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Rare earth industry in China

Rare earth industry in China is a huge and important industry domestically and elsewhere around the world which uses these metals to manufacture everything from electric or hybrid vehicles, wind turbines, consumer electronics and other clean energy technologies.[1] Rare earth minerals are a group of 17 elements[2] which are found dispersed in low concentrations and costly to extract.[3]

China's rare earth industry makes up 97 percent of rare mineral trade worldwide.[4][5] It is estimated the world has 99 million tonnes of rare earth reserve deposits.[6] China's reserves are estimated to be 36 million tonnes or roughly 30 percent of the world's total reserves.[6] Chinese government has confirmed export quotas for rare earth minerals will be 14,446 tons down from 16304 tons last year.[7]


China began dominating the rare earth trade two decades ago as it became more economical to produce locally and its lax environmental regulations.[8] China's rare earth production may be the largest in the world but this is made up by large number of producers who have small production output.[9]

China's start to the rare earth industry began in 1986 with the program known as Program 863 which calls for the advancing of the country through technological breakthrough and increase research to propel the country forward economically and strategically.[10] The other important program Program 973 created as a basic research program to utilise science to advance the rare earth industry.[10]

In 2002, China's central government pushed forward restructuring of the domestic rare earth industry by creating two state-owned groups China Northern Rare Earth Group Company and China Southern Rare Earth Group Company.[9] This largely failed due to opposition from powerful local authorities and local producers.[9] Fierce competition in the local sector produced low profitability and inefficiency. This drove producers to consolidate and merge into larger companies for survival.[9] Market forces thus accomplished what central planning could not.

In China, Xu Guangxian is regarded as the founding father of China's rare earth industry. He helped spearheaded China's strategic scientific development into rare earth in the early nineties which lead China to become a rare earth powerhouse.[10] Xu was the chair of Natural Science Foundation of China and former chief of the Chinese Academy of Science. He is also former president of the Chinese Chemical Society.[10]

As rare earth prices goes up because of the restriction of export, many illegal mines were developed by organized criminals to benefit from the trade.[11] The smuggling by organized criminal groups is harmful to China's rare earth industry as it depletes resources rapidly, deflate prices and cause supply problems for local producers.[12] It is estimated a third of exports or 20 000 tonnes in 2008 were illegally exported from China.[12]

It is said China contains 36 percent of the rare earth deposits in the world.[13]

Due to Chinese restrictions and heavy dependence by foreign companies in other countries, there is work going on to restart rare earth mines in other countries and pressure high manufacturing economies like Japan to look elsewhere to source their rare earth demands.[14] Non-Chinese companies which will benefit from increased demand are Lynas Corporation and Alkane Resources of Australia.[14] The Mountain Pass mine in California which has been closed since 2002 due to heavy competition from China will be restarted by Molycorp.[15]

It has been reported Chinese authorities will set up an industry group called The China Rare Earth Industry Association to coordinate pricing collectively with foreign buyers.[16][17] Wang Caifeng will be the chief of the industry grouping which is expected to be formally established in May 2011.[16][18]


China has two state research facilities which provide specialist research into rare earth elements.[19] They are the Rare Earth Materials Chemistry and Applications state key laboratory, which is associated with Peking University.[19] The other laboratory is the Rare Earth Resource Utilization state key laboratory located in Changchun, Jilin province.[19]

Chinese rare earth industry also have two journals which published research in rare earth minerals.[19] They are the Journal of Rare Earth and China Rare Earth Information (CREI) Journal.[19] These journals are published by the Chinese Society of Rare Earths established in 1980 by Chinese rare earth researchers.[19]

Major players

Chinese rare earth industry is dominated by local state owned firms, private firms and centrally owned state firms.[20]

In northern China, rare earth industry is dominated by the Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Company. In southern China, China Minmetals Corporation is the dominant player in the region.[20] Other major players include the Aluminum Corporation of China Limited and China Non-Ferrous Metal Mining.[20]

See also


  1. "China may not issue new 2011 rare earths export quota: report". Reuters. 31 December 2010. 
  3. "Rare-Earth Elements (REE)". 
  4. People's Daily Online (January 7, 2011). "New standards for rare earth sector". 
  5. "Germany urges China review rare metals policy". 8 January 2011. 
  6. 6.0 6.1 Anil Das (January 7, 2011). "2011 spells desperate search for rare earth minerals". International Business Times. 
  7. Bill Smith (30 December 2010). "China defends cuts in rare earth exports". ABI/INFORM Dateline. McClatchy - Tribune Business News. 2224953931. 
  8. William J. Broad (November 8, 2010). "Mining the Seafloor for Rare-Earth Minerals". New York Times. 
  9. 9.0 9.1 9.2 9.3 "Rare-Earth Elements (REE) Industry". 
  10. 10.0 10.1 10.2 10.3 Cindy Hurst (March 2010). "China’s Rare Earth Elements Industry: What Can the West Learn?" (PDF). Institute for the Analysis of Global Security (IAGS). 
  11. Keith Bradsher (December 29, 2010). "In China, Illegal Rare Earth Mines Face Crackdown". New York Times. 
  12. 12.0 12.1 "Smuggling key factor in China's rare earth actions". Royal Society of Chemistry. 29 October 2010. 
  13. Suzanne Goldenberg (26 December 2010). "Rare earth metals mine is key to US control over hi-tech future: Approval secured to restart operations, which could be crucial in challenging China's stranglehold on the market". London: 
  14. 14.0 14.1 Nicolas Perpitch (December 31, 2010). "Western Australia sees bonanza in Chinese move". The Australian. 
  15. Suzanne Goldenberg (January 1, 2011). "US digs deep to secure the technology of the future". 
  16. 16.0 16.1 "China setting up rare earth industry group". December 29, 2010. 
  17. Luo (2010-12-28). "China to Set up Rare Earth Industry Group". 
  18. Agence France-Presse (Dec 28, 2010). "China Setting Up Rare Earth Industry Group". 
  19. 19.0 19.1 19.2 19.3 19.4 19.5 Cindy A. Hurst. "China's Ace in the Hole: Rare Earth Elements". National Defense University Press. 
  20. 20.0 20.1 20.2 "China to cut 90 rare earth firms into 20". September 9, 2010. 

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