Highlights
- Bayan Obo mine in Inner Mongolia controls nearly 40% of global rare earth reserves.
- This contributes to China’s critical mineral dominance.
- The mine’s operations result in severe environmental and public health consequences, including:
- Water contamination
- Biodiversity loss
- China’s tight state control over Bayan Obo represents a strategic geopolitical advantage in technological supply chains for advanced industries.
The Bayan Obo mine in Inner Mongolia stands as the world’s largest rare earth element (REE) production facility, controlling nearly 40% of global reserves and anchoring China’s dominance in critical minerals. Since beginning operations in 1957, Bayan Obo has fueled industries ranging from defense to renewable energy and electronics, with ore processed into oxides, chlorides, and carbonates at Baotou, China’s so-called “rare earth capital.”
Yet behind this industrial powerhouse lies a hidden toll: massive environmental degradation, contaminated water systems, soil pollution, biodiversity loss, and severe public health impacts, including respiratory illnesses and cancer among local populations. Despite financial offsets to affected communities, the social and ecological costs persist and worsen.
The Bayan Obo mine in Inner Mongolia is operated primarily by Baotou Steel Rare Earth Group (now known as China Northern Rare Earth Group High-Tech Co., Ltd.), which is state-owned. The parent company is Baogang Group (Baotou Iron and Steel Group) — one of China’s largest steel companies and itself a wholly state-owned enterprise. The operator is China Northern Rare Earth Group High-Tech Co., Ltd. — a publicly listed company but majority-owned and controlled by the Chinese government through Baogang Group.
Importantly, the Chinese central government, through SASAC (State-owned Assets Supervision and Administration Commission), ultimately exerts control. China Northern Rare Earth is the largest rare-earth producer by volume globally, and Bayan Obo is its flagship asset. Another giant is China Minmetals (opens in a new tab). Bayan Obo is technically a polymetallic mine (iron, niobium, and rare earth elements), but rare earth production is now strategically prioritized due to national security and industrial policy. Nearly all rare earth elements extracted at Bayan Obo are refined and processed domestically in China, particularly around Baotou, Inner Mongolia’s primary hub for rare earth processing.
The Bayan Obo mine and all its rare earth production activities are under Chinese state ownership and control, with the Baogang Group and China Northern Rare Earth Group directly involved. Private or foreign entities have zero operational role.
Largest Rare Earth Operation in the World
As REEx previously reported, China’s control over Bayan Obo and broader rare earth production poses strategic risks that extend far beyond trade wars—it determines the pace of global technological advancement itself. With rising demand for EVs, green technologies, and advanced weaponry, the world faces an urgent crossroads: invest now in cleaner, diversified rare earth mining—including efforts in the U.S., Australia, and Africa—or remain tethered to a supply chain built on environmental devastation and geopolitical vulnerability. The future of technology—and of global environmental health—depends on decisive action. A recent profile of the mine was published in EcoNews (opens in a new tab).
Note that the Bayan Obo mine in Inner Mongolia is operated by Baogang Group, again a state-owned enterprise. Baogang Group is the controlling shareholder of China Northern Rare Earth Group High-Tech Co., Ltd., holding approximately 37% of its shares. China Northern Rare Earth is a publicly listed company on the Shanghai Stock Exchange under the ticker 600111.SH. While Baogang Group maintains significant control, the remaining shares are held by various institutional and retail investors. This structure allows for some degree of public investment, but the state largely influences the strategic operations and decisions through the Baogang Group.
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