Do the Chinese not understand that part of the reason companies like ours can get a foothold , is due to their protectionist actions?
Their bans, subsidies and now state control can only take them so far.
It is a temporary measure, and yes, it may last years and take time to decouple, but I am hoping this last turn of events and policy change in the rare earth space, is the final straw for the western powers, to do more than talk and promise.
More broadly, are we witnessing the beginning of the end for this manufacturing superpower?
Because once the wests supply chains begin to properly decouple, there is no going back.
And what we will witness is a steady decline in the size of the Chinese economy.
The Chinese have, to some extent, realised the significance here, and have been pivoting their focus to tech, AI and of course the auto industry, specifically EV's.
They were too late to the party to ever seriously challenge the west with ICE vehicle's, but EV's, that's a whole new party...one they were very early to not only adopt, but develop the auto and battery tech.
From a country who manufactured the cheapest of the cheap low quality wares in the 80's and into the 90's, to now producing basically anything at any quality level, with some industries producing cutting edge tech, they have truely transformed from a communist backwater to a capitalist powerhouse.
But with this comes prosperity for the masses, a continual rise in the standard of living, and ever present, steady pressure on the cost of everything.
I have read and heard about manufacturers starting to leave China.
Cost the primary driver of moving world wide production to China is ever increasing.
With this in mind, manufacturers look for alternative jurisdictions.
Names like Thailand, Vietnam and India are beginning to be more prominent in the manufacturing space as cheaper alternatives to China.
Stable jurisdictions, however still lacking in infrastructure, skilled labour and reliable power.
But as time goes buy, and new industry brings prosperity and development,these shortcoming too will be overcome.
China too, not so long ago, lacked the same infrastructure and was a agriculture based economy, closed off to the west.
But back to the rare earth sector.
https://www.mining.com/web/shares-in-china-rare-earth-producers-rise-after-new-regulations/
This news is already starting to gain traction in China as their biggest player, a state owned conglomerate of rare earths, has seen a rise in its SP, up over 11% in 4 days.
Shares in China’s largest rare earth producers rose on Monday after Beijing announced regulations aimed at protecting supplies of the strategic minerals in the interest of national security, a move some in the market said could potentially tighten supply.
The regulations, issued on Saturday by China’s State Council, or cabinet, take effect from Oct. 1 and stipulate that rare earth resources – a group of 17 minerals used in products from magnets in electric vehicles to consumer electronics – belong to the state.
Shares in China Northern Rare Earth Group High-Tech, China Rare Earth Resources and Technology, Rising Nonferrous Metals Share and Shenghe Resources Holding jumped by 4.8%, 4.1%, 1.8% and 0.5%, respectively.
The regulations follow draft rules in early 2021, with changes including the removal of earlier language saying that companies engaged in rare earth smelting and separation could use imported supplies on top of allocated supply quotas.
“We believe there might be a further control over the smelting and separation of the imported ore,” Sinolink Securities wrote in a note.
China is the world’s dominant producer of rare earths and has taken various measures to tighten management of the industry even as Western countries try to reshape supply chains to ease dependence on Chinese supply.
The last sentence is significant for IXR, as we are on of the players, and possibly one of the most prominent incumbents in western Europe,
as we try to shape supply chains to ease dependance on Chinese supply
And China's justification....Their rhetoric is masked under the guise of reducing environmental harm, extending the life of their mines...of course...
Ge Honglin, chairman of the China Nonferrous Metals Industry Association, said the regulations would reduce industry demand for non-renewable resources, extend the life of mines, and reduce environmental harm.
Now I hope the west sees straight through this as clearly as we do.
A thinly vailed attempt to justify this latest hard line policy change.
Except now it's not holding back the export of some random product.
What is now state controlled, is critical for all the military complexes around the world and critical for most nations sovereign capability to arm and defend themselves.
Their usual tactic of plenty of supply for plenty cheap, just wont cut it in this space.
They have tried the cheap game here again, crashing the price of many commodities in the critical mineral space, many of which I have spoken about before.
But as their cost base has increased, many of their miners and refiners are living on state subsidies to survive...some have closed their doors.
So, I almost feel this latest policy change is an act of desperation, to close ranks in their rare earth players and fully control the supply chain.
Their manipulation of the downward pressure on the worlds supply of rare earths, while their costs have been rising has left them in a vulnerable position.
So if they can no longer control by price alone, what is left?
State control.
We offer the alternative.....
(20min delay)