The rare earth industry in China is a large
industry that is important to Chinese internal
economics.
Rare earths are a group of elements on the
periodic table with similar properties.
Rare earth metals are used to manufacture
everything from electric or hybrid vehicles,
wind turbines, consumer electronics and other
clean energy technologies.
The elements are also important to national
governments because they are used in the defense
industry.
Twenty percent of rare earth demands are for
use as permanent magnets.
Permanent magnets can be used for a variety
of applications including serving as essential
components of weapons systems and high performance
aircraft.Rare earths are found in various
minerals such as monazite and bastnasite.
They are dispersed in low concentrations and
are costly to extract from ore.
Major reserves in the world exist in China,
California, India, Brazil, Australia, South
Africa, and Malaysia.
However, China accounts for over 95 percent
of the world’s production of rare earths.
Therefore, having control of these elements
puts China at a powerful position.
It is estimated the world has 99 million tonnes
of rare earth reserve deposits.
China's reserves are estimated to be 36 million
tonnes or roughly 30 percent of the world's
total reserves.
== History ==
In 1927, rare earths were discovered and small
scale production of concentrates started as
early as 1958, but the government did not
have interest in the large scale potential
of these elements until the 1980s and 90s.In
China, Xu Guangxian is regarded as the founding
father of China's rare earth industry.
A pioneer for rare earth research, Xu Guangxian
came back to Peking University in China after
graduating from Columbia University.
In 1980, he joined as a member of the Chinese
Academy of Sciences.
A few years later, Xu created the State Key
Laboratory of Rare Earth Materials Chemistry
and Applications for research on these elements.
Xu would go on to have powerful positions
in the scientific community such as a Director
in the National Natural Science Foundation
of China, Chairman of the Chinese Chemical
Society, and Vice Chairman in the Chinese
Society of Rare Earths.
Later in the 2000s, Xu was also influential
in telling the government to adopt export
quotas because he saw the potential rare earths
had in the technology sector and wanted to
keep these precious resources within China.Additionally,
in 1980, the Chinese Society of Rare Earths
was created and just five years later, they
established the China Rare Earth Information
Center (CREIC).Government support increased
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.
Another important program Program 973 was
created as a basic research program to utilise
science to advance the rare earth industry.
During this time, the government poured funding
into the resources and knowledge that were
essential to the establishment of the industry.
Another form of governmental support was its
encouragement to Chinese rare earth companies
to partner with rare earth industries from
other countries.
In 1979, Japan’s Inoue Japax Research worked
with China to do research regarding ore analysis,
ore dressing, and product application.
In 1989, Ke Ning Da Industry of Ningbo, China
partnered with US firm Tredas International
to make 40 tons of magnets.
The Chinese rare earth network later expanded
to include relationships with Canada and additional
countries from the West.
During these ventures, the Chinese government
provided more money for new facilities and
the industry also received new technologies
from their partners which catapulted China
to the forefront of rare earth production.
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.
This largely failed due to opposition from
powerful local authorities and local producers.
Fierce competition in the local sector produced
low profitability and inefficiency.
This drove producers to consolidate and merge
into larger companies for survival.
Market forces thus accomplished what central
planning could not.
As rare earth prices went up because of the
restriction of export, many illegal mines
were developed by organized criminals to benefit
from the trade.
The smuggling by organized criminal groups
is harmful to China's rare earth industry
as it depletes resources rapidly, deflates
prices and causes supply problems for local
producers.
It is estimated a third of exports or 20 000
tonnes in 2008 were illegally exported from
China.It is said China contains 36 percent
of the rare earth deposits in the world.Due
to Chinese export restrictions and heavy dependence
of foreign countries on Chinese sources, efforts
are ongoing to restart rare earth industries
in other countries and to pressure countries
with intensive industry, like Japan, to source
rare earths elsewhere.
Non-Chinese companies which will benefit from
increased demand are Lynas Corporation and
Alkane Resources of Australia.
The Mountain Pass mine in California which
has been closed since 2002 due to heavy competition
from China will be restarted by Molycorp.It
has been reported that Chinese authorities
will set up an industry group called The China
Rare Earth Industry Association to coordinate
pricing collectively with foreign buyers.
Wang Caifeng will be the chief of this industry
group, which is expected to be formally established
in May 2011.
== Research ==
China has two state research facilities which
provide specialized research into rare earth
elements.
They are the Rare Earth Materials Chemistry
and Applications state key laboratory, which
is associated with Peking University, and
the Rare Earth Resource Utilization state
key laboratory located in Changchun, Jilin
province.The Chinese rare earth industry also
has two journals which publish research in
rare earth minerals.
They are the Journal of Rare Earth and China
Rare Earth Information (CREI) Journal.
These journals are published by the Chinese
Society of Rare Earths established in 1980
by Chinese rare earth researchers.
== Controversy and Political Implications
==
From 2000 to 2009, China’s production of
rare earth elements increased 77 percent to
129,000 tons while production from other reserves
dropped to around 3000 tons.
Large US mining companies such as Molycorp
closed due to the mix of China’s abundance
of rare earths and their capacities for production,
the cost of labor, and stringent environmental
regulations during the Nixon era.
With the decreased pool of competitors, China’s
hold on these elements gave them a lot of
power in the distribution of these commodities.
The government declared these elements to
be a protected and strategic good in 1990.
This decision had a significant impact on
foreign industries who partnered with China.
Foreign investors could no longer work with
rare earths except when partnered with Chinese
firms.
The State Development and Planning Commission
gained power as all projects needed their
approval.
Production quotas were instigated for the
miners and oftentimes quotas would be surpassed
because of illegal mining by people who did
not have licenses.The Chinese government was
also able to use these rare earths as a means
of exerting power over other countries.
As production levels reached all time highs
and China declared rare earths to be protected,
the government imposed tight regulations on
exports.
Currently, the Ministry of Commerce is responsible
for setting quotas for domestic producers
and for foreign joint venture producers.
In 2015, a select 20 domestic producers could
export elements and the export quota was 35,000
tons total for both domestic and joint venture
producers.
These decreasing figures alarmed other countries
because they depend on China for their supply
of rare earths.
If China were to cut off the exports, the
results for the technology sector would be
disastrous.
This occurred temporarily in 2010 when the
Chinese had tensions with Japan due to a maritime
dispute.
They stopped all their exports to Japan and
also reduced their exports from 40 to 30 percent.
China demonstrated to the world that they
would use this tactic as a means of coercion
should need be.
In response, the US and Japan appealed to
the World Trade Organization to reduce their
practices that secured the monopoly on rare
earths and to stop pressuring other countries
to move their jobs to China.
The appeals did not induce a significant change
in the way the Chinese government controls
these elements today.
China’s rare earth industry is of significance
to the United States and the rest of the world
today because of the increasing demands for
tech products.
Tesla’s shift to a magnetic motor for its
Model 3 Long Range car will catapult sales
for neodymium.
Because of the export quota, prices for rare
earths are rising.
The current cost for 1 kilogram of neodymium
is 70 US dollars.
However, it is expected to increase as 3,300
of the 31,700 tons of global demands were
not met in 2017 and it is calculated that
the demand will increase to around 39,000
tons by 2019.
Therefore, countries are going to have to
find ways to reduce rare earth usage, mine
their own, or pay ever increasing prices.
In addition, political relations play a large
factor in the distribution of these commodities.
In 2018, US President Donald Trump proposed
tariffs on technology products imported from
China.
As a result, China immediately responded with
tariffs on US goods.
Were the Chinese to impose sanctions on these
elements just like what happened with Japan
in 2010, the US technology sector would be
greatly harmed.
US companies such as Apple and Boeing get
the materials and labor from China and a significant
part of their profits come from China’s
large market.
== Major players ==
The Chinese rare earth industry is dominated
by local state owned firms, private firms
and centrally owned state firms.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.
Other major players include the Aluminum Corporation
of China Limited and China Non-Ferrous Metal
Mining.
== Environmental Impact ==
The US stopped their mining operations in
part because of the immense pollution from
the practices to extract these rare earths.
However, as the main producer for the world,
China did not waver but rather increased their
production levels.
The major cities in which rare earths were
mined are Shandong, Inner Mongolia, Sichuan,
Jiangxi, Guangdong, Fujian, Hunan, and Guangxi.
This has caused lasting damage to the villages
surrounding the factories.
The sewage produced from the factories were
dumped into nearby ponds and rivers.
According to accounts from a resident of Bayan
Obo, a major production center, "Before the
factories were built, there were just fields
here as far as the eye can see.
In the place of this radioactive sludge, there
were watermelons, aubergines and tomatoes".
And during the 1980s, "Plants grew badly.
They would flower all right, but sometimes
there was no fruit or they were small or smelt
awful".
In the villages near Bayan Obo, many farmers
left because crops and livestock could not
survive and the remaining farmers were affected
with health problems.The reason why mining
rare earths is so detrimental is because of
the low concentrations of the elements in
the raw ores.
Therefore, factories must use various separation
and refinement techniques such as acid baths
and leaching which damage the environment.
The major pollutants were emissions of HF,
H2SO4, SO2, and NH3.
== See also ==
Advanced materials industry in China
Science and technology in China
Program 863
Rare Earths Trade Dispute
