Will China's 'Green' Plan Affect REE Market?
Source: Michael Montgomery, Resource Investing News (7/26/10)
"Moving even small amount of production to renewables may pay out big."
China just passed the U.S. as the world top energy consumer. This hasn't been the biggest concern for the Chinese, however; as the population grows wealthier and its drive for resources grows, the pollution problem can no longer be overlooked.
The mining and energy sectors of the Chinese economy have been able to produce under very little regulations, making Beijing one of the most polluted cities in the world. The runoff from mining operations, from coal to rare earths, has destroyed the water table. "Almost 1/4 of China's surface water remains so polluted that it is unfit even for industrial use, while less than 1/2 of total supplies are drinkable," reported Reuters David Stanway.
For REE mining, China is considering consolidating the various miners into four–five conglomerates. "Beijing wants to consolidate the industry and lower energy waste and environmental damage. Ironically, the REE mining business is one of the most energy-wasteful and highly polluting industries around.
By lowering REE export quotas 72%, China is hoping to encourage investment and production of wind and solar power. If this plays out, China will be in the driver seat for a green energy sector set to explode.
Of course, risk is involved with green technology, especially considering Western countries face massive debt issues, and the relative cost of oil and coal are far cheaper than renewable energy currently.
If governments do begin to move even a small percentage of energy production to these renewable sources—and China is producing all the technology behind it—it may pay out big."