China has enacted a new regulation, effective October 1, asserting state ownership over its rare-earth materials required in semiconductor production, reports Nikkei. This move aims to secure national and industrial interests, though outside of China the move is considered to be leverage in the ongoing trade war with the U.S.
The new regulation prohibits any individual or organization from unlawfully accessing or damaging rare-earth resources. We could interpret the rule as basically an explicit declaration of state ownership of important rare earth metals, such as gallium and germanium. Notably, the statement of state ownership was not part of the initial draft but was included in the final version to emphasize control over these strategic materials.
Both gallium and germanium are crucial for high-tech industries, but while these metals are not exactly scarce, China has kept their prices low, making mining them elsewhere relatively unprofitable. China's restrictions have affected the prices of these metals, but this incentivized companies in other countries to start extracting them, which will eventually potentially diminish China's dominance in the market. For now, despite efforts to increase domestic production, the U.S. still depends on China for processing these materials, according to Nikkei.
By asserting state control, China aims to maintain its dominance in the rare-earth metals sector. The question is, will it work out?
