons out of the estimated 100 million tons worldwide, this represents a drop from around 70% to just over 50%. This decline is partly due to increased exploration efforts in other countries.
Domestically, resource losses are significant. At the Baiyun Obo mine in Inner Mongolia, which once had 43.5 million tons of rare earth reserves, over 12.5 million tons have been extracted since 1958. However, nearly 2 million tons were lost during mining, smelting, and storage, resulting in a 15% loss rate. Only 1.2 million tons were actually utilized, giving an overall utilization rate of less than 10%, with the rest ending up in tailings dams.
In southern China, particularly in Jiangxi, the "leaching method" is used to extract ion-absorbed rare earths. This process requires 2,000–3,000 tons of ore per ton of oxide produced. Due to high prices in previous years, illegal and unregulated mining became widespread, further accelerating resource depletion. Experts predict that, at the current rate, China could lose its status as a major rare earth producer within 50 years.
China's massive export volumes have also contributed to the problem. In 2005, it produced 119,000 tons of rare earth materials, accounting for over 96% of global output. Last year alone, it exported 55,300 tons of rare earth products, showing a 11.43% increase compared to the previous year. Additionally, foreign companies operating in China often purchase raw materials and then export them after minimal processing, further reducing domestic value addition.
In contrast, the U.S., which ranks second in rare earth reserves, has closed its main mine, while Japan continues to import large quantities of Chinese rare earths, spending over $100 million annually. This highlights a growing imbalance in how China manages its strategic resources.
The domestic industry is fragmented, with numerous small-scale enterprises and low concentration. Overcapacity in primary processing and underdeveloped deep-processing capabilities limit China’s ability to add value to its exports. For example, 90% of the world’s color TV powder relies on Chinese rare earths, yet most are exported as raw materials and later re-imported processed.
Experts urge the government to implement stricter industrial policies, raise entry barriers, and promote research and industrialization of rare earth technology. They also stress the need for better coordination between regulatory agencies and more efficient allocation of export quotas based on regional development, environmental standards, and technological advancement.
Finally, there is a strong call for reforming the export system to prevent price suppression and ensure that China can leverage its market dominance effectively. With proper management, China can maintain its leadership in the rare earth sector and secure long-term economic benefits.