Finshots Daily An explainer on Pax Silica
Feb 11, 2026
A deep dive into how China built a chokehold on critical minerals and the historic breakthroughs that enabled its rise. A look at the US-led Pax Silica plan to forge allied supply chains for silicon, chips and AI infrastructure. Discussion of India’s strategic role, investments by cloud giants, and the environmental and industrial hurdles facing alternative producers.
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China’s Early Rare Earth Breakthrough
- In 1964 Chinese geologists discovered the world's largest rare earth deposit near Batao and the state treated the find as strategic for defense and advanced materials.
- A cheap, scalable purification method by Xiu Xiuangxian and state-led five-year plans let China rapidly build refineries and scale rare earth separation.
Tech Transfer Via A Business Sale
- General Motors' Magnet Quench developed powerful magnets and later sold the business to investors that included Chinese-linked firms to secure Shanghai production approval.
- That sale transferred critical magnet technology and manufacturing capability to Chinese companies who then scaled it domestically.
Price Warfare Built Refining Dominance
- China overproduced critical minerals, drove global prices down and forced Western projects to become uneconomic, shrinking competitors' capacity.
- This cycle let China tighten supply later and regain pricing power across rare earths, graphite, lithium and cobalt refining.