Chinese Gov't White Paper Pledges International REE Cooperation


"In the first white paper of its kind published on rare earths, China's Central Government pledges to follow WTO rules, strengthen the industry's management, and supply rare earths globally."

China's Central Government Cabinet Wednesday published the first white paper of its kind on the country's rare earth industry, pledging to improve relevant laws and regulations, as well as cooperate internationally on rare earth exports and the development of new rare earth technologies.

In the paper, "Situation and Policies of China's Rare Earth Industry," the government targets "a unified, standardized and highly efficient administration system" for the industry and a "healthy development pattern featuring rational mining, orderly production, efficient utilization, advanced technology and intensive development."

The paper is divided into five sections including: I. Current Situation of China's Rare Earth Industry; II. Principles and Targets of Development; III. Effectively Protecting and Rationally Utilizing Rare Earth Resources; IV. Better Coordination of Rare Earth Utilization with Environmental Protection; V. Promoting Technological Advancement and Industrial Upgrading; and VI. Promoting Fair Trade and International Cooperation.

Current Situation of China's Rare Earth Industry

China says "a complete industrial system has been achieved" with the development of three major rare earth production areas, i.e. the light rare earth production areas in Baotou of Inner Mongolia and Liangshan of Sichuan, and the middle and heavy rare earth production areas in the five southern provinces centering around Ganzhou of Jiangxi Province.

"China can produce over 400 varieties of rare earth products in more than 1,000 specifications," the paper said. In 2011, China produced 96,900 tons of rare earth smelting products, accounting for 90% of global output. The nation holds 23% of the world's total rare earth reserves.

China said it has established a "relatively compete R&D system, pioneered numerous technologies of international advanced levels in rare earth mining and dressing, smelting, separating, etc. . ."

Despite its rapid development, the paper observes that the "China rare earth industry also faced many problems, for which China has paid a big price. Among these problems are:

  • Excessive exploitation of rare earth resources. "The decline of rare earth resources in major mining areas is accelerating, as most of the original resources are depleted."
  • Severe damage to the ecological environment. Outdated processes and techniques have severely damaged surface vegetation, caused soil erosion, pollution and acidification and reduced or even eliminated food crop output.
  • Irrational industrial structure. "China's rare earth industry has huge over-capacity in smelting and separating." Low-end products overflow while high-end products are in short supply.
  • Severe divergence between price and value.
  • Grave smuggling. "Due to multiple factors, including domestic and international demand, the smuggling of rare earth products to overseas markets continues to be a problem in spite of the efforts made by China's customs listing it as a key criminal act to crack down on."

Principles and Targets of Development

The state will implement stricter environmental standards and protective exploitation polices concerning rare earth resources.

China intends to actively push technological innovation, strictly control the mining, smelting and separating capacities, and phase out outdated capacity.

The state has pledged to "encourage international exchanges and cooperation."

Effectively Protecting and Rationally Utilizing Rare Earth Resources

The adjusted new tax rate for light rare earths is 60 Yuan (US$9.43) per ton, and for middle and heavy rare earths, 30 Yuan (US$4.72) per ton.

China has established a strategic reserve system and formulated "a special plan for key rare earth mining areas. China has tightened control on mining rights and enforced a system of mining rights allocation plans."

"In principle, the state has put a moratorium on accepting new registration applications for rare earth prospecting and mining, and prohibits existing mines from expanding their production capacities." The Chinese government has ordered 13 mines and 76 smelting and separation enterprises to cease production to help reverse the trend of illegal mining and production of rare earths.

The government encourages the development of special processes, technologies and equipment for the collection, processing, separation and refining of rare earth wastes.

Better Coordination of Rare Earth Utilization with Environment Protection

"In recent years, the state has enforced the environmental impact assessment system to the letter," said the paper. "An analysis, prediction and assessment report of the environmental impact that may be caused by a rare earth construction, expansion or renovation project must be submitted in advance, along with countermeasures to prevent and mitigate the impact."

China has a pollution discharge license system and implements the Discharge Standards of Pollutants for the Rare Earth Industry. The state has adopted a system of "compulsory elimination of obsolete processes and equipment, and prohibits the use of tank and heap leaching methods for ion-absorption rare earths and the mining of monazite deposits only."

"Governments at all levels will appropriate funds to address ecological damage and pollution caused by tailings and slag, which have been formed over a long period of time," said the white paper.

Promoting Technological Advancement and Industrial Upgrading

"The state strives to create a favorable policy environment for expediting the technological advancement and upgrading of the rare earth industry, overcoming resource and environmental bottlenecks and providing technological support for the sustainable development of the rare earth industry."

China has built and improved tailings facilities, as well as transformed existing production lines of rare earth smelting and separation by using advanced equipment and technologies, such as separation without ammonia, and fuzzy simultaneous extraction technology to reduce the consumption of chemicals and discharges of waste gas, waste water and waste residues.

"The Chinese government. . .will not approve any new rare earth smelting and separation projects except for those state-sanctioned projects of merger and reorganization and for optimum distribution," the white paper stressed.

The state intends to "encourage the growth of high-tech rare earth application industries with high added value, and encourage the application of rare earth materials in the fields of information, new energy, energy conservation, environmental protection and health care."

Promoting Fair Trade and International Cooperation

"Opening up is a basic national policy of China," the government stressed." China will continue its efforts in promoting fair trade and international exchanges and cooperation in this field."

The Chinese government said it has "reiterated on more than one occasion that China will continue its rare earth supply to the international market."

"China opposes politicizing the rare earth issue, and is willing to strengthen dialogue and cooperation with other rare earth producers and consumers in a constructive and responsible manner, to work together with them in preventing excessive speculation in the rare earth market and solving the resource and environmental problems in development of the industry," the government stressed.

"It also hopes that countries and regions with abundant rare earth reserves will make active efforts in developing their own resources to diversify the supply and expand rare earth trade in the international market, shouldering together the responsibility of global rare earth supply in order to meet the needs of the sustainable development of the world economy," the paper advised.

Companies in the U.S., Germany, France, Canada and Japan have invested a total of 6.1 billion Yuan (US$959 million) in China's rare earth industry, establishing 38 sole-proprietorship and joint venture enterprises, said the Chinese government.

China also asserted that it has actively participated in a number of international rare earth exchanges and engaged in extensive dialogues with the US, the EU, Russia and Japan concerning rare earths.

Dorothy Kosich

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