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Situation and Policies of China's Rare Earth Industry

http://www.globaltimes.cn/content/716161.shtml

China contributes more than 90 percent of global output of the 17 rare earth metals, but its own deposits only account for 36.4 percent of the world's total reserve of 100 million tons. File photo: IC 

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China on Wednesday pledged to more strictly regulate its rare earth industry, saying its regulations are aimed at protecting the environment and are in line with WTO rules.

As the world's largest producer of rare earth metals, China will continue to intensify regulations for the sector while supplying the global market in line with WTO rules, according to a government white paper issued Wednesday.

The country will implement stricter environmental standards and protective exploitation policies for the rare earth industry, said the white paper, published by the Information Office of the State Council, or China's cabinet.

The government will continue to enforce regulations on the mining, production and export of rare earth metals, improve relevant laws and regulations and crack down on all violations, it said.

The white paper, the first of its kind in China, came three months after the European Union, United States and Japan challenged China's restrictions on rare earth exports through the WTO.

Speaking at a press conference Wednesday, officials defended China's curbs on production and exports as being in line with WTO rules and a necessary move to protect the environment from being further damaged by reckless exploitation.

China has given equal treatment to both domestic and foreign firms in the rare earth industry and has allowed the market to decide prices, Gao Yunhu, chief of the Rare Earth Office under the Ministry of Industry and Information Technology (MIIT), told reporters.

Despite export controls, China has met global market demand, he said, noting that the country set an export quota of 30,200 tonnes for rare earth products in 2011, while actual exports totaled just 18,600 tonnes.

"We're willing to cooperate with the parties involved to solve the dispute as soon as possible," Gao said. "At the same time, we will actively use WTO rules to defend China's legitimate rights and interests."

As a rule, the WTO allows members to take necessary measures to protect their resources and environment. The organization allows export restraints if they are accompanied by simultaneous restrictions over domestic production or consumption.

China supplies more than 90 percent of the world's demand for rare earth metals, although its reserves account for just 23 percent of the world's total.

Rare earths, a group of 17 metals, are vital for the manufacture of high-tech products ranging from smart phones and wind turbines to electric car batteries. The process of extracting the metals from the earth is extremely harmful to the environment.

To control environmental damage and protect the non-renewable resources, China has implemented multiple policies, including production caps, export quotas, stricter emission standards and higher resource taxes.

However, these policies have sparked complaints from major consumers like Japan, which purchased 56 percent of China's rare earth exports in 2011.

Some countries have complained that China's regulations have led to price increases for rare earth metals on the global market, triggering concerns that the country is trying to use the resources as a political bargaining chip.

The Chinese government has never interfered with the market prices of rare earth metals, said Su Bo, vice minister of industry and information technology, at the press conference.

Rare earth price rises are a "completely rational response" that reflect the real value of the resources, which were previously undervalued and sold "as cheaply as cabbages and carrots," Su argued.

The difference between lower domestic rare earth prices and higher international prices was probably caused by quality diversity and China's customs policies, he explained.

The MIIT is supporting Chinese firms in setting up a national rare earth trading platform to let market competition play a bigger role in pricing, he added.

"China opposes politicizing the rare earth issue and has never used the industry as a tool for political or economic gain," Su said.

The country will continue to supply the global market with rare earth metals while maintaining regulatory policies that fall in line with WTO rules, he noted.

The imposition of export quotas and tougher regulations for the sector are aimed at protecting the environment and public health, Su stressed.

China has "paid a heavy price" for the development of its rare earth industry, which has been plagued by excessive exploitation, environmental damage, underrated prices and rampant smuggling, according to the white paper.

Rare earth reserves have continued to decline in major mining areas, while excessive mining has resulted in pollution-related disasters and even major natural disasters in some places, it said.

 

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