China is the most populous country on the planet and needs enormous resources to continue to grow its volatile economy. As a result, the Chinese communist regime has invested millions over the past few decades to develop a significant focus on mining non-renewable natural resources.
Beginning with significant mining within China, the Chinese regime continued with determined strategies to expand mining in the rest of the world, especially in developing countries in both Latin America and Africa.
Mining has been at the forefront of much of China’s strategy of commercial advancement in the so-called “Belt and Road” project through which the Chinese regime managed to penetrate emerging countries. The project entices officials and citizens with huge investments of money into various projects, including mining, usually putting at risk the national sovereignty of the nations supposedly benefiting from the investments.
The European Union has identified a list of 30 mineral commodities as critical products. The conflicts and commercial monopolies surrounding their exploitation endanger their supply chain, especially when controlled by a dictatorial regime such as the Chinese Communist Party (CCP), which is accused of great corruption and a constant tendency towards imperialist advance.
These 30 products, together with the exploitation of the so-called “rare earths,” are crucial for the defense, technology, and renewable energy sectors. The world production of these critical raw materials barely reaches a few thousand tons per year, and unfortunately, their exploitation is shared among a handful of countries, including China.
The Chinese communist regime produces 45% of critical raw materials, while the next ten largest producers account for a combined share of 35%.
China’s regime leads in the exploitation of crucial minerals
China not only has significant reserves of mineral resources but also leads the world in the extraction of many of them. Thus it has a remarkable geopolitical advantage as a source of the resources essential for global technological production.
It has become the leading supplier of many of these raw materials in just two decades, far ahead of its main commercial competitors in the United States and Europe. This dominance is partly due to China’s deposits and deliberate planning to extend its mining apparatus throughout the world, including isolated regions such as the Brazilian Amazon and marginalized countries in Africa.
China stands out in two main groups: base metals and technological elements when it comes to these raw materials.
The basic materials group comprises five metals from the periodic table; iron, copper, aluminum, magnesium, and zinc (sometimes lead and tin are included).
All these metals are found in everyday objects and are the backbone of the development of the modern industry. Therefore, all countries need them, which puts those with the largest deposits of these metals at a strategic advantage over the rest.
A country’s mineral wealth is not necessarily related to the volume of existing minerals in the ground but is also measured by the ease and feasibility of extracting the product. In the case of China, both variables coexist since the country has the largest deposits of many of these minerals in the world, and they are relatively accessible, leading the ranking with magnesium (79% of global extractions) and tin (43%), and zinc (31%).
As for metals used in the technology industry, it is essential to note that it includes several minerals, such as rare earth elements, precious metals, and semiconductors. Quantitatively speaking, these metals needed are minimal, although their availability is crucial to producing today’s technology.
For example, some of the most common technological metals include lithium, yttrium, palladium, cerium, and neodymium, which can be found in smartphone batteries, medicines, magnets, or catalysts. In these cases, China also leads with the largest deposits of some of these elements, especially tungsten, rare earths, and molybdenum.
In short, the Chinese regime not only has the largest deposits of these valuable minerals used as critical materials in the modern industry but is also the world’s number one exporter. Moreover, apart from extraction, the country refines and manufactures components from these minerals and, in many cases, manufactures the final product. In other words, it is involved in the entire production process.
The Chinese regime seeks prominence in international mining exploitation
During the last few years, Chinese companies have managed to develop sufficient technology to exploit the mining deposits and process the extracted products.
Thus, China has become a significant importer of these raw materials, which are processed in China and then exported again, either as minerals or transformed into finished products.
The Chinese regime has lax environmental and labor regulations, which allows them to considerably reduce their production costs in all industries, including mining. This situation forced many international competitors to withdraw from the market, giving way to the Chinese advance.
Despite record mineral extractions in China in recent years, the country cannot meet its annual demand for minerals such as copper, zinc, nickel, and a range of other raw materials used in its industry.
As a result, China now imports more than $100 billion worth of base metals each year, consuming more than 25% of global supplies.
Companies of Chinese origin have been at the forefront of the wave of mergers and acquisitions experienced by the mining sector over the past few years. In their commitment to move away from fossil fuels, Chinese groups are targeting the minerals needed for electric car batteries and so-called “clean energy” generation.
According to a study published by JETRO (Institute of Developing Economies), Chinese mineral imports include 30% of world zinc production, 25% of world lead production, and 22% of refined copper production. In addition, the Chinese economy absorbs 27% of the world’s iron and steel and 25% of aluminum production.
The Chinese communist regime has managed to take a leading role in the world mining industry, either by directly importing minerals, buying existing international mining companies, participating in its own mining companies abroad, or investing in developing countries to take control of their mining products.
Latin America and Africa are being plundered by bad local policies that allow the Chinese regime to take much of the natural resources of these continents while at the same time flooding the markets with their cheapest products, destroying the national industry, generating dependency, and finally breaking the financial system.
In the case of minerals, China depends almost exclusively on sub-Saharan Africa for its imports of cobalt and manganese, the latter mainly from Gabon, South Africa, and Ghana. At the same time, Latin America’s Brazil and Chile became its principal iron ore and copper suppliers.
The Chinese regime has secured direct shareholdings in mineral reserves in local mining companies and multinational holding companies, within several countries, with contracts that ensure the flow of raw materials for decades.
Within a few years, the Chinese regime managed to displace the countries that historically led the international mining industry, so much so that for several editions, the annual “Mine” report published by the consulting firm PricewaterhouseCoopers (PwC) highlighted the appearance of at least nine companies of Chinese origin among the most important. PwC analyzes the mining industry based on the economic and financial behavior observed in the top 40 mining companies by market capitalization.
Environmental disasters, inside and outside China
As it has in other industrial sectors, the Chinese mining regime adopted low environmental standards as a strategy for mining, which, together with low labor costs, led to super-competitive international prices, enabling rapid gro. Still, in the long run, the environmental costs have been exorbitant.
One of the main obstacles to mining, in general, is the complexity of the chemical processes used and the high costs of cleaning up the environmental pollution caused by the resulting toxic wastewater.
The traditional method of extracting these metals involves injecting ammonium sulfate and ammonium chloride into the ground to help separate the ore.
As a result, “thousands of rivers in China have disappeared, while industrialization and pollution have spoiled much of the remaining water. As a result, 80% to 90% of China’s groundwater and half its river water are too dirty to drink. According to some estimates, more than half of its groundwater and one-quarter of its river water is unusable even for industry or farming,” reported Bloomberg last Dec. 29.
In particular, pollution resulting from rare earth mining has created soil incapable of supporting crops. In addition, the ravages left on the large exploited areas can take 50 to 100 years to recover. Pollution from existing mines threatens the places they are located and neighboring cities and countries downstream.
The critical water situation was publicly acknowledged by the CCP itself in 2008 when China’s State Council warned that China’s water resources would be basically depleted by 2030. “Taking into full account water-saving, by 2030, our country’s water use will reach or approach the total volume of exploitable water resources, and the drought-fighting situation will be increasingly serious,” stated a directive issued by that body and Reuters reported.
Pollution levels due to carelessness in mining exploitation in their own country, it is assumed, can be much worse when companies linked to the Chinese regime participate in mining projects in foreign countries where the environmental consequences are not suffered by the Chinese people.
Many social movements, especially in Latin America, are protesting because of the devastating effects on the environment due to mining activity near sources rich in drinking water, such as in the Patagonian mountain range in Chile and Argentina.
Strategies of other powers to halt China’s advance in the mining industry
Specific political sectors of certain world powers such as the United States and some European countries have warned about the dangerous tendency to depend on the Chinese regime for critical raw materials produced by the mining industry.
In this regard, former President Donald Trump signed an executive order to boost mining production and cut this dependence on essential minerals, especially from adversarial countries such as China.
In December 2017, Trump had already signed another executive order. He directed the Secretary of the Interior to identify which minerals were essential to reduce the country’s vulnerability to a possible interruption in the supply of these minerals.
As a result, 35 minerals were identified as essential, 31 of which were imported and 14 of which were not produced domestically.
Faced with these results, Trump expressed his concern and, in his executive order, said, “The United States now imports 80% of its rare earth elements directly from China, with portions of the remainder indirectly sourced from China through other countries.
“In the 1980s, the United States produced more of these elements than any other country in the world, but China used aggressive economic practices to strategically flood the global market for rare earth elements and displace its competitors.”
Trumps’ Executive Order differentiates the role of adversary countries from allies and emphasizes the importance of incentivizing allies to increase their production of these minerals as well.
Trump points out that the Chinese regime exploited its dominant position in the minerals market and coerced industries in other countries to move their facilities, intellectual property, and technology to China, generating total dependence on the Asian giant.
The order also seeks to boost U.S. domestic mining production by reviewing the possibility of granting loans and reforming the mining permit system.
At the same time, some European countries are also taking initiatives to address the Chinese regime’s encroachment on this sensitive industry.
To reduce its dependence on external suppliers, the European Union considers two main approaches. First, as expressed in its 2020 action plan, the bloc proposes diversifying the sources of its raw materials. The Commission spokesman said that member states have been asked to identify extraction and processing projects on their territories “that can be operational by 2025.” A business alliance has even been formed to facilitate investments.
The second main focus is “reducing dependency through circular use of resources.” However, it is unclear whether recycling will have a significant impact or whether the industry will eventually have to find substitute inputs.
The minerals known as rare earths are vital inputs in the production of smart electronic devices, smartphones, microchips, wind turbines, electric cars, and military equipment, among others, whose demand has skyrocketed in recent years and is projected worldwide with even greater development.
China has struggled to maintain its monopoly on the production of these materials. Still, as mentioned above, some world powers have understood the geopolitical threat posed by the development of this monopoly and have begun to take actions that are gradually reversing this situation.
Thus, China, after producing 86% of the world’s rare earths, has now dropped to 58%, losing almost 20% of the production it had some years ago, which has delivered a hard blow to the Chinese regime, according to last year’s U.S. Geological Survey (USGS) report.
For analysts, the importance of counteracting the global dominance of the Chinese regime in the production of rare earths is urgent, given the geopolitical implications. In the same vein, researcher Liam Gibson writes: “Breaking China’s grip on rare earths should be an AUKUS mission.” AUKUS is a strategic military alliance between the United States, the United Kingdom, and Australia announced in September, focusing on the Indo-Pacific region.
He added in the Nikkei Asia media in December 2021, “The economics of rare earths means that commercial companies will always be beaten on price by state-backed companies who exist not so much for profit as for the geopolitical gain of monopolizing such a strategic asset.”
Countries such as the United States, Australia, and Myanmar (Burma), among others, have increased the production of these scarce minerals to a much higher proportion than processing in China has grown, reaching a contribution of about 40% of the world’s total, according to Statista.
Notably, some of this increased production, particularly from Myanmar, has been imported by the Chinese regime to supply its technology industry. Reports also indicate that illegal trafficking of these rare earths has increased considerably in recent years, with China being the big buyer of these goods.
The United States increased its production of rare earths by 36% in 2020, obtaining 38,000 tons, while in 2019, it extracted 28,000. On the other hand, as part of its strategy to reduce its dependence on China, it began installing a processing plant during the Trump era, which would avoid sending it to the Chinese for processing.
This processing plant is located in Hondo, Texas, some 45 miles west of San Antonio. It is financed with $30.4 million by the U.S. Department of Defense in a joint venture with the Australian rare earths company Lynas Rare Earths Ltd. Initially announced in 2019 with private investors; the facility is still under development. However, it could be a step toward an effective risk management strategy.
The productive concentration in a few hands of basic materials for the normal functioning of the economic system puts the stability of democracies and world peace in a situation of extreme weakness.
The problem is even more serious when this concentration occurs in a country governed by a communist regime such as China, characterized by imperialist ideas based on repression, violence, no respect for individual freedoms, and a general lack of values based on its atheism.
Only the concrete action of the rest of the strong countries can guarantee a more equitable and democratic production of the exploitation of the scarce resources of this world and thus prevent it from falling into the hands of authoritarian regimes that seek to monopolize markets to increase the concentration of power.