Recently, news about rare earth-related policy adjustments have frequently appeared in the financial sector.
Many people believe that as rare earths are industrial raw materials, the tightness of their control has nothing to do with ordinary people.
But in fact, rare earths have already penetrated into every aspect of life.
The state has tightened controls on rare earth exports to safeguard strategic resources, ensure the development of domestic high-end manufacturing, and maintain the security of the industrial chain.
However, the industrial chain is a whole, and changes in upstream raw material export rules will be transmitted layer by layer, ultimately affecting every ordinary person.
Rare earths are not a single metal, but a collective name for seventeen kinds of rare metals, divided into light rare earths and heavy rare earths. Heavy rare earths are called “industrial vitamins” and “materials needed for military industry.”
From mobile phone headsets and home appliance batteries to new energy vehicles, wind power generators, medical imaging equipment, and even national defense military equipment, production is inseparable from rare earths.
In the past, domestic rare earth mining, processing, and export thresholds were loose, and a large number of rare earth semi-finished products and finished products flowed overseas at low prices. Some overseas companies took this opportunity to develop high-end manufacturing industries and compete with related industries in my country.
Therefore, tightening export controls and optimizing resource allocation have become inevitable choices.
The changes brought about by the tightening of rare earth control are analyzed below from four dimensions.
1. Reshuffle of upstream rare earth processing companies
Control policies first impact rare earth mining, separation smelting, and primary processing plants.
The export qualification review threshold has been significantly increased. Some small and medium-sized processing plants have lost their export qualifications due to environmental protection, violation of regulations and other issues, and their order volume has dropped sharply or even stopped production. Large compliance companies have taken on more orders, and industry resources have been concentrated at the top.
At the same time, domestic sales prices of raw materials fluctuate in the short term, and factories will transfer costs downstream, but relevant departments will regulate prices to keep them within a controllable range.
In addition, foreign trade practitioners have been forced to adjust their business structures, traders who lack technical reserves have shrunk their business, and the industry’s business model has been restructured.
2. Rising costs in downstream manufacturing industries
Rare earths, as key additive materials, affect the selling price of end products.
The production cost of digital electronic products has increased, the pricing of new products has increased, and the price reduction of old models has narrowed; the cost of new energy vehicles and electric vehicles has increased indirectly, and the selling prices of complete vehicles and maintenance parts have increased; the prices of household appliances and medical equipment have been affected simultaneously, with the selling prices of new products rising and replacement cycles getting longer; the prices of wind power and photovoltaic supporting products have risen, equipment procurement costs have increased, and there is also weak upward pressure on residential electricity prices.
3. Changes in the job market structure
The upstream and downstream of the rare earth industry chain involves tens of millions of practitioners, and tighter control has brought about adjustments to the employment structure.
Jobs in small processing plants have been reduced, and job stability in leading companies has been improved; jobs in the foreign trade industry have been transformed, with compound talents becoming more popular; emerging industries have generated a large number of new job opportunities, and the gap in technical positions has expanded, and ordinary workers can learn new technologies and enter the emerging manufacturing industry.
4. Long-term benefits to people’s livelihood
Although the tightening of rare earth exports will cause some problems in the short term, in the long term, the policy has multiple benefits to people’s livelihood.
It can safeguard strategic resources and ensure the independent control of military and high-end industries; it can force industrial technology upgrades to improve the cost performance of future high-end products; it can reduce disordered mining and improve the ecological environment; it can increase resource income and feed back investment in infrastructure for people’s livelihood.
Ordinary people can respond smoothly to short-term market changes by rationally planning the replacement cycles of home appliances, digital devices, and new energy vehicles, while migrant workers proactively learn new technologies, rationally view market price fluctuations, and pay more attention to the development of domestic high-end manufacturing industries.
In short, the tightening of export controls on rare earths has a wide-ranging impact. It will be adjusted in the short term, but it will benefit the country and the people in the long term.
