China accelerates state-led overseas mining acquisitions to secure critical mineral supplies
China is rolling out a state-coordinated global mining strategy
to replace firm-level decision-making, said Dan Wang, China director at Eurasia, adding that the model allows for larger, better-aligned global mining investments.
China is mobilizing state-linked companies to take bigger ownership stakes in overseas mines, seeking to strengthen its control over metals vital for electric vehicles, semiconductors, and jet engines. The state-led push could give Beijing greater control over global supplies of critical minerals and who gets access to them, analysts say.
Centralized bureaucracy steers overseas mining deals
To supervise foreign investments by central state-owned enterprises, a specialized overseas bureau was established in April. Several government agencies, ministries, and policy banks were mobilized to steer overseas mining deals.
In July, a new mining investment vehicle was established to orchestrate foreign transactions, providing guidance to Chinese enterprises regarding compliance, risk management, and market dynamics amidst mounting geopolitical friction and foreign regulatory barriers. This centralization could curb disorderly competition among Chinese firms and strengthen their hand against Western competitors and newer entrants like Saudi Arabia and India, according to Eurasia’s Dan Wang. However, longer review and approval processes could also raise corruption risks and weigh on investment returns.
Surging mineral acquisitions drive outbound investment
Chinese mineral acquisitions abroad reached $8.8 billion in the first three quarters of the year, representing the highest annual total since at least 2018, according to a Rhodium Group report released Wednesday.
Acquisitions have mostly been concentrated in minerals that China lacks domestically,
said Armand Meyer, senior research analyst at Rhodium, pointing to lithium, nickel, and cobalt investments during the electric-vehicle boom in the mid-2010s, alongside gold acquisitions in recent years.
Outbound investment in upstream critical minerals will roughly double from the 2021-2025 period as Beijing pushes to secure access and reserves it lacks at home, according to Eurasia projections. Beijing treats a 70% import dependence level as an implicit red line, which places copper, lithium, cobalt, nickel, bauxite, and iron ore under hard national security constraints. Even for gold, which sits within the 50% safe range, the government seeks additional access to high-grade resources to build ultimate geopolitical strength, overriding standard investment risk and profitability metrics.
China dominates rare earth refining and controls supply chains
The push faces growing resistance as resource-rich countries demand more local processing. China dominates this refining stage and has turned it into a key supply-chain chokepoint.
Countries traditionally shipped rare earths to China for processing because refining carries high environmental costs. Data from the International Energy Agency indicates that approximately 92% of the world’s refined rare earths are presently supplied by China.
If a rival builds a new refinery, China can produce more, oversupply the market and push prices below economic levels,
said Brad Handler, director of the Energy Finance Lab at the Payne Institute.
China curbed exports of seven medium and heavy rare earths last year, requiring exporters to obtain licenses. Japan faced severe supply pinches, coming within months of running out of yttrium, an element used for screen displays and semiconductors. According to Chinese customs figures, September shipments of yttrium oxide from China to Japan fell to 4,000 kilograms from the 51,000 kilograms recorded during the same month in the prior year. Outside China, the oxide’s price surged to about $1,150 a kilogram — roughly 179 times its level two years earlier — compared with about $9 a kilogram inside the country.
Chinese companies have adapted by ramping up greenfield investments and establishing processing capacity near mines abroad, such as building smelting and refining capacity in Indonesia following that country’s ban on nickel ore exports.