Thread by @brief_pk

China’s Stranglehold on Pakistan’s Rare Earth Ambitions

1/18 China has executed a masterclass in economic leverage. Following Pakistan’s September 8th memorandum of understanding with US Strategic Metals, a $500 million arrangement to develop critical minerals in Balochistan, Beijing implemented sweeping export controls specifically targeting overseas rare earth producers utilizing Chinese extraction technologies and equipment.

2/18 The timing proved interesting, days after Pakistan shipped its initial rare earth consignment to the United States, China’s Commerce Ministry unveiled regulations requiring foreign entities to obtain Chinese government licenses before exporting products derived from Chinese mining, processing, or separation equipment.

3/18 Pakistan faces a major technical barrier. The country’s rare earth processing infrastructure, installed through the $60 billion China Pakistan Economic Corridor, relies entirely on Chinese supplied refineries and extraction systems. The separation technologies represent the genuine value proposition, as 90 percent of the world’s 250 rare earth minerals exist in mixed form.

4/18 Beijing’s new framework mirrors America’s Foreign Direct Product Rule, mandating Chinese approval for any exports containing trace amounts (defined as 0.1 percent or greater) of Chinese origin rare earth materials, or manufactured using Chinese technologies across mining, processing, or magnet production.

5/18 Chinese industry analysts characterize rare earth extraction and purification as analogous to picking black beans from a bowl of sesame, a process requiring specialized expertise Pakistan cannot replicate domestically. Even substantial American capital investment cannot compensate for the absence of Chinese processing capabilities necessary to achieve military grade specifications.

6/18 China’s dominance across the supply chain remains absolute that is 70 percent of global rare earth mining, 90 percent of separation and processing operations, and 93 percent of permanent magnet manufacturing. This vertical integration transformed what appeared to be Pakistan’s sovereign mineral wealth into assets effectively controlled by Beijing.

7/18 The CPEC framework, celebrated as transformative infrastructure development, established comprehensive dependencies. Chinese metallurgical corporations operate Pakistan’s Saindak Copper Gold Mine and maintain substantial involvement in the Reko Diq project, two cornerstone assets in Balochistan’s mineral sector. Every extraction tool, every processing facility, every separation technology bears Chinese provenance.

8/18 Pakistan’s estimated five million metric tons of rare earth reserves, valued at several trillion dollars, have become a focal point in Sino American strategic competition. Chinese commentators note these minerals could sustain American defense contractors’ production of F 35 fighter jets and nuclear submarines. Yet Islamabad cannot monetize these resources without Beijing’s concurrence.

9/18 The geopolitical calculations have shifted dramatically. Chinese media, which traditionally characterized Pakistan as China’s iron brother, now publish pointed reminders that Pakistan must remember who its true brother is and exercise caution regarding actions that might compromise China’s core strategic interests.

10/18 Pakistan’s predicament extends beyond diplomatic discomfort. The nation possesses substantial mineral deposits yet lacks the autonomous capability to refine them to internationally tradable standards. Chinese equipment suppliers like Zhengzhou Tiei Extraction Technology and Baotou Shibo Rare Earth Extraction and Equipment represent the technological gatekeepers to Pakistan’s mineral sector.

11/18 The security environment further complicates these challenges. Balochistan, home to Pakistan’s most significant mineral wealth, experiences persistent insurgent activity. The Balochistan Liberation Army characterizes CPEC projects as exploitative ventures draining regional resources without benefiting local populations. Mining operations proceed under constant threat.

12/18 The American alternative remains aspirational rather than operational. The Department of Defense invested $400 million in MP Materials during July 2025, establishing the government as the company’s largest shareholder. However, MP Materials projects production of merely 1,000 tons of neodymium iron boron magnets by year’s end, less than one percent of China’s 138,000 ton annual output.

13/18 Washington established a mine to magnet supply chain completion target of 2027, yet even optimistic projections acknowledge years of continued vulnerability to Chinese supply decisions. The United States committed over $439 million since 2020 toward domestic capabilities, but temporal realities favor Beijing’s established infrastructure.

14/18 Pakistan’s strategic miscalculation where it attempted to leverage its mineral endowment as a negotiating asset between competing superpowers, failing to recognize that Chinese infrastructure investments had already subordinated those resources to Beijing’s regulatory authority. The minerals exist within Pakistani territory, yet their commercial viability depends entirely on Chinese authorization.

15/18 This episode highlights Belt and Road’s strategic architecture. China’s Commerce Ministry characterization of these measures as efforts to better safeguard world peace and regional stability masks their function as economic coercion instruments. Beijing constructed dependencies through infrastructure provision, then activated those dependencies when partners’ actions diverged from Chinese preferences.

16/18 The implications extend beyond rare earths into comprehensive industrial dependency. When processing infrastructure, extraction equipment, and separation technologies all originate from a single source, recipient nations discover their sovereignty over natural resources proves theoretical rather than practical. Pakistan can mine its rare earths indefinitely. It simply cannot refine or export them without Chinese consent.

17/18 China invested fifteen years and over $60 billion establishing this leverage architecture. The recent export controls merely formalized constraints that existed structurally since CPEC’s inception. Pakistan now confronts the reality that its proclaimed strategic partnership with China operates under profoundly asymmetric terms, where Beijing retains unilateral authority to determine whether Pakistani minerals reach international markets.

18/18 China demonstrated that modern resource control requires neither military occupation nor explicit sanctions. Patient infrastructure investment coupled with technological monopolies suffices. Pakistan’s rare earth ambitions, regardless of geological endowment or American commercial interest, remain subordinate to Chinese regulatory prerogative.