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China to restrict strategic rare earths mining to only a few state companies
The Chinese government has proposed placing restrictions on the mining of rare earth minerals, ensuring strategic rare earth minerals will be exploited by only a few select state-owned enterprises.
The additional restrictions are aimed at making the industry focus on more valuable ion-absorbed type rare earths in the southern region of China, China Daily reported Wednesday, quoting "sources close to the matter."
China produces 97% of the world's supply of rare earth elements although it only accounts for 59.3% of global rare earth deposits. A six-month government crackdown on the illegal mining of REE in China begins this month.
The Ministry of Industry and Information Technology and the National Development and Reform Commission have sent their draft plan on cracking down on illegal exploitation and consolidating reserves to the State Council, China's highest legislative body, for approval. "Once approved, the Ministry of Land and Resources (MLR) will issue licenses and start allocating the resources to those companies," said an unidentified source quoted by China Daily.
"Private enterprises can only collaborate with the selected firms through shareholding," the source said.
China Minmetals and Aluminum Corporation of China are believed likely to control the major reserves of middle and heavy rare earths in Jiangxi Province, while Jiangxi Copper and China Nonferrous Metal Industry's Foreign Engineers & Construction Co. are likely to control the reserves, respectively, in Sichuan and Guangdong Provinces.
China Daily said analysts and industrial experts say that Inner Mongolia's Baotou Steel Rare-Earth High-Tech is likely to monopolize light rare earth elements deposits in that region. The company controls most of the REE in northern parts of China.
REE are becoming critical to such applications as magnets, lasers, computer monitors, fiber topic cables, cell phones, ceramics, stainless steel and a number of green technologies such as low-energy light bulbs, wind turbines and batteries for hybrid and electric cars.
Zhang Anwen, deputy secretary-general of the Chinese Society of Rare Earths said the minerals are "very much undervalued because of over-exploitation and improper management."
Zhang told the New York Times, "We want a higher price on rare earth minerals. ...Foreign buyers should more or less share our costs, including the high cost of reducing environmental pollution."
These rare earth elements also have extensive military uses in such things as missiles, navigation instruments, jet engines, smart weapons and other cutting-edge military technology.
In March, the Ministry of Land and Resources announced that REE production will be capped at 892,000 tons this year. The government has also stopped issuing new licenses for domestic exploration of rare earths until June 30, 2011.
In a May opinion piece published in the Wall Street Journal, James Bacchus, a former chairman of the World Trade Organization's Appellate Body and a trade negotiator, noted, "The Chinese stand accused by some trading partners of hoarding rare elements and other raw materials that are essential to many globally traded products."
Bacchus said "China is hardly the only country considering export restrictions as the race for natural resources heats up in the wake of the recession. The sharp increase in restraints is happening world-wide, and raises fundamental questions about the rules and resilency of the World Trade Organization."
However, China said it is not violating WTO rules and is aimed at legally protecting its natural resources.
"WTO rules stipulate that its members can take measures to protect their raw materials from being exhausted, and China's measures are in line with them," He Weiwen, managing director of the China Society of WTO Studies said.
