China sets up rare earth body to shake up industry

BEIJING Tue Apr 10, 2012 7:33am EDT

Labourers work at a site of a rare earth metals mine at Nancheng county, Jiangxi province March 14, 2012. REUTERS/Stringer

Labourers work at a site of a rare earth metals mine at Nancheng county, Jiangxi province March 14, 2012.

Credit: Reuters/Stringer

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BEIJING (Reuters) - China on Sunday set up a rare earth industry association, state media reported, in a move to speed up consolidation of its sprawling industry that has drawn fire for what overseas trade partners call unfair export quotas.

The association, with 155 members across the country, will report to the Ministry of Industry and Information Technology, which regulates rare earth production, the official Xinhua news agency said.

Baotou Steel Rare Earth in Inner Mongolia, Rising Nonferrous in Guangdong and China Minmetals are among 13 heavyweight members, Xinhua said.

Su Bo, an industry vice minister, said Beijing wanted to shake up the industry by phasing out small smelters, giving big players a greater stake in the supply of rare earth metals and boosting environmental protection.

"China will continue to clean up the rare earth industry, expand rare earth environmental controls, strengthen environmental checks, and implement stricter rare earth environmental policies," Su said.

Xinhua said the long-awaited body would promote international exchanges and help Chinese companies to handle trade disputes. China's rare earth export quota is managed by China's Ministry of Commerce.

The European Union, the United States and Japan complained to the World Trade Organization last month that China is illegally choking off exports of rare earths to hold down prices for its domestic manufacturers and pressure international firms to move operations to China.

China accounts for about 97 percent of world output of the 17 rare earth metals crucial for the defense, electronics and renewable-energy industries and used in a range of products such as the iPhone, disk drives and wind turbines.

Beijing has said its export curbs are necessary to control environmental problems caused by rare earth mining and to preserve supplies of an exhaustible natural resource.

(Reporting by Zhou Xin and Michael Martina; Editing by Ron Popeski)

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Comments (3)
This is a serious problem to be facing right now. This could drive up the costs or limit the supply of cell phones, computers, glass products, etc. China’s environmental issues are well known and real, however, the US and other countries stopped mining rare earth elements because prices for the elements had been pushed down due to China’s output and we could not compete. Now the US and other countries are trying to gear up to begin mining rare earths again because China has adopted this policy. This will take time. It will be interesting to see what, if anything, can be done by the WTO.

Apr 11, 2012 1:00pm EDT  --  Report as abuse
Janeallen wrote:
I saw a documentary on rare earth mining on PBS a while ago,
about the environmental devastation it caused, including deforestation.

That was a while before the export quota, and not long after some devastating floods had occurred. The documentary insinuated that
the mining was causing real hardship for many ordinary, poor chinese rural people to lose their ancestral homes, and then later suffer environmental disasters that the Government had not anticipated.

Whole villages were washed away, allegedly, or at least in part due to the deforestration related to mining. And the rare earths were so cheap that it couldn’t pay for fair compensation for the local poor people.

The story was much more heart wrenching than the Apple workers’ long hours and low pay story. (Our doctors-in-training work longer hours than the Apple workers in training, and got about the same in compensation per hour.)

What alarmed me was this — I had seriously considered buying a Prius(this was long before the recall and acceleration controversial). The most important reason was that Prius was about the only,(except the Insight) eco-friendly car that had good reveiws then. (This is long before the American car companies entered into the competition.)
I was glad that I didn’t buy a Prius because it’s really a hoax to lure customer based on the eco-friendliness claim. Even though it did save gas, using rare earths instead of gas, was merely trading one terrible environmental harm for a range of others.

So when I first heard that China was restricting the exports, I was pleased from the humanitarian viewpoint. The market competitiveness is another issue, but China supposedly only owns 1/3 of the world’s reserve. So I’m sure the rest of the world will open up their mines again– that’s what they should have done in the first place, and never closed those mines. No reasonable person can expect exploitation of the cheap prices to continue, once the environmental effects of mining rare earths become known a couple of years back.

What the scientists should also do, is to hasten to find cleaner technology, and truly environmental friendly ways to mine and produce rare earths all over the world, or to recycle them. We go through so many generations of cell phones and computers so quickly.

When are folks going to face the reality that those “cool gadgets” aren’t so environmental friendly after all? Besides, stiff fingers and wrists, who knows what other bad side effects will surface in the future in the lifetime of these kids that start using these gadgets so young!

Apr 11, 2012 4:31pm EDT  --  Report as abuse
I can’t believe Canada and other countries haven’t got their mines up and running already. The trend of producing cheap products, initially not so high in quality, that outcompete others, then improve quality and price is almost a predictable model for new industries. All sorts of liability and cleanup kick in. And countries hurry up to set up new environmental laws to catch up with the industries, so the first batch of corporations usually get away with a lot, and cheaply, before all the environmental laws kick in. We heard lots of worries and complaints about Japanese companies doing that back in the 1970s, when their reputation wasn’t so good, and their products were considered cheap skates compared to American and German products. Now Japanese products seem to have peaked in their quality and price. Sony is not keeping up with Apple’s i-phones. Toyota’s reputation is tarnished about the mysterious accelerations and plenty of recalls.

This is business. Shrewd business people should have seen the scarcity coming, and started on re-opening the mines with better technology of mining and processing rare earths. Those few with the foresight are doing well. Some Canadian mines are already operating. They are the ultimate winners, capitalizing on the market, and never had to sell cheap to get their business off ground.

Apr 11, 2012 4:43pm EDT  --  Report as abuse
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