scte long read
Refuse, Rethink, Reduce, Reuse, Repair, Refurbish, Remanufacture, Repurpose and Recover
Meanwhile, what about everywhere else? India, Australia and the US were mining at scale, but without the government support China lavishly supplied to its own industry, their outputs were eclipsed during the 90s, at a point that digital revolution was starting to gain traction. “Mining is expensive and dirty, it’s bad for the environment; we don’t want that kind of industry in the west,” Amanda said. Around this time a leak in a processing plant in California made locals nervous and it was closed down, at which point all American mined rare earths (rated 7th in the league for highest level of rare earth reserves, not insignificant) were shipped to China, in the misguided belief doing business with the US was a benign effort by China to continue propping America up as the world’s dominant superpower. Intelligence officials now admit they were naïve. Van Dyke added, “The Chinese have realised that all you need to do in commodities is slightly overproduce to keep the price down. If you just produce one or 2% more consistently than the market needs, you keep a total lid on the prices.” The Chinese business model is unlike anything we operate with in the West. Investors expect a return quickly and won’t invest if that isn’t possible. The West operates on election cycles of 4-5 years, maybe they can look forward to 8-10 with a comfortable majority, but where no democracy operates, China has no such barriers to contend with. They can afford to take the long view. In China, Van Dyke explained, “they’ve mastered the commercialisation of the entire process. They have understood that they need rare earths to develop an electronic components and electronics industry. They told the mining companies, ‘we will lend you lots of money to build these factories and you don’t have to have a normal rate of return 10-15 percent. In fact, we’ll let you run at a loss for the first five years. If you just scrape by with a two or three percent like one or two percent margin, we’re ok with that. We’ll fund lots of you so that you’re slightly overproducing. That way prices never go up and we’re okay with doing that because that means we own global rare earth production, and we own the markets that come from it.”
Amanda Van Dyke is an investment banker based in London who heads up the Critical Minerals Hub which provides analysis and insights on the global market for critical minerals. She has a deep knowledge and understanding of this market and broke down the rare earths market over a coffee. What is happening with rare earths is only one part of an audacious, far reaching strategy that even now is not especially discussed in the West. Reports and interpretations vary, but not long after the 1949 Communist Revolution a manifesto was developed, laying out a complex 100-year road map that would establish China as the world’s economic superpower by 2049. It isn’t even clear if this manifesto has been written down, such is its hallowed secrecy. Only parts of it have been translated. Western complacence has largely ignored what was quietly taking place across the landscape as a rural nation developed into a manufacturing powerhouse, creating a dependence on cheap, well-made electronics that according to Michael Pillsbury, whose chilling and prescient 2015 warning on The Hundred Year Marathon: China’s Secret Strategy To Replace America as the Global Superpower, “constitutes the US misreading of China’s ‘hundred-year marathon’ as its greatest intelligence failure of the past 50 years.” Ouch. The mining of rare earths began some fifty years into this journey, with China realising early on that dominating the messy and complex processing part of the rare earth supply chain was essential to securing market dominance down the line. Van Dyke explained further. “China realised a long time ago that the money was in making the electric vehicles; computers and high tech is fine, but the value add is in the big-ticket items. To control the big industry, you need to control the components, so they own the entire supply chain. China owns many of the biggest mines in the world, over 50% of the market. The processing of rare earths is maintained at a deliberately very small margin, basically at cost. Why? So that nobody else is incentivised to develop their rare earth deposits or process the rare earths because there’s so little money in it.”
They don’t want anyone else to know their secret sauce. That said, it’s not that hard. It’s not nuclear fission. It’s chemistry. It’s material science and chemistry.
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May 2025 Volume 47 No.2
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