China Stands Firm on Rare Earth Policy
China possesses about 36 percent of the world's rare earth reserve, but it has been accounting for more than 90 percent of the world's rare earth supply for a very long time. This kind of unbalanced trade pattern is extremely irrational, and has to be changed.
On March 13, China received negotiation requests put forward by the USA, EU, and Japan on the export management measures of rare earth, wolfram, and molybdenum under the WTO's dispute-settlement system. As a matter of fact, the developed world has been somewhat discontent about China's rare earth export quotas system since it was implemented in 2008. This time, the purpose of the joint efforts of the USA, EU and Japan is to force the Chinese government to lift the restrictions on rare earth export. However, this action against China's rare earth export trade is apparently unfounded.
"In terms of accelerating the reform of the development pattern of the economy, it's important for the sound development of China's rare earth industry to exploit and make use of rare earth resource in a more scientific and rational manner and to increase the added value of the industry", said Zhang Weichen, an expert of the Chinese Academy of Land and Resources Economics.
Restriction policy pointing to environmental issues
Waste solid, water, and gas produced during the development of rare earth elements cause great damage to the environment. The cost to repair the damage is extremely high.
Mining of rare earth resource in China has kept intensifying for a very long time. Currently, it is operating at a drastic overload, which has paid a huge price in the environment.
"Predatory mining of rare resource may be able to boost production rapidly within short term, but it would result in rapid decrease of reserve volume and severe threats to the eco environment of the mineral area", said Zhang Weichen.
Currently, China's rare earth reserve is shrinking at an alarming speed. Meanwhile, waste solid, water, and gas produced in the process of the mining and production of rare earth and the development of rare earth elements cause huge damage to the environment. The treatment cost of repairing such damage is extremely high. According to experts' estimate, eco restoration on lands that have been damaged due to mining of rare earth and other minerals in south Jiangxi would require an estimate of more than RMB 38 billion Yuan.
For the aim of protecting the environment and resources, China has carried out a series of management measures in the rare earth industry in recent years. Since 2008, China has been implementing a stricter export quotas management system on the export of rare earth.
Extensive development overdrawing rare earth resource
Rare earth is an important strategic resource that affects national interest; quicker effort should be made to control rare earth at the source
Since 1990s, China's excessive mining of rare earth had caused the price of rare earth on the international market to stay at a rather low level for a very long time.
Liu Shuchen, a researcher in the Information Center of the Ministry of Land and Resources, said that for more than a decade, the price of rare earth has been going downwards, a sharp contrast to the climbing price of resource products such as iron ore and coal. In 2009, the export price of China's rare earth was only about 60 percent of the price in the 1990s.
"The essential cause of the extremely low price of rare earth lies in the excessively extensive development pattern of the rare earth industry in China. The expansion of the industry's scale comes at the cost of the excessive consumption of resources and the environment. Some developed countries have even shut down their rare earth mines and imported directly from China", said Liu Shuchen.
This kind of arduous development pattern puts China's rare earth industry on the brink of overdraft. From 2001 to 2009, Chinese enterprises exported a rather stable average of 60,000 tons of rare earth to the world annually. However, from 2002 to 2007, the relative scarcity index of China's rare earth resource dropped from 1.158 swiftly to 0.486, with the level of scarcity increasing year by year.
Xu Guangxian, an academician of the Chinese Academy of Science, points out that there used to be a reserve of 1.5 million tons of medium-heavy rare earth in the five provinces in South China; however, there is only 600,000 tons left now. "At this pace, the rare earth there will be exhausted in 10 years".
According to incomplete statistics, there are currently 70 enterprises engaging in mining of rare earth in China, and more than 100 that are engaged in rare earth refining and elution. Due to the extensive development pattern and rather chaotic production administration, excessive and disordered rare earth mining can be found everywhere.
"If we don't reform the production pattern soon, the safety of China's rare earth resource will face severe challenge", said Liu Shuchen, who suggests that rare earth is an important strategic resource that affects national interest, and we should make quicker efforts to control rare earth resource at its source, and optimize industrial development pattern through scientific planning and resource integration.
Sharing responsibility to promote market balance
If the other 70 percent of the world's rare earth reserve is tapped, it can completely compensate the production gap caused by the industrial rectification in China
According to rare earth exploration data, America, Russia, and Australia possess 13 percent, 19 percent, and 5.4 percent of the world's rare earth reserve respectively. However, due to environmental pressure, rare earth production in these three countries in 2009 was zero.
According to Zhang Weichen, if the other 70 percent of the world's rare earth reserve is tapped, it can completely compensate the production gap caused by the industrial rectification in China, and global rare earth supply will remain stable.
"We cannot follow the path of predatory mining in the rare earth industry any longer, nor can we continue to sell rare earth into domestic and foreign markets at unreasonably low price", said Zhang Weichen, who points out that the aim of China's promulgation of rare earth resource regulation and control policy is to protect the environment and promote the sustainable development of the industry.
Therefore, it's imperative that we attach more importance to solving such problems as low resource utilization rate, excessive waste and mining, and vicious competitions among exporters.
He suggests that China should accelerate the construction and improvement of the development coordination mechanism in the rare earth industry, implement overall planning of the country's rare earth reserve, unify management, carry out strict control and regulation, mine at limited scale, and implement combined efforts in the administration of the country's rare earth resource; meanwhile, we should also accelerate law making and put the protection of rare earth resource onto legal level. Besides, we should levy high resource tax on rare earth mining enterprises, in order to fund the treatment of environment pollution caused by resources exploitation and ensure the sustainable development of economy, resource, and the environment.