The neglected change and dilemma in China’s rare earths policy

Most of the media reportings on this topic assume China’s policy is to control the metal market based on a long term plan. They could be wrong. There is a dilemma in China’s policy on the industry that is overlooked.
In contrast with its export control, China was worrying about the decline of rare earths metals trade in 2009, according to a report on the website of Ministry of Industry of Information Technology:  China's export of rare earths metals dropped significantly during the first 11 months of 2008 (2008年前11个月我国稀土金属出口明显下降)
The volumne of rare earths metals export dropped 56.1% year-on-year, and that of rare earths alloys went down by 75.5 %. “The trend is that the export is dropping even faster,” it says.
It then analyzed the reasons for the decline.
First, the government has started to impose more control on rare earths trade since 2008. It reduced quota and raised taxes for the export of these minerals.
Second, demands for rare earths dropped as industries such as magnetic materials, computer and toys slow down.
Third, supply surpasses demand. Prices and profitabilities of companies therefore drop.
There are a couple of interesting points here.
First, nobody mentions China’s rare earths import, but it looks to be an important part of the overall policy. The report says it start to control imports of rare earths products since 2008 by listing them into a catalogue on processing imported materials.
Second, it mentioned domestic demand, which is a factor behind its export too.
For instance, the article says:
“For a long time, domestic rare earths enterprises have strong motivation for expanding capacity, but domestic consumption increase is flat due to limits in technology. ”
“As domestic rare earths output keep increasing, exports and foreign consumption drops, but domestic demand is unable to expand rapidly and efficiently, therefore prices of rare earth drop significantly. ”
“The drop of export prices make the profitability of some rare earth enterprises decline sharply,” it says in the end.
Only two years later, the senerio looks totally different. It does not always like this. It won’t always look this either.

Lynas and Molycorp

 Lynas and Molycorp, both claim they have the world's largest rare earth deposit outside China, are busy.
Lynas is defending itself after NYT reported on the environment concerns of its refinery in Malaysia. It told AP the effects of exposing to the radioactive elements is less than that of using a cellphone. The NYT story said locals connects a rare earth refineries before with birth defects and leukemia. AP: Malaysia monitors Aussie rare earth plant
Molycorp released its quarterly report. Its loss narrowed, sales soared nearly ten fold, the company said in a statement. It also said China might become a net rare earths importer in four years in a statement. Business Week: Molycorp Says China May Be Net Rare-Earths Importer by 2015
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From a mine to an iPhone

There is a long way to go between finding a rare earths deposit and using it in iPhone. For instance, the rare earths reserve of Lynas lies in Mount Weld on the desert of western Australia. They have to be shipped to Fremantle, a port on the west coast of Australia first, then travel through the India Ocean to Kuantan in northern Malyasia, where they will be processed and refined.

Right now 2,500 construction workers are working on the project, which will be the first rare earth ore processing plant outside China in nearly three decades. Lynas is spending $230 million on it, according to the New York Times.

Cost is the main reason for the 2,500 miles trip of the ores, which are radioactive. The construction and operation cost in Australia would be four times as much as it is in Malaysia, the report cited Nicholas Curtis, Lyna’s executive chairman, as saying.

The NYT also ran a story on another rare earth refinery: the one Bukit Merah of Malaysia, operated by the Mitusubishi Chemical, is now one of Asia’s largest radioactive waste cleanup sites.

Link for the NYT story is: Taking a Risk for Rare Earths

View rare earths in Asia in a larger map

China’s Five-year plan for the rare earths industry

 I sum based on Xinhua report:

Problems now:

1. illegal mining; production capacity expland too rapidly; 2. damage to environment and waste of resources; 3. high-end development and research lag behind; 4. disorder in export

Solutions: 

1.    improve technology in exploration, distill, and application2.    “Insist” on : environment protection and energy saving; control total output and optimize reserves; coordinate national and international market and resources

Goal: a rare earths industry with resonable exploration, orderly production and advanced technology in five years

How:

1.    more regulation on total output, export quota, environment standards

2.    legal moves against illegal mining and damage to environment

3.    coordinate the industry, merger and acquisition

4.    research and develop technology

The original report is here: 温家宝主持国务院常务会：五年形成稀土业持续健康发展格局

Commerce minister: China and Japan develop rare earths together

China would like to work with Japan to research on rare earth alternatives, said Chen Deming, the commerce minister, at a press conference in Beijing.

Rear earths resources under earth are very limited, and they will soon be used up under current rate of exploration, he said. “We have to look for recycling methods and alternative resources. We would like to work together with other countries,” Chen said.

China has decided to restrict both the exports and domestic use of rare earth due to environmental concerns, he said.

Chen said the rare earths resources in the country is mainly in the least developed regions. Its technology in exploring and processing rare earth is not advanced enough, leading to bad impact to the environment.

Chen said he lived in Jiangxi, a province with rich rare earths reserves, for more than 10 years, and he noticed the damage to the environment himself. “Large area of land cannot be recovered after rare earths exploration, and that influenced the ecology greatly,” he said.

The transcribe of the press conference is here: 陈德铭两会http://www.gov.cn/2011lh/zhibo/20110307a.htm

a month without rare earth

experienced:

村上春树：《海边的卡夫卡》
王小波：《我的精神家园》
沈从文：《从文自传》
鲁迅：《彷徨》《呐喊》《故事新编》
林语堂： 《苏东坡传》
吴敬梓：《儒林外史》（favourite）
刘义庆：《世说新语》
Yukio Mishima: Spring Snow, Runaway Horses, The Temple of Dawn, The Decay of Angel

Wolfgang Mozart: Magic Flute
Franz Schubert:  Piano Sonata in C minor, D958; Piano Sonata in A, D959; and Piano Sonata in B flat, D960

Some data on rare earth trade between China and Japan

Japan imported 4,080 tons of rare earth from China in December, up from 634 tons in Novemver, according to the Japanese Ministry of Finance.

That accounts to 86 percent of China’s total export in the month, which stands at 4,738 tons.

In total, Japan imported 23,310 tons of rare earth in China in 2010, or 82 percent of its total import volume, which is 28,564 tons.

It also means about 60 percent of China’s exports of the minerals go to Japan in 2010, which is 39, 813 tons in total, according to data from China Customs Statistics Information.