China Tightens Grip on Rare Metals, Sweeps Up Even North Korean Tungsten

Rare-metal imports jump 60% in January-May

Beijing tightens export curbs while securing supplies from friendly nations

Strategy targets control of key raw-material supply chains for advanced industries

China is tightening its grip on the global rare-metals market and increasingly using those materials as a strategic weapon. Beijing is strengthening export controls on domestically produced metals while boosting imports of raw materials from North Korea and Myanmar, in a push to deepen its control over critical mineral supply chains. Major economies including Japan, which remain heavily dependent on China, face mounting pressure to diversify procurement.

Nikkei reported on June 27, citing China’s General Administration of Customs, that imports of 22 rare-metal-related items Beijing placed under export restrictions in February last year rose 60% from a year earlier to 350,000 tons in the first five months of this year. Imports in March alone exceeded 90,000 tons, the highest level in seven years and two months.

China added tungsten-, tellurium-, bismuth-, molybdenum- and indium-related items to its export-control list in February last year as trade tensions with the US intensified. Rare metals are essential materials for semiconductors, electric vehicles, aerospace and advanced manufacturing, giving them high strategic value in global supply chains.

Although China is already a major producer of rare metals, it has recently accelerated efforts to secure raw materials from abroad while managing domestic supply. Imports of molybdenum and tungsten ore rose 59% from a year earlier to 55,400 tons in January-May. Procurement increased notably from countries with close ties to China, including Myanmar, Uzbekistan and Kazakhstan.

China’s move to dominate supply chains is also affecting international prices. Shanghai Metals Market, a Chinese data provider, said ammonium paratungstate traded in Europe at about $3,000 per MTU, equivalent to 10 kilograms, at the end of May. That was nearly triple the level at the start of the year.

By contrast, prices in China have fallen by more than half since their March peak. Japanese manufacturers of tungsten carbide cutting tools are wary that if exports of low-priced Chinese tools keep expanding, dependence on China could deepen not only for raw materials but also for processed goods.

China is also moving to secure recycled feedstock by recovering tungsten from used tools and other scrap. Ryan McAdams, chief executive officer of US tungsten scrap company Amerin, said China is buying US tungsten scrap and seeking supplies across the global supply chain.

North Korea is also benefiting from China’s strategy to secure rare metals. China’s imports of North Korean tungsten ore reached $87.5 million in the first five months of this year, up tenfold from a year earlier.

Many tungsten mines on the Korean Peninsula were developed during Japan’s colonial period. After UN sanctions blocked North Korean exports of coal and iron ore, tungsten emerged as a major source of foreign currency because it was not subject to sanctions. Tungsten ore is now North Korea’s biggest export to China by value, overtaking wigs, a former mainstay export product.

China is stepping up efforts to use rare-metal supply chains as leverage in the competition for leadership in advanced industries. The US, Japan and other Western countries are under growing pressure to move more quickly to build supply chains that reduce reliance on China.

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Choi Man-su, Tokyo correspondent, bebop@hankyung.com