Spotlight on American Rare Earths, page-2779

China has thus been able to establish its dominance in CRMs thanks to a long-term strategy that was initially based on rare earths. However, this strategy is not enough to understand clearly China’s dominance today. To understand the context, we need to go back to the 1980s and 1990s, when Beijing realised that it was lagging behind Western countries. In 1986, Deng Xiaoping launched the “863” public technological and industrial development programme, which aimed to provide the country with the technological capacity to catch up industrially in areas of strategic importance for economic development and security. In the early 1990s, however, Chinese companies still lacked the technological and industrial know-how required for industrial upgrading of key components, which was held by American, European and Japanese companies. What’s more, the first Gulf War made the Chinese authorities aware that they were lagging behind the USA in military terms. It was therefore decided to take over foreign companies so that China could catch up technologically.

Beijing was particularly interested in the dual technology of permanent magnets. These played a decisive role in the civilian wind turbine and electric vehicle industries, as well as in the defence. One technological turning point was the 2015 Chinese takeover of Magnequench, a subsidiary of General Motors. This takeover was controversial because of the strategic importance of Magnequench, which supplied 85% of the magnets for the US military’s homing missiles. What’s more, the Sextant investment fund that bought Magnequench was actually co-owned by two Chinese groups, each with a minority stake, but which together held the majority (62%). These two companies – San Huan New Material and The China National Non-Ferrous Metals Import and Export Corporation – were both headed by sons-in-law of Deng Xiaoping. In 2002, all of Magnequench’s assets were moved to Tianjin, China, and the company was renamed Neo Performance Materials. With this takeover, Beijing could acquire the patents for the production of neodymium permanent magnets, which had previously been the exclusive domain of the US and Japan. Thanks to the transfer of technology following the acquisition of Magnequench and the availability of CRMs on its territory, China now accounts for 80% of the world’s production of neodymium magnets, which are not only at the heart of the new economy but also indispensable to the defense industry. As a result, the Chinese army could benefit from the development of long-range cruise missiles. According to the European Union’s 2023 report on CRMs, China is the sole global supplier of dysprosium (100%), neodynium (100%) and yttrium (100%). - QUOTE


A good and cautionary read.... https://moderndiplomacy.eu/2023/08/03/china-and-critical-raw-materials-a-strategy-of-domination/