A 21st Century Scramble: South Africa, China and the Rare Earth Metals Industry

The document analyses the global rare earth elements (REE) industry, which is dominated by China with a 97% share of upstream production. It examines how China uses export restrictions and production quotas to leverage its monopoly, aiming to induce foreign downstream producers to relocate to China for technology transfer. The paper highlights the strategic importance of REEs for 'green' technology and military applications, and assesses South Africa's potential to re-enter the market through the Steenkampskraal and Zandkopsdrift projects. It also discusses global reactions, including Japan's efforts to reduce REE reliance and the emergence of junior mining companies seeking non-Chinese sources.

• China maintains a near-monopoly on the rare earth elements (REE) industry, controlling 97% of global mining and dominating most stages of the supply chain, including 97% of separation and approximately 100% of refining.
• China's strategy involves using export restrictions and production quotas to create a twin-track pricing system, which encourages foreign downstream manufacturers to relocate their production to China to access cheaper materials and facilitate technology transfer.
• Rare earth elements are critical for high-performance magnets used in 'green' technologies, such as electric vehicles and wind turbines, as well as high-technology military equipment like missile guidance systems and submarine engines.
• The US Department of Energy identifies five 'critical' rare earths based on their importance for clean energy and supply risk: dysprosium, yttrium, terbium, europium, and neodymium.
• South Africa is developing two globally significant REE projects: Steenkampskraal, a refurbished monazite mine with a high material grade of critical REEs, and Zandkopsdrift, a larger carbonite deposit with significant projected output.
• The Steenkampskraal project is notable for its 'mine-to-market' strategy, aiming to establish a fully integrated supply chain outside China, and its joint venture with China's Ganzhou Qiandong Rare Earth (GQRE) group to build a separation plant.
• The Zandkopsdrift project has a strategic partnership with the Korean parastatal Korea Resources Corporation (Kores), which is expected to acquire a 10% stake in Frontier Rare Earths and a 20% share in the mine.
• REE extraction and separation pose significant environmental and health risks, including the generation of acidic waste water and radioactive tailings, specifically from thorium.
• Japan is actively attempting to reduce its reliance on Chinese REEs through a $1.3 billion spending package focused on increasing efficiency, recycling, and finding substitute materials.
• A 'mini-bubble' of investment in junior mining companies (largely Canadian and Australian) occurred between 2009 and 2011 as investors sought non-Chinese REE sources, though many of these projects are unlikely to become operational mines.

APA

Jepson, N. (2012). A 21st Century Scramble: South Africa, China and the Rare Earth Metals Industry. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2012/03/Occasional-Paper-113.pdf

Chicago

Jepson, Nicholas. A 21st Century Scramble: South Africa, China and the Rare Earth Metals Industry. South African Institute of International Affairs, 2012. https://saiia.org.za/wp-content/uploads/2012/03/Occasional-Paper-113.pdf.

Wikipedia

{{cite report |last1=Jepson |first1=Nicholas |title=A 21st Century Scramble: South Africa, China and the Rare Earth Metals Industry |publisher=South African Institute of International Affairs |date=March 2012 |url=https://saiia.org.za/wp-content/uploads/2012/03/Occasional-Paper-113.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jepson201221st, author = {Jepson, Nicholas}, title = {{A 21st Century Scramble: South Africa, China and the Rare Earth Metals Industry}}, institution = {South African Institute of International Affairs}, year = {2012}, month = mar, url = {https://saiia.org.za/wp-content/uploads/2012/03/Occasional-Paper-113.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }