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China's rare earth resources face "shrinkage"
China holds the world's largest proven reserves of rare earth resources, but experts warn that the country is losing its competitive edge due to inefficient management and overexploitation. The lack of a robust protection and development system has led to significant resource loss, threatening China's long-term dominance in this critical sector.
The global share of China’s rare earth reserves has been steadily declining. While the world's total industrial reserves are estimated at around 100 million tons, China accounts for approximately 52 million tons—still the highest globally—but the proportion has dropped from about 70% to over 50%. This decline is partly due to increased exploration efforts in other countries, as well as domestic mismanagement.
In regions like Baiyun Obo, rare earth extraction has resulted in massive losses. Since 1958, over 12.5 million tons have been mined, with nearly 2 million tons lost during processing, leading to a utilization rate of less than 10%. The remaining 9.3 million tons end up in tailings dams, highlighting serious inefficiencies in resource use.
Southern provinces also face severe environmental damage from the "leaching method" used to extract ion-absorbed rare earths. This process consumes large amounts of ore to produce just one ton of oxide, and unregulated mining has led to widespread waste. Experts predict that if current trends continue, China could lose its status as a major rare earth supplier within 50 years.
China’s export surge has further worsened the situation. In 2005, it produced over 119,000 tons of rare earth minerals, accounting for more than 96% of global output. Last year alone, it exported 55,300 tons of rare earth products, a 11.43% increase from the previous year. Many foreign companies set up operations in China, importing raw materials and re-exporting processed goods, which reduces China’s value-added benefits.
In contrast, the U.S., with the second-largest reserves, has closed its main rare earth mine, while Japan continues to import vast quantities of Chinese raw materials, worth over $100 million annually. This highlights the imbalance in how China’s resources are being utilized and valued.
The industry is fragmented, with numerous small-scale players and weak regulation. Overcapacity in primary processing and limited deep-processing capabilities mean that most rare earths are exported as low-value raw materials. Japan and the U.S. then process these into high-value products and sell them back to China at a premium.
Experts recommend urgent policy reforms, including stricter access controls, improved research and industrialization, and better coordination between government agencies. Export quota systems need optimization, prioritizing key regions and enterprises that demonstrate environmental responsibility and technological innovation.
With the right strategies, China can reclaim its position as a leader in the rare earth sector, ensuring sustainable development and maximizing the value of its natural resources.