China restrices RE export to protect resources

中國限制稀土出口保護資源

China abounds in rare earth(RE)resources，and ranks first in the world both in RE output and export.But in the past 30 years，oil price soared by 30-40 times，and RE price only soared 20%.As RE is widely used in advanced technology and weaponry， Chinese，Government's policy for RE industry has always the focus of concern of Western countries.

The US Bloomberg recetly reported that the US trade officials shall file a complaint with the World Trade Organization (WTO)，accusing CHina of stocking up RE，and of controlling RE export.The government Accountability Office of the US states in an April report that China controls 97%of the world's RE production， and thus has the “narket dominant power” of holding the US under duress.

RE expert Cordier with the US Geological Survey used to say that since China began to sell RE in quantities at cheap prices，most of the countries in the world have suspended RE mining.Statistics of the US Geological Survey also show that calculating based on current demand，China's RE resources can sustain for 30 years'consumption.

Only 30 year.In the 1960s，only Baiyun'ebo in Inner Mongolia accounted for over 80%of the world's total industrial reserve of RE.Today，China's share of the world's RE industrial reserve has dwindled to about 40%.

At the beginning of this year，China has published a series of measures to strengthen RE protection，restrict export，control and cut the mining and production of fireclay， and fluorite， strctly control new mining capacities，and increase resources tax rate.The Ministry of Land and Resources(MOLR)in principle no longer accepts applications for new mine prospecting and mining;and the national Development and Reform Commission(NDRC)and the Ministry of Industry and Information Technology(MIIT)are in charge of promulgating annual output plans，setting this year's target output at 80，000 tons.Meanwhile， they have promulgated new industrial access standards:no more approval of new RE mining right in the next six years.By 2015，China's annual RE export will be controlled within 35，000 tons，and export of dysprosium，terbium，thulium，and yttrium will be strictly prohibited.Government and enterprises should reorganize RE resources，and first supply to and meet the domestic demand.In the meantime，they should strive to retain deep processing and high value added downstream process within China.

In fact， China used to restrict RE output in 2006，when CAS academician Xu Guangxian joined hands with tens of academicians to write to the poliy makers，requiring protection of RE that were running off at cheap prices.Their letter has quickly obtained an official and written reply，and MOLR took the charge of implementing the output control plan，restricting the annual RE output at 80，000 tons.Under the anticipation for output control in China， RE prices began to pick up in 2006，with the highest price in 2006 three times that in 2005.Accompanying the output control plan， the Chinese Government also made efforts in restricting export and industrial rectiflcation.

However， despite the State output control plan，enterprises and local governments did not fully observe the RE protection policy driven by profit.Meanwhile，as RE industrial management involves Molr， NDRC，MIIT， MOC and all centrally administered enterprises，local government at various levels， private enterprises，and even mine owners that are mining lilegally，the inter-relationship is completed，and it is difficult to coordinate the benefits.Therefore，this round of RE protection campaign proved a failure.In 2009，China's RE output rebounded to about 150，000 tons， far exceeding the marked demand of 100，000 tons.Foreign-invested entrprises have one after another launched factories in RE producing areas including Inner Mongolia，to purchase raw materials for simple processing and then export them，in detour of the export quota restrictions imposed by the Chinese Goverment.In 2009，there were still 90%of the RE supply on the world's market coming from China，and RE prices fell to the low levels in 2007.

Recently，China's largest RE smelting and processing enterprises，Inne5r Mongolia Baotou Steel RE(Group)HI-Tech Co.，Ltd.announced in a bulletin that its RE raw materials purchase and storage plan implemented through a subsidiary，Inner Mongolia Baotou Steel RE INternational Trade Co.，Ltd.has been approved by the government of Mongolia.This is the first RE purchase and storage move initiated by enterprises in history，and the move will obtain 10-million-yuan discount loans support from the government.Under the plan，the company will construct five RE reserve facilities with total reserve being 200，000 tons.

China's State RE purchase and storage plan is under discussion at present.