Chinese state funding in mineral exploration on the rise: FT

China is boosting state support for domestic mineral exploration in an effort to secure dominance in the resource sector amid rising competition from Western rivals, the Financial Times reported on Thursday.

According to FT’s analysis of government publications, at least half of the 34 provincial governments have given additional subsidies or expanded access to mineral exploration companies over the past year. These include top resource-producing regions such as Xinjiang, which increased its spending on exploration to 650 million renminbi ($90 million) this year from 150 million ($21 million) in 2023.

Since 2022, the nation as whole has devoted $13.8 billion to geological exploration annually — the highest investment over a three-year period in a decade, FT estimates.

A director at China’s natural resources ministry told reporters recently that “a series of major breakthroughs in mineral exploration have been achieved,” which would significantly enhance the nation’s ability to “ensure the safety of important industrial chains and supply chains.”

In January, the China Geological Survey (CGS) confirmed that Chinese geologists have found what could be the largest medium and heavy rare earths deposit in the country, containing over 1 million tonnes in resources.

In the same month, the CGS also announced the discovery of a 2,800-km belt in Western China that it says could “reshape the distribution pattern of lithium resources” and more importantly, has elevated China as the second-largest holder of lithium resources in the world.

Tightening grip

The heightened focus on minerals stems from President Xi Jinping’s repeated emphasis on self-reliance in science and high technology, which requires China to tighten its control over key raw materials used across a variety of applications.

Currently, China is the world’s largest producer of 30 of the 44 minerals deemed as “critical” by the US government for their indispensable roles in the manufacturing of semiconductors, electric vehicles and weapons.

To the US and other Western powers, China’s dominance in the critical minerals supply chain gives it the geopolitical leverage in global trade relations. Amid escalating trade tensions over the past year, China has already curbed its exports of many strategic minerals including gallium, germanium, antimony, graphite and tungsten.

Xi’s government has also enacted policies aimed at protecting its wealth of strategic resources, including a move in 2021 to block foreign companies from investing in the mining of tungsten, rare earths and uranium.

China has also been looking to exert its control over minerals beyond its borders.

Earlier this year, FT reported that the Chinese government, through state-backed entities, has issued $57 billion in loans to support the mining and processing of copper, cobalt, nickel, lithium and rare earths across the developing world.