Competitors contained? Manufacturer strategies in the global rare earth value chain: Insights from the magnet filament

Abstract

This paper connects the extractive industry of rare earth mining and processing with the global automotive industry in which magnets with rare earth content are key components. In the context of the hardly uncontested market leadership in rare earth mining by China, the strategies of second-tier European rare-earth magnet manufacturers warrant examination: they compete with their third-tier Chinese suppliers and aim for a favourable position with first-tier suppliers to automotive end-users. We use the governance typologies of the global value-chain framework to elucidate how European magnet manufacturers strategize and employ the ‘ability to codify’ variable. Codification significantly determines how global value chains are governed and who gains from access to and use of mined and processed rare earths: Our findings pinpoint the strategic use of information flows and knowledge by manufacturers to their competitive advantage in the magnet filament towards the automotive industry. Therefore we propose a focus on ‘intention to codify’ in exploring deliberately managed information flows for global economic restructuring processes. Such focus will provide a more holistic understanding of the global rare earth value chain and its many filaments.