China tightens regulation of rare earth industry

“Messy” is a term often used to describe China’s rare earth mining industry. It has earned this distinction because of the severe environmental degradation, illegal mining practices and smuggling that have become endemic to the industry.

While many countries around the world are eager to develop their rare earth mining industries, China just wants to clean up its act.

In the most recent bid to reduce the negative impact of China’s rare earth mining industry, authorities from a variety of mining-related companies and groups convened at a high-level meeting on Monday and Tuesday to discuss environmental protection, industrial consolidation and the regulation of rare earth mining and exports.

The meeting, authorized by the State Council, or China’s cabinet, urged more efforts to implement a guideline issued by the Cabinet last month to promote the healthy development of the rare earth mining industry.

The guideline, reported as the first of its kind in 11 years, is designed to enhance industrial consolidation, crack down on smuggling and illegal mining practices and set up a national strategic stockpile system for rare earth metals.
Environmental concerns are the main impetus for the creation of new rare earth mining regulations.

Rare earth metals are some of the most sought-after materials in modern manufacturing. Their unique magnetic and phosphorescent properties make them vital ingredients for producing sophisticated products like flat-screen monitors, electric car batteries, wind turbines, missiles and aerospace alloys.

However, mining the elements is environmentally hazardous. As the world’s largest rare earth metal supplier, China has suffered from serious environmental degradation.

Ceng Qingshou, an elderly rice farmer living in southwest China’s Guangxi Zhuang Autonomous Region, has already felt the wrath of a local rare earth quarry.

Waste water from the quarry, which opened last year, contaminated Ceng’s rice fields, resulting in a non-existent harvest last year.

“They paid me 2,400 yuan (about 369 U.S. dollars) to compensate me for my losses last year, but what about this year, and the year after that?” Ceng said.

On a hill near Ceng’s rice fields, trees were toppled to make room for the quarry. The hill now resembles the surface of the Moon, with ditches and vast holes in the ground where the trees once stood.

However, Ceng and his fellow farmers are comparatively lucky, as they at least have tap water to drink. In east China’s Jiangxi Province, where rare earth mining is a prominent industry, many villagers have to use pipes to bring in drinking water from neighboring villages, as rare earth mines have poisoned their wells.

Pollution has been a significant problem for the industry since China began mining rare earth metals decades ago. The problem has been exacerbated by lax environmental standards and rampant illegal mining, which have also served to lower prices for China’s rare earth exports.

China shocked the global rare earth market in the late 1990s, as feeble environmental regulations allowed rare earth mining companies to offer outrageously low prices, causing many producers outside of China to close up shop.

China, which is home to about one-third of the world’s rare earth reserves, now supplies more than 90 of the global demand for rare earth metals.

China’s Ministry of Environmental Protection announced tougher emission limits for rare earth mining and smelting in January in a bid to reduce the negative environmental impact of the country’s mines. Emission caps for 15 types of pollutants will take effect on October 1 this year.

A new resource tax on rare earth metals was also announced in April.

Smuggling is another aspect of China’s rare earth mining industry that is often mentioned in news reports. However, the real numbers and figures behind the phenomenon are rarely mentioned in these reports.

Some media reports state that smuggling siphons off about one-third of the total volume of rare earth metals leaving China each year.

The highest estimate comes from Wang Caifeng, a senior rare earth mining expert. He puts the ratio at more than half.

Analysts have said that smuggling is on the rise because of high returns for smugglers, as the Chinese government continues to tighten export regulations for rare earth metals.

Chinese customs have uncovered several illegal rare earth smuggling cases over the past few years. One major case involved a shipment of 4,196 metric tons of rare earth metals valued at 10.9 billion yuan.

Lin Donglu, secretary general of the Chinese Rare Earth Society, said that the total volume of rare earth metals smuggled by using false product names and remote declarations is probably “remarkable.”

Smugglers can use many tricks to bypass China’s export controls, including using false names, creating fictitious customs paperwork or by taking advantage of policy loopholes, said Chen Guiyuan, deputy director of the Hohhot customs bureau in north China’s Inner Mongolian Autonomous Region.

According to Chen, shipments of rare earth metals are marked by smugglers as being iron oxide, marble or other materials that are unidentifiable in appearance, allowing them to skirt export regulations.

Analysts said that China has strictly banned foreign companies from rare earth mining, but there are currently no restrictions on exporting alloys, which may contain rare earth metals.

To get past the government regulations, some foreign companies are investing in their own rare earth metal processing centers in China, aiming to obtain more of the metals at a cheaper price, Chen said.

The government has been working since 2006 to tighten exports of rare earth resources and announce annual export quotas. Last month, the government vowed to crack down on the smuggling of rare earth metals and impose quotas for exports of rare earth alloys.

In an email to Xinhua, the Ministry of Industry and Information Technology said that China’s rare earth campaign aims to protect the environment and ensure the sustainable utilization of the country’s resources.

“These policies are in line with common international practices and the rules of the World Trade Organization,” it said. “They have been created out of a sense of responsibility not only for China’s own development, but also the development of the world.”

Source: Xinhua

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