Rare Earths – The Writing is on the Wall

China’s total reserves and production scale of rare earth ranks first in the world. The output of wolfram, indium and rare-earth in China accounted for more than 80 percent of the global output.

In Europe, U.S., Japan and ROK, the rare metals are also called “strategic metal” widely used in national defense. However, many countries began to import rare metals from China and other developing countries instead of mining in their countries.

In 1980s, China’s rare-earth industry was in a mess and no one pay attention to it, which resulting in oversupply, thus rare-earth prices have been artificially lowered. China’s rare earth industry is facing a non-profit dilemma. And foreign countries took their chance hoarding much of the market supply.

China’s rare-earth production has reached 96 percent of all global production and exports reached over 60 percent in 2005. However, the pricing right is not reserved for Chinese enterprises. Compared with 1998, China’s rare-earth exports have increased ten times, but the price has decreased by about 36 percent.

Energy experts warn that with the current mining rate, mining area in Baiyunebo, China’s Inner Mongolia will turn to non-rare-earth in the coming 30 years. Rare-earth resources in Jiangxi will be exhausted in the next 20 years and China’s world largest tungsten resources will also be exhausted in 14 years.

In recent years, China has realized the strategic importance of rare-earth. In 2005, crude rare earth ore was listed in the non-exportation catalogue. Foreign countries could only buy purified rare earth materials. And in the same year, export tax of rare earth substantially increased.

In April, Ministry of Land and Resources of China released a new standard of rare earth mining and cut down the output of rare earth; meanwhile, mining permits are still frozen.