China’s land and expand plan to source critical metals and materials globally

In 1953, China spelled out its 1st “Five-Year Plan”.  The strategy involved maximizing the nation’s control over exploration, production, and exports of natural resources. Based upon all available indicators, the country seems to have succeeded in “extending” that plan around the globe.
News out of China earlier this week confirmed this fact. Ecuadorean President Guillermo Lasso said that it would conclude trade negotiations with China later this year. From all indications, the new trade deal between China and Ecuador may include more exports of Ecuadorean minerals to China.
In the last 10 years or so, China has already “come to the aid” of Ecuador. China extended long-term credit running into millions of dollars for trade that’s tied-in with crude oil, minerals and other projects.
Ecuador does not stand alone in Latin America. China has arrangements with other countries to exploit natural resources such as iron ore, copper, nickel and rare earth elements (REE). Earlier this month, Xi announced a further “deepening of ties” between his country and Argentina. This came after Zijin Mining Group announced that it would invest US $380 million to build a lithium carbonate plant in Argentina. Incidentally, Argentina, Chile and Bolivia make up South America’s lithium triangle.
For those who need to track rare earth metals prices, the MetalMiner’s MMI report contains a rare earth index.
China and imports: accusations of weaponizing trade
In addition to its traditional trading partners like the US and Australia, China has extended its expansionist trade tentacles across another continent. In Africa, China’s aggressive mining policies have not gone unnoticed by the rest of the world. Afghanistan serves as another example.
For example, after Congo had emerged from civil war in the early 2000s, China had seized the opening to buy mines. From those early years in this relationship, the China-Congo alliance has come a long way. Beijing has its hands in copper and cobalt projects worth billions.
The way China has managed its foreign and trade policies from the 1950s underlines that its “expansionist” strategy drawn up in those early years still guides its actions.
Iron ore – the big score
Iron ore likely represents where the Chinese have scored the most as compared to other countries. Beijing largely depends on Australia and Brazil for the same. Ore imports from these two countries have accounted for about 80% of all imports since 2015. Of course, with diplomatic ties between China and Australia souring in recent years, it has dampened trade between the two. In 2022, analysts expect Australian ore imports to fall below the 60% mark.
To tackle the drop perhaps, China said on Feb. 7 that it aimed to step up mines’ iron ore production and use steel scrap to develop a more efficient, greener ferrous industry. According to the South China Morning Post, a joint statement with state planners and environmental regulators, the Ministry of Industry and Information Technology (MIIT) vowed to consolidate and restructure the steel industry. MetalMiner previously covered that topic in this month’s Raw Steels MMI report.
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China and Rare Earth policy
Of course, no report or analysis of China’s trade policies can avoid the country’s REE strategy. According to some estimates, the country mines over 70% of the world’s rare earths. In addition, China accounts for over 90% cent of rare earth refining and production. Rare earths remain essential inputs to various technologies, including defense systems and satellites.
The US also relies on China for at least 80% of its rare earths. That has long raised the hackles of the US administration and lawmakers. For years now, the US has worked to explore alternatives to reduce this reliance.
In the Democratic Republic of Congo, China already has access to the largest untapped reserves of cobalt. Of the 14 large cobalt mines, as many as eight have tie-ups with Chinese companies.
A few days ago, China’s Zijin Mining had announced that its first lithium exploration project launched in the Democratic Republic of the Congo (DRC) through Katamba Mining, a joint venture between Zijin and Congolaise d’Exploitation Minière (COMINIERE) of the DRC.
Elsewhere, in Australia, another Chinese firm recently acquired a 51% stake in the world’s largest lithium mine there.
According to another news report, in January of this year, another Chinese mining financier had bought equity in a junior mining company exploring cesium and lithium in northeastern Ontario, Canada. According to this report, Sinomine Rare Metals Resources would provide $3 million to Power Metals Corp. through a financing agreement to give the company a 5.7% interest in the Vancouver and Arizona-based junior miner.
In 2021, China, the largest producer in the world of primary and hollow aluminum, imported a record amount of the same for the second consecutive year. Imports of refined nickel and copper continue at the same speed. Refined nickel imports in 2021 doubled year-on-year. So have purchases of a wide range of nickel raw materials.
Strategic stockpiling
Furthermore, China continues to import metals and minerals to shore up its own reserves. This has raised accusations of “weaponizing trade” from other countries.
Once, former Australian prime minister Tony Abbott had said so in so many words. While calling for Britain and its allies to stop technology sales to China, he had called for the world to reorient essential supply chains away from China. An adviser to the UK Board of Trade, Abbott had said Beijing viewed trade as a strategic weapon that can be turned on and off.

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