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The Rare Earths Industry in China

 

China is effectively the monopoly supplier of rare earth elements in the world today. It became the dominant supplier by producing and supplying rare earths in the 1990s and early 2000s at a price western producers could not compete. As a result China, in 2010, produced an estimated 95% of global rare earth element output, or approximately 118,900 tonnes.

 

Chinese demand for rare earths has also continued to rise with organic growth for current applications and new applications have been found for many of the elements and in 2010 was 60% of the global total, or 72,500 tonnes. This is expected to rise to 117,500 tonnes by 2014. At the same time, China’s supply of rare earths is expected to fall. The Ministry of Land and Resources has a 2011 mining quota of only 93,800 tonnes. Although actual output in 2011 is expected to be higher as a result of illegal mining, this is expected to continue to decline as a source of supply in future years as the Chinese government is actively taking steps to eradicate it.

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The Chinese government is actively trying to consolidate the rare earth industry into major mining groups to assert state control over the supply of rare earths which it views as a strategic asset. These groups will centre on the 3 main rare earth production areas in China:

 

  • BaoTou Hi-Tech representing the Inner Mongolia government is taking the lead in the BaoTou area which predominantly produces light rare earths
  • JiangXi Copper Corp is taking the lead in consolidation in the Sichuan area which produces mainly light rare earths
  • In the Ionic clay region in the south of China it is expected that consolidation will result in 3 producing groups, China Minmetals, Chinalco and China Mining. This is where most of China’s heavy rare earths will be produced

 

As a consequence of the rising demand and limited supply China has introduced export quotas which have limited the supply of rare earths to the rest of the world. The Chinese export quota has been reduced substantially since 2005, from 65,580 tonnes to 30,258 tonnes in 2010 as shown below. The quota for the first half of 2011 was further reduced to 14,446 tonnes representing a 35% drop from the quota for the first half of 2010.

 

 

Chinese Rare Earth Export Quota

 

>Chinese Rare Earth Export Quota

 

Rare Earth Industry in China Articles/links

 

June 04 2011: A Mining.com article on the reduction of the Chinese rare earth industry into a small number of key players. China tightens grip on rare earth supply as Baotou gobbles up 35 small miners;

 

May 26 2011: A Reuters article on the decision to start a rare earths exchange in China. This is a key part of China’s plan to centralise control of the rare earth industry. “The report called the decision a "breakthrough" in Chinese companies' efforts to establish a unified national exchange that will "regularise market flows of rare earths" and give them greater leverage over foreign buyers.” China companies get green light for rare earth exchange-report

 

May 23 2011: A Reuters article revealing the large drop in Chinese 2011 rare earth exports, despite an attempt by the Chinese to change the official metric. “China's exports of rare earths fell by more than half in April from a year previously, detailed Customs data showed on Monday, despite headline official data that indicated a rise of 46 percent.” China April rare earth exports down 53 pct y/y, values top $120,000/t

 

May 19 2011: A Reuters article reiterating China’s intention to stop illegal rare earth mining. “China will crack down on smuggling of rare earths and impose quotas for exports of rare earth alloy products as part of its campaign to reform the sector, vowing on Thursday to no longer turn a blind eye to "chaotic" export regulation.” China vows crackdown on rare earth smuggling

 

May 19 2011: A Xinhua News article on China’s plans to reorder the rare earth industry. “Specifics in Thursday's guideline also include efforts to implement greater order in rare earth exploration, smelting and extracting, and market distribution over the next one to two years.” China issues guideline to promote healthy development of rare earth industry

 

May 17 2011: A Digitimes article revealing the concern Taiwan has about access to rare earths critical for its high tech industry. Taiwan to cooperate with China to secure steady supply of rare earth materials

 

April 30 2011: An AFP article detailing the extensive damage caused by poor rare earth mining standards in China. "We are victims. The tailings dam has contaminated us," Wang, 60, told AFP at his home near Baotou city in Inner Mongolia, home to the world's largest deposits of rare earths, which are vital in making many high-tech products. China pays price for world's rare earths addiction

 

March 31 2011: A Reuters article detailing the 2011 rare earth output quota. China to cap 2011 rare earth output at 93,800 tonnes

 

March 10 2011: A Reuters article suggesting China may need external sources of rare earths by 2015. “China could become net rare earth importer by 2015 –Molycorp”

 

February 17 2011: A Xinhua News article on China’s efforts to reform the rare earth industry. China to streamline rare earth industry within five years

 

January 21 2011: An important presentation from Dr. Chen of the Chinese Society of Rare Earths at the Critical Metals Investment Summit detailing the urgent need for non-Chinese rare earth supply sources. China's Role in a Changing Global Rare Earth Market

 

October 16 2010: A Bloomberg article highlighting the limits of China heavy rare earth resources: “We cannot rule out the possibility that China may need to rely on imports sometime in the future for these minerals, instead of supplying the world,” Chao [Ning, section chief of foreign trade at the ministry said at a Beijing conference] said. China Rare Earths to Last 15-20 Years, May Import



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