Rare earths industry targets illegal players

Fears over a global shortage of precious rare earths metals are mounting, as production in China slows amid a national crackdown on illegal miners.

This month 155 rare earths businesses, almost all on the mainland, launched a national industry association, after the United States, the European Union and Japan filed a complaint in March to the World Trade Organisation, accusing China of unfairly limiting its exports of rare earth elements.

The China Rare Earths Industry Association will assist in communicating with foreign companies in the event of trade disputes and help monitor the industry, which has seen rampant illegal mining and serious environmental damage, says its deputy secretary-general, Chen Zhanheng.

“The amount of illegally mined rare earths in the southern regions has been about twice the volume of mining officially permitted by the government in recent years,” he said.

Officials from Japan, the US, European Union and Canada failed to reach an agreement with China on the issue during talks held last week, Japan’s Asahi newspaper reported yesterday, without citing a source. It said Japan might sue China at the World Trade Organisation in late June, probably joined by the US and the EU.

The demand for rare earth metals is rising sharply due to their use in a range of advanced devices, from computer hard drives to television screens and smartphones. China first imposed limits on the mining of the commodity in 2007, and introduced a crackdown last year, but illegal operations continue to flourish.

In Ganzhou , Jiangxi province, a production base for rare earths, almost all legally registered miners had ceased production in the wake of Beijing’s campaign, said one employee at the Yourui Rare Earths Company in Ganzhou, who declined to be named. But with the metals lying in shallow deposits on mountain sides, fairly easy to access, the lure of quick money can be hard for some residents to refuse.

The China Economic Weekly reported that many illegal mines operated during public holidays, when supervision was looser.

Pan Juan , the wife of a local miner, told the weekly they mined at night at the top of a mountain, which her husband had bought two years ago for 400,000 yuan (HK$490,000) from local farmers, supposedly to grow fruits. The ores were then processed into oxides in a local factory, and smuggled to Japan.

“Work is usually from 7pm to 7am. Many people do it this way,” she said. They have to pay 300 yuan for one labourer for one night’s work, and a considerable sum in hush money to the nearly 100 households living near the mine, according to Pan. But as rare earths can sell for up to 400,000 yuan a tonne, huge profits can be made.

Excessive mining, however, raises ammonia and nitrogen levels in the soil, which can then spread to crop fields by rain. Many mountain tops in Ganzhou remain bare because of mining carried out years ago, according to the paper.

At a ceremony marking the establishment of the industry association on April 8, Su Bo, vice-minister of industry and information technology, pointed to the vexing economics of the business. While rare earths mining companies in Jiangxi could realise profits totalling 6.4 billion yuan, about 38 billion yuan was needed to treat environmental pollution in Ganzhou city alone. “As the proverb goes, the loss outweighs the gain,” Chen said.

One of the association’s tasks would be to collect information on illegal operators, so they could be exposed and punished, he said.

Despite the government restrictions on rare earths production in 2007, a business has yet to be punished for exceeding their quota.

The quota was lowered every year from 2007 to 2010, when it was set at 89,200 tonnes (it was slightly increased to 93,800 tonnes last year). Exports of rare earths from the mainland also fell, in line with production quotas. Some overseas observers say China is limiting exports in a bid to move from being the mere supplier of rare earth materials for high-tech devices to dominating the entire production chain.

Indeed, Chen said that one focus for the sector should be the development of consumer products like the iPad and BlackBerry

Mandy Zuo
South China Morning Post.

Categories: Mining & Energy

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4 replies

  1. Reblogged this on Craig Hill.



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