China Tightens Controls on Rare Minerals for Computer Chips

China is sealing loopholes in its controls on the extraction and processing of minerals crucial for high-tech.

Recent government actions have severely increased the difficulty foreign companies—especially semiconductor manufacturers in trying to procure rare earth metals, including other critical minerals of prime origin from China. On October 1st, exporters are now being demanded to give detailed tracking regarding the integration of such shipments within the Western supply chain as an increase in Chinese control on which foreign companies could use these scarce materials.

China is also adding corporate ownership of these resources. Unnoticed abroad, the last two foreign-owned rare earth refineries in China are being purchased by one of three state-owned companies that control most of the refineries in the country.

China now generates nearly all global production of these critical materials. The fresh restrictions further reinforce its position in the market and take place at the same time as other new export restrictions. For instance, last September 15, the Commerce Ministry imposed some restrictions on the mineral antimony used both in semiconductors and for military purposes. It was preceded last year by restrictions on the export of gallium and germanium, which are important materials used in chip manufacture.

In addition, state secrets were granted to any information related to mining and refining rare earth.
These occur in a time of heightened tensions between China and the US over emerging technologies: semiconductors needed for AI are among them. The two countries are each establishing export controls even as they seek to create secure and reliable supply chains at home and with trusted partners.

The Chinese government claims these are necessary steps to conserve precious natural resources, prevent the proliferation of weapons, and ensure national security. China's rare earths are used for multiple applications, such as in F-35 stealth fighters produced by the United States, wind turbines, electric vehicle motors, camera lenses, and catalytic converters for gasoline cars. The International Energy Agency says the clean energy sector will demand seven times more rare earths by 2040 than in 2020.